New Delhi: Designer Malini Ramani had only seen her business, founded around a decade ago, growing till 2005. That year, though, things changed for her and several other Delhi designers. Government demolition squads forced her to close both her production unit and store on Delhi’s MG Road. Even as she was recovering from that, more trouble came her way in 2008. Earlier this year, Ramani was forced to downsize her workforce to 65 from 100. There were fewer orders coming and a New York shop she supplied has also closed.
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After the government closed, and in some cases demolished outlets on MG Road because the land in the area wasn’t meant for such retail establishments, several Delhi-based fashion designers moved to the MGF Metropolitan Mall in Saket. But not for long. Low sales and high rentals drove them to shut their shops. The list of designers who have had to do this includes Vikram Phadnis, Mandira Wirk, Swapan and Seema, and Ashima Leena. The nearby Square 1 mall has seen 18 designer stores close over the last few months. And even some designers with shops in the Emporio mall in Vasant Kunj, which opened late last year and is billed as the Mecca of luxury and designer wear, say they are seeing few visitors and fewer sales.
Two big fashion events in the Indian fashion calendar present a sliver of hope for most designers: the Autumn/Winter 2009 shows at the Delhi Fashion Week that begins on Thursday and the Wills India Fashion Week that began on Wednesday.
Fashion weeks are important for designers—they offer opportunities for networking, signing new deals, picking up international trends, readjusting the product mix, innovating and learning from peers from other countries.
Still, if global trends are anything to go by, the Delhi fashion events won’t be as big or impressive as they have been in previous years. At the recently concluded Milan Fashion Week, the effects of the global downturn were apparent despite valiant efforts by the leading Italian fashion houses to keep the show going. Smaller fashion houses simply skipped the event.
Glitz and glamour: (left) A model at Wills Lifestyle India Fashion Week in New Delhi on Wednesday; (right) designer Tarun Tahiliani. Photographs by Mustafa Quraishi/AP and Manoj Varma/Hindustan Times
At New York Fashion Week last month, the shows were smaller, several had empty seats, the usual gift bags were minimal or missing and several familiar faces from the fashion industry were conspicuously absent.
The impact on the Delhi fashion events, say experts and designers, will be more competition and thrifty buyers. Buyers “won’t be able to buy from all the designers as they did previously. That is why I feel the Indian fashion designers, who are extremely creative, now need to concentrate a lot more on their collections, which should be according to international trends,” says Sunil Sethi, president of Fashion Design Council of India (FDCI), which organizes the Wills Lifestyle India Fashion Week. “Well it’s a big fashion week with nearly all the Indian names participating. Since the markets are down, the competition is going to be intense,” adds designer Tarun Tahiliani.
Still, the very fact that the shows are on is indicative of some sort of resilience.
From New York to London, Paris to Milan, fashion houses, particularly smaller ones, have cut back on catwalk expenses while others have pulled out shows altogether as the luxury sector feels growing pain from the downturn. Many stores are reportedly selling 25-40% less than they did last year and factories are closing.
Buyers attending fashion shows—from small trendy boutiques in Paris or Milan to department stores such as Saks and Bloomingdale’s in New York—plan to reduce their purchases this year, some by up to 30%.
A presence and more
For many Indian designers, a presence at the fashion week isn’t just about business, but also part of an effort to build their brand. “I am hopeful that the fashion week will bring some good news in terms of business but at the same time I am prepared to rough it out for a couple more seasons as that seems to be the current trend,” says Rahul Reddy, one among the younger breed of designers just beginning to make their presence felt in the country.
Still, some designers do up to 40% of their annual business at such shows. The Fashion Foundation of India recently took 11 designers, including Tahiliani, Ramani, and Rohit Bal to Dubai to participate in a shopping festival—a visit that resulted in the three of them opening talks with the UK-based luxury department store chain Harvey Nichols.
“We’re trying to add business for designers that is not just short-term but we want them to build established relationships”, says Sumeet Nair, founder of the Fashion Foundation of India (FFI), organizer of the Delhi Fashion Week.
Even such relationships, though, can’t insulate designers from slowdowns such as the one the world is currently going through. Nair estimates that Indian designers have been hit by a fall in sales of 25-50%. Those who rely more on international buyers have been hurt even more. And those whose markets are in Europe and the US have been hit the worst, he adds. Bal is relatively better off as 25% of his business comes from West Asia. Exports to the US and European markets contribute just 5% to his revenue. “I know designers who have gotten cancellations of up to 85% from their overseas buyers. Fortunately, I don’t depend on the Western market so I haven’t felt it as much,” Bal says.
