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New Delhi: The festive season has resulted in a boost in fashion apparel sales, but the demand for innerwear has failed to follow the upward trend. Irrespective of the segment — men, women or children — all top brands like Lux Cozi, Dollar and Rupa are reporting that sales haven’t picked up like they usually do at this time of the year.

Manufacturers and industry experts told ThePrint that a major problem is the poor health of small, local retail shops that sell undergarments, which have failed to recover from the double blow of demonetisation and the rollout of the goods and services tax (GST).

The local shops, also known as multi-brand outlets (MBOs), aren’t buying stocks of undergarments as they used to, and are delaying payments, which in turn is affecting the working capital cycle of manufacturers.

Research firm Edelweiss Securities estimates that there are over 1 lakh MBOs across India, which account for over 60 per cent of the total sales of undergarments, while the rest take place through modern trade formats like malls or online portals.

According to a 2014 report by consultancy firm Technopak, India’s innerwear market was worth Rs 19,950 crore, and is estimated to grow at 13 per cent annually to reach Rs 68,270 crore by 2024.

“Among the core apparel categories, innerwear appears to be a potential growth category across all segments. With rising incomes, higher discretionary spending, greater number of working women and growing fashion consciousness, the innerwear segment is expected to continue to progress,” the report had stated.

It had also said while the innerwear market had traditionally been largely unorganised, the organised innerwear segment had shown promising growth in the preceding few years.

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Manufacturers’ lament

K.B. Agarwala, managing director of Rupa and president of the Federation of Hosiery Manufacturers Association (FOHMA) of India, said the downward trend over the last six months was industry-wide.

“The industry is struggling with falling sales. From real-estate to Parle-G biscuits, every industry is grappling with low consumer sentiment. Our sales have fallen by 10-15 per cent and in fact, the festive season is pretty dull for us,” Agarwala told ThePrint.

“On an average, the entire innerwear industry is facing fall in sales by 20-25 per cent. Stocks have been piling with us as demand with local retailers is very poor. We had pinned our hopes on the festive season, but the increase in sales is marginal. Generally, in the period around Diwali, our sales increased by almost 20 per cent, which this year have increased only by 10 per cent.”

Ashok Kumar Todi, chairman of Lux Industries, concurred with Agarwala. “We are passing through a difficult phase. Before the start of the festive season, sales were down by 40 per cent (against the previous six months), which are now down by 25 per cent,” he said.

“I hope that the government would do something to revive our sector soon by helping the small retailers grow.”

Vinod Kumar Gupta, managing director of Dollar Industries, which manufactures for rural and semi-urban consumers, said he had never seen such a massive slowdown in undergarments. “It is unimaginable that people are not buying undergarments and even the festive season hasn’t helped us much,” Gupta said.

Media reports say the quarterly performances of the top four listed innerwear firms are the weakest in a decade. “Sales of Page Industries, which sells the Jockey brand of innerwear, grew 2 per cent, its slowest expansion since 2008,” stated a report in The Economic Times.

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Two-fold problem

Edelweiss analyst Nihal Mahesh Jham said the problem was two-fold.

“The reason for poor consumer demand is with the trade format, along with economic reasons. The innerwear category is suffering from the poor show of MBOs,” Edelweiss analyst, Nihal Mahesh Jham, told ThePrint.

“These MBOs were hit badly by demonetisation and their liquidity was hurt. As they were recovering, the GST was announced, which eventually hurt their purchasing power even more. Now, these MBOs are buying less and stocking less, and the manufacturers are feeling the heat.”

Agarwala, speaking on behalf of the FOHMA, echoed Jham’s words.

“The retailer is asking for more credit. They have very little money left for investment, thanks to demonetisation and then GST. They are small shop owners who have not yet been able to implement GST well,” he said.

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Impact of slowdown magnified in innerwear sector

India’s top fashion retailers, such as Pantaloons, Shoppers Stop and Central, had also reported a slight slowdown. Same-store sales growth (SSG) stood at around 2-7 per cent in quarter ending June, lower than the 3-9 per cent range seen in Q4 of the previous financial year.

However, they all have started growing again. According to another Economic Times report, the sales of fashion and apparel brands have jumped by an average of 10-14 per cent in the festive season.

“Several retailers, including Future Group, Spencer’s Retail, Arvind Lifestyle, Reliance Digital, Vijay Sales and Great Eastern, said their sales have grown by more than double digits in categories such as fashion and apparel, smartphones and consumer electronics in the first weekend of Navratri over the same period last year,” the report stated.

Arvind Singhal, chairman of Technopak, said: “The impact of the slowdown has been magnified in innerwear sector. The sales of expensive garments were slightly impacted, but many brands such as Westside and Aditya Birla Retail have been growing and were never impacted.”

Abneesh Roy, senior vice-president at Edelweiss Securities, said: “At Aditya Birla Fashion and Retail, they are seeing 50 per cent-plus growth, as they’ve just entered the inner wear category.”

Sources at Zivame, an online lingerie portal, said their is “no impact” on sales. “In fact, we are registering a healthy growth.”

Also read: With Westside, Tata looks to build cheaper fashion brand to compete with Zara

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