Retailers and apparel brands to stay away from sharp price hikes

Retailers and apparel brands including Lifestyle, Reliance Retail, Raymond and Woodland said they will either hold product prices or take only marginal hikes despite unprecedented inflation across input costs as it could derail the recovery witnessed over the past few weeks.

"As a retailer, we have taken a stance of not increasing product prices for the next six months since it could affect the positive consumption trend we are seeing now," said Devarajan Iyer, chief executive of departmental store chain Lifestyle International.

Retailers across apparel, lifestyle products, restaurants, and supermarkets are expected to post double-digit revenue growth year-on-year for the March quarter despite a slow start due to the Omicron wave, with the reopening of offices and schools, and weddings driving demand.

However, companies fear any significant hike may impact demand. "We have our plan on how to deliver our margins, but we have to be cognisant of the fact that you cannot create a panic in the market. Suddenly the prices go through the roof, demand will fall. Whatever the reason is, we have to find the right balance," said Amit Agarwal, group chief financial officer at Raymond, adding that the company will look at cost efficiencies and reducing discounting instead of direct price hikes.

India's largest retailer, Reliance Retail, has also decided not to increase the prices of the apparel and shoe brands owned by them fearing it could jeopardise demand generation when the market is improving, an industry executive said. An email sent to Reliance Retail remained unanswered.

In branded apparel, profitability has been under pressure for more than a year given sharp raw material inflation, the unavailability of containers and a significant increase in cotton prices. While most fast-moving consumer goods and quick service restaurants have consistently increased price tags, clothing and lifestyle firms have a cautious stance.

For instance, shoe and apparel maker Woodland managing director Harkirat Singh said raw material prices have gone up by 20-25% in the last 3-4 months, including that of cotton, leather, rubber and chemicals. In addition, supplies are erratic due to the lockdown in China. Yet, the company will not hike prices for the next few months.