Newer designers such as Rahul Reddy and Atsu (who uses only one name), who’ve been designing for about three-four years, saw their businesses grow 20% and 50% a year respectively in boom times. Like the bigger players, over the last year, they, too, have suffered losses of around 25%. They do not have their own stores and the ones they sell to are buying less. And unlike Bal, even some designers who depend on West Asia for business have seen a slowdown.
Designs for slowdown
For such designers, the domestic market presents an opportunity. There’s a problem, though: most buyers in the domestic market haven’t sold their purchases from previous seasons and people are shopping less for designer garments in the background of the economic slowdown.
“The format of buying in India goes a lot on consignment sales (where the buyer retains the option of returning the garments if they don’t sell),” says FDCI’s Sethi. “What happens is that the designer suffers because if items are not sold he might have to take the goods back. Then you are on to the next season and you have to keep the stuff or try to get a better price. Obviously, if they sell it cheap the (profit) margins disappear.”
Bal says his higher priced range of bridal and eveningwear have suffered less, with a fall of about 8-12% in business. “The upper segment is going to tide us through this recession. It hasn’t hit them (well-heeled customers) that much, especially (when it comes to) buying clothes. They might not invest in a house or a Rolls Royce, but clothing is just petty cash for them.”
Bal adds that his expansion plans for this year continue to be on track. Apart from West Asia, he is concentrating on the Russian and Indian markets. In addition to new stores in Mumbai, Delhi and Chandigarh, he plans to expand to cities such as Ludhiana, Hyderabad and Kolkata.
Ramani says she’s trying to concentrate on designs that are commercially more viable. “I used to design crazy clothes that didn’t fit all shapes and sizes”, she says. “Now I have a more commercial line both to make money and I want to make clothes that I can wear myself.” She has been driven, at least partly, by the slowdown to explore business opportunities beyond fashion, she says, but is not ready to discuss her plans yet.
Gaurav Gupta, a designer for the past three-and-a-half years, says he’s at a stage in his business where he has more flexibility to work around the global slowdown.
“We are strategizing around the recession,” says Gupta. “I’m concentrating on Indian markets more, and the Middle Eastern market which has also been affected (by the slowdown) but is still buying. Sales I would have done in America—I’d shift these figures to the Middle East or newer markets like Australia, Eastern Europe, South Korea, which are still potential markets.”
Gupta plans to open his first store in New Delhi this year. He is also coming out with a more commercial, affordable line for the coming autumn/winter season in the price range of Rs2,000-2,500.
Tahiliani, meanwhile, is focusing on pared-down luxury. “The creations are not being scaled down, but just have been toned down with this environment and are perhaps, better value for money,” he says.
Sethi himself is hoping not too many people start thinking of inexpensive lines because it could erode the brand equity of the designer involved.
The designers themselves are very conscious about this.
Designers Reddy and Atsu have decided not to go that way. Reddy, whose designs are priced between Rs6,000 and Rs10,000, says he’s chosen not to come out with a more inexpensive line. “If I go down in price, the competition is huge,” he adds.
Atsu says it was his most expensive pieces that sold out among the ones he sent out in November and December, rather than the cheaper range. “For me, I’m sticking to what I’ve been doing and what I’ve been selling.”
Still, most designers are trying to do what they do more efficiently.
Both Ramani and Bal say they are keeping a tighter control on costs. And most designers have become selective about participating in international events.
Some designers have already diversified into areas such as home furnishings and lifestyle products and more designers may want to do this in the context of a slowdown in their main line of business. Sethi points to designers such as Sabyasachi Mukherjee who designs for Bombay Dyeing, Manish Arora who’s designing for Reebok and Bal who’s started doing jewellery. Designer Manish Malhotra has also tied up with Skoda to launch a collection called Skoda Superb, inspired by the launch of a recent model of the same name by the auto firm.
“This is another avenue in this time of recession and it’s also good to join hands with other labels”, says Sethi. “They (designers) were doing it earlier but it now makes more sense for them commercially and gives added revenue to them.”
Reuters and Bloomberg contributed to this story.