CMAI Ap­parel In­dex

A Re­port on CMAI’s Ap­parel In­dex for the Third Quar­ter (Oc­to­ber-De­cem­ber 2016) shows that Growth is at its low­est, so far, at 1.4 points.

Apparel - - Contents -

A re­port on CMAI's Ap­parel In­dex for the third quar­ter (Oct-Dec 2016)

CMAI’s Ap­parel In­dex for Q3 Oct-Dec FY 2016-17 shows that this Quar­ter has had the low­est growth, so far, with the over­all In­dex Value at 1.4 points, as com­pared to the pre­vi­ous Quar­ter (July-Sept FY 201617) where over­all In­dex Value was 4.64 points. The dis­mal growth this past Quar­ter is an ob­vi­ous out­come of the dis­rup­tive ‘De­mon­eti­sa­tion’ that had an im­pact on all seg­ments and sec­tors of the In­dian econ­omy, in­clud­ing the Ap­parel In­dus­try. Within Ap­parel In­dus­try, the im­pact has been felt, across the board. How­ever, Large and Gi­ant Brands seem to have adapted to the sit­u­a­tion and man­aged their brands’ growth. While Large Brands were at 7.23 points, Gi­ant Brands scored 8 points. Small Brands, how­ever, have been hit badly record­ing neg­a­tive growth at -0.55 points, while Mid Brands man­aged to grow a mea­ger 1.22 points.

Large and Gi­ant Brands some­how main­tained growth with fast clear­ance off goods and dis­counts that in­creased the Sales Turnover to 4 and 6.67 points and re­duced In­ven­tory Hold­ing in­crease to just 0.68 and 1.77 points, re­spec­tively. Com­par­a­tively, Small and Mid Brands lost Sales Turnover this Quar­ter by 0.45 and 0.22 points and In­ven­tory Hold­ing in­creased for Small Brands at 2.70 and Mid Brands at 1.25 points. This had a cu­mu­la­tive im­pact on Sales Turnover and In­ven­tory Hold­ing of Over­all In­dex Value as Small Brands and Mid Brands out­num­ber Large and Gi­ant Brands greatly.

CMAI's Q3 Ap­parel In­dex for the Oct-Dec FY 2016-17 clocked 1.40 points growth. This is ap­prox­i­mately 2.54 times higher than the In­dex for Small Brands (with turnovers of Rs 10 to 25 crores) which stood at -0.55 points. For Mid Brands (turnover of Rs 25-100 crores), growth is 1.22 points. They have per­formed much bet­ter than Small Brands. How­ever, it’s the Large and Gi­ant Brands that have led the growth once more this Quar­ter with 7.23 and 8 points. In fact, Large and Gi­ant Brands have con­sis­tently been do­ing well in ev­ery quar­ther. No­tably, in­dex value for Gi­ants Brands is 5.71 times higher than the Over­all In­dex.

The Q3 Ap­parel In­dex clearly in­di­cates that Large and Gi­ant Brands have out­done Mid and Small Brands. Small and Mid Brands have lost sales turnover, and one of the main rea­sons could be De­mon­eti­sa­tion and its im­pact on over­all re­tail sales. Smaller re­tail­ers and Brands as­so­ci­ated with them have had much larger trans­ac­tions based on cash in­stead of credit cards or other dig­i­tal modes. Drop in sales im­pacted stocks clear­ance and hence, in­creased In­ven­tory Hold­ing. This, in turn, af­fected the In­dex Value of both Small and Mid Brands. Large Brands and Gi­ant Brands, on the other hand, were con­nected with or­ga­nized re­tail through MBOs, EBOs and Large For­mat Stores. They took the deep dis­count­ing route, thereby stim­u­lat­ing sales to clear off in­ven­tory at both store and com­pany level this is clearly re­flected in in­creased Sales Turnover and re­stricted In­ven­tory Hold­ing in ef­fect, push­ing up their In­dex at 7.23 and 8 points. THE SUC­CESS MANTRA In­deed there is a strong cor­re­la­tion be­tween Sales Turnover and In­ven­tory Hold­ing and this ex­plains the dif­fer­ence in the In­dex Value of dif­fer­ent groups. Since Small and Mid Brands are more depen­dent on trade and have less con­trol on re­tail, they couldn’t push sales, while Large and Gi­ant Brands could stim­u­late sales turnover, thereby re­strict­ing In­ven­tory Hold­ing. As Vineet Gau­tam, Coun­try Head, Best­seller In­dia,

ex­plains, “We have seen more than a 50 per cent surge in sales, only com­pared to last year. We had planned and added 40 new doors to the brand, which au­to­mat­i­cally im­plied an in­crease in In­ven­tory Hold­ing. Also, the key to manag­ing in­creased In­ven­tory Hold­ing is in­creas­ing sell out. For only we suc­cess­fully man­aged to in­crease sell out.” Ar­gu­ing on sim­i­lar lines Anant Daga, VP, ‘W’ and Aurelia, says, “Sales growth surge is backed by high dou­ble digit SSSG and ag­gres­sive ex­pan­sion. In­ven­tory re­duc­tion is a re­sult of bet­ter than ex­pected sales against planned buys.”

