Falling rupee worry manufacturers/brand retailers

Thursday, 24 November 2011
After dealing with situations like excise duty, high raw material costs and signs of recession affecting consumer buying sentiment, the depreciating rupee is the new cause for worry for the apparel industry players. Experts feel since the industry’s import component is high apparel manufacturers/brands may be forced to pass on the cost to the consumer by hiking product prices once again.

As Ajay Ramachandran, Brand Director, Van Heusen points out the rupee depreciation close on the heels of cotton price rise and excise duty, will be a big blow for them. Van Heusen imports nearly 30 per cent of its fabrics (especially suit fabrics) from China, Korea and Indonesia.

In fact, bands like Van Heusen and Louis Philippe, Calvin Klein, Tommy Hilfiger, Benetton and Blackberrys, which import a lot of fabrics and garments from countries like China, Korea and Indonesia are already feeling the pressure. Louis Philippe for example, fears a “severe” impact on margins with a 10-15 per cent rise in input costs for the spring/summer merchandise next year. Arvind, the licensee of Swiss premium brand Gant, could hike prices if the situation continues till February. Unlike the other brands of Arvind, nearly 70 per cent of Gant is imported from China and Europe. J Suresh, MD, Arvind Brands says they may have to look at Rs 200 price hike for Gant.

While consumers have already faced two rounds of price hikes this year, another one will further dampen their buying sentiment. Even though the rupee depreciation has not caused any immediate impact on retailers as most had bought their current stock well in advance. However, if the situation continues most will be forced to take hard decisions on the quantity of imports and hike in retail prices. Also, they will have to step up local sourcing.

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