CMAI’s Ap­parel In­dex

A Re­port on CMAI’s Ap­parel In­dex for Q3, which shows a growth re­cov­ery for all Brand Groups.

Apparel - - Contents -

CMAI’s Ap­parel In­dex for the third quar­ter (Oct-Dec 2017-18)

CMAI’s Ap­parel In­dex for Q3 (Oct-Dec FY 201718) gives out pos­i­tive sig­nals about the mar­ket, as there is a clear growth re­cov­ery at 2.71 points. This is much higher than the fig­ures from the same quar­ter (Q3) in the pre­vi­ous year (Oc­tDec FY 2016-17), which had an over­all In­dex Value of 1.4 points. The mar­ket had reg­is­tered the low­est growth in that quar­ter, since it faced the im­me­di­ate after­math of the im­ple­men­ta­tion of de­mon­eti­sa­tion.


De­spite the push and pull ex­pe­ri­enced one year post-de­mon­eti­sa­tion and a few months af­ter the GST im­ple­men­ta­tion, Gi­ant Brands have re­mained re­silient and buoy­ant. In Q3, they main­tained their lead with an in­dex value of 11.25 points, grow­ing mul­ti­ple times com­pared to other brand groups. Large Brands, on the other hand, grew at 5.56 points; Mid Brands recorded 3.69 points of growth; while Small Brands grew least at 1.3 points.

Com­pared to pre­vi­ous quar­ters, Gi­ant Brands are grow­ing much faster than others, as their rate of growth in the pre­vi­ous quar­ter was 8.72 points. The growth rate for Large Brands was 6.65; 1.25 points for Mid and 0.29 for Small Brands, re­spec­tively.

In­deed, all brand groups across the board have recorded higher growth this quar­ter, ex­cept for Large Brands (growth dropped this quar­ter to 5.56, from 6.65 ear­lier). Sur­pris­ingly, Large Brands grew 7.23 points in the same quar­ter of the pre­vi­ous year. A closer look at the Large Brands’ per­for­mance dur­ing Q3 and Q2 of FY 2017-18, re­flects that in both th­ese quar­ters, Sales Turnover growth is same, but Sell Through grew bet­ter in the pre­vi­ous quar­ter, com­pared to this quar­ter. In­ven­tory Hold­ing, too, in­creased this quar­ter, com­pared to pre­vi­ous quar­ter, im­pact­ing neg­a­tively. The re­mark­able growth im­prove­ment of Gi­ant Brands is on ac­count of bet­ter Sales Turnover growth, com­pared to pre­vi­ous quar­ter, and bet­ter Sell Through growth.

Q3 Ap­parel In­dex, once again, in­di­cates that Gi­ant Brands have out­done Large, Mid and Small Brands. Be­ing more or­ga­nized and net­worked with or­ga­nized retail through MBOs, EBOs and Large For­mat Stores, Gi­ant and Large Brands man­aged their busi­ness and sales turnover bet­ter. More­over, they in­creased their sales turnovers sig­nif­i­cantly – at 8.0 points and 4.4 points, re­spec­tively.


In Q3, Sales Turnover re­flected an In­dex growth of 1.52. Nearly 49 per cent brands, or al­most half, re­ported an in­crease this quar­ter. How­ever, it seems the festive sea­son didn’t bring much cheer to all brands, as many re­ported a dip in sales turnover. A sig­nif­i­cant 30 per cent re­ported a loss this quar­ter. In­ci­den­tally, most of the re­spon­dents, who re­ported a loss in sales

turnover, were in the Mid Brands bracket. In fact, no Gi­ant Brands in­di­cated a loss in turnover in Q3. Ex­plain­ing the dip in sales turnover, Naren­dra Shah, Pro­pri­etor, Vog­a­rtino says,“The dip in sales turnover is partly due to our chang­ing lo­ca­tion, and ma­jorly due to the pat­tern of busi­ness fol­lowed by cor­po­rate brands. End of sea­son sales af­fected not only our brands, but also MBOs, small in­dus­tries and man­u­fac­tur­ers. Big cor­po­rate brands gave away goods at throw­away prices, and this had a great im­pact on our busi­ness, caus­ing the dip in sales turnover.”