Ex­plain­ing the plight of win­ter wear mak­ers and re­tail­ers which was im­pacted the most due to De­mon­eti­sa­tion, Vinod Ku­mar Gupta, MD, Dol­lar In­dus­tries, says, “Some of our prod­ucts like ther­mals—which are sea­sonal in na­ture and pro­duc­tion—had been done in the month of July and Au­gust, to be sold up in win­ter months; but with De­mon­eti­sa­tion, the en­tire In­dus­try wit­nessed a dras­tic fall in the last Quar­ter. Nat­u­rally, our in­ven­tory in­creased by a huge mar­gin. How­ever, with sum­mer ap­proach­ing and the new fi­nan­cial year, we are hop­ing all sum­mer prod­ucts are sold and clos­ing stock goes down.”

Clas­sis Polo at­tributes in­creased Sales Turnover and bet­ter Sell Through, to a bet­ter de­signed prod­uct that catches the con­sumers’ fancy. Usha Pe­ri­asamy, VP - Op­er­a­tions & Brand, Clas­sis Polo, opines, “Fine re­search in un­der­stand­ing the de­sign needs of the tar­get group and mar­ket thereby up­grad­ing cre­ativ­ity to meet ex­pec­ta­tions pre­cisely. Ear­lier, Clas­sic Polo range had striper dom­i­nated tee's and ba­sic col­lec­tions but now the non-striper fash­ion cat­e­gory has taken over which is reap­ing re­sults. We have iden­ti­fied the most liked cat­e­gories in shirts and trousers—printed shirts and Ly­cra bot­toms are or­der of the day.” In fact, Brands are get­ting closer to cus­tomer ex­pec­ta­tions. This is the real rea­son be­hind the turnover and sales push. This ef­fect will be more ev­i­dent in the next fis­cal.


Sales Turnover saw an In­dex growth of 0.72, while 54 per cent of brands re­ported an in­crease in Sales Turnover. Of these, 40 per cent grew be­tween 1-20 per cent; 10 per cent grew be­tween 21-40 per cent; and 4 per cent grew 41 per cent, or more. The num­ber of brands that grew 41 per cent or more were mostly Gi­ant Brands at 22.3 per cent, fol­lowed by Large Brands at 9.1 per cent. Nearly 8 per cent re­spon­dents said their Sales Turnover re­mained the same. A sig­nif­i­cantly high num­ber of re­spon­dents re­ported a loss this Quar­ter at 38 per cent, max­i­mum re­spon­dents who re­ported a loss in Turnover were from Small Brands with 71.05 per cent re­spon­dents, fol­lowed by Mid Brands—23.68 per cent—and Large Brands at 5.2 per cent. No Gi­ant Brand in­di­cated a loss in Turnover in Q3.

In­ven­tory Hold­ing recorded an In­dex Value growth of 2.53 points. In­ven­tory Du­ra­tion in­creased, this Quar­ter amongst all brands—62 per cent. Nearly 28 per cent brands re­ported an in­crease of be­tween 1-20 per cent in Hold­ing; an­other 22 per cent re­ported an in­crease of 21-40 per cent; and only 12 per cent said their In­ven­tory Hold­ing went up 41 per cent, or more. How­ever, 21 per cent re­spon­dents said their In­ven­tory Hold­ing re­mained the same.

For 17 per cent re­spon­dents, there was a de­crease in In­ven­tory Hold­ing—13 per cent be­tween 1-20 per cent whereas 3 per cent de­creased be­tween the 21-40 per cent slab and 1 per cent more than 41 per cent.


If Small brands are com­pared with Big brands, the In­dex Value of Big brands at 4.57, is a whoop­ing 8.30 times higher than that of Small brands at (-) 0.55. This time the gap be­tween Big brands and Small brands has widened even high. The big­ger gap came in Sales Turnover and also in In­ven­tory Hold­ing where Big brands in­creased In­ven­tory Hold­ing by 1.25 points against 2.70 for Small brands. The higher value in In­ven­tory Hold­ing in­di­cates neg­a­tive im­pact.


In fact, around 41 per cent of Brands feel that the out­look for next Quar­ter is ‘Good’. An­other 10 per cent say the out­look is ‘Ex­cel­lent’. Nearly 42 per cent fore­see an av­er­age out­look and 7 per cent (pre­vi­ous Quar­ter, as well) feel it will be ‘Be­low Av­er­age’. Next Quar­ter be­ing the last Quar­ter of the year, Brands as­sume De­mon­eti­sa­tion im­pact though phas­ing out will still be there as con­sumers will take time to re­turn to stores.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.