Nearly 45 per cent brands in­di­cated an im­prove­ment in Sell Through. But, for the other 44 per cent, Sell Through re­mained the same. “The in­crease in sell through is con­nected; if sales turnover in­creases au­to­mat­i­cally, sell through will in­crease, as sales have been man­aged well,” ex­plains Sameer Pa­tel, Pro­pri­etor, Deal Jeans.

Al­most 46 per cent re­spon­dents across all brand groups said their In­ven­tory Hold­ing went up this quar­ter. Pa­tel opines, “In­ven­tory hold­ing in­creased, as fash­ion is fast chang­ing and the in­ven­tory is man­aged and con­trolled well at our end.” The higher value in In­ven­tory Hold­ing in­di­cates a neg­a­tive im­pact. The in­crease in in­ven­tory could be due to a car­ry­over of in­ven­tory from pre­vi­ous quar­ters and/or due to the lower than ex­pected sales dur­ing the festive sea­son. Ra­jesh Giani, Pro­pri­etor, Toffy House points out, “The last quar­ter was the sea­son for win­ter wear, hence, de­mand was good and stocks were stored for win­ter. We had some pre­vi­ous stocks and with late pro­duc­tion of fresh stocks, we were able to meet de­mand. This is why in­ven­tory hold­ing went up.”

Fresh In­vest­ments went up by 1.30 points over­all, with nearly 59 per cent re­spon­dents re­port­ing a rise in in­vest­ments. As Seema Me­hta, Pro­pri­etor, Ex­ile ex­plains, “The rea­son be­hind an in­crease in in­vest­ment is a govern­ment scheme, which helped us with a bank loan to en­hance busi­ness. We opted for it and in­fused money to in­crease our in­vest­ments.” Ke­tan, Owner, Goof goes on to ex­plain, “We in­creased our in­vest­ments by opt­ing for a bank loan, to widen our hori­zons.”

As for the out­look for the next quar­ter, around 48 per cent brands say it is ‘Av­er­age’, while 38 per cent be­lieve the out­look is ‘Good’. Gen­er­ally, Q4 of the fi­nan­cial year is seen as a quar­ter that has EOSS in Jan­uary and only a small pe­riod of fresh in­ven­tory. Growth in sales is seen in the sec­ond half of March, when stu­dents’ ex­ams are over and hol­i­days start, and sum­mer sea­son picks up. Look­ing for fresh goods, post the first quar­ter of GST, con­sumers are also ex­pected to re­turn to stores. GST and new pro­cesses would be set­tled; es­pe­cially by the last quar­ter of this fi­nan­cial year and this could au­gur well for growth in Q1 of FY 2018-19.


CMAl’s Ap­parel In­dex aims to set a bench­mark for the en­tire do­mes­tic ap­parel in­dus­try and helps brands make in­formed busi­ness de­ci­sions. For in­vestors, in­dus­try play­ers, stake­hold­ers and pol­i­cy­mak­ers, the in­dex is a use­ful tool of­fer­ing con­crete and cred­i­ble in­for­ma­tion, and is an ex­cel­lent source for assess­ing the per­for­mance of the in­dus­try. The In­dex is based on an anal­y­sis and as­sess­ment of the per­for­mance on four pa­ram­e­ters: Sales Turnover, Sell Through (per­cent­age of fresh stocks sold), num­ber of days of In­ven­tory Hold­ing and In­vest­ments (sig­ni­fy­ing fu­ture con­fi­dence) in brand de­vel­op­ment and brand build­ing. The Ap­parel In­dex re­search is con­ducted by DFU Pub­li­ca­tions.

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