15 September 2022, Mumbai:

Retail businesses across India had a 15% growth in sales as compared to pre-pandemic levels ahead of festivity. Are retail sales set for a bumper growth ahead of festivity as per data? observes Kumar Rajagopalan, CEO, of the Retailers Association of India (RAI). He also alluded that," The growth might pick up around Dusshera but we’ll have to wait and watch".

The effects of inflation 

Reading into the data given inflationary/cost pressures it has different impacts across category mix & product spectrum. Inflation affects different stakeholders in a different fashion but on the whole, it is anecdotal that it bites the common man more than anybody else. The same is clear when one wades into the granularity of the data as pricier articles are selling more V/s low ticket/lower price spectrum where we have started to see consumers titrating. 

Given the recovering nature of the economy currently, experts are sanguine that consumer downtrading at present is transitory and consumption optimistically gets more wide-based as the festive season merrily kicks in.

Topically sales growth of August 2022 as an apple to apple comparison V/s pre-pandemic period was pretty secular & encouraging as witnessed across regions with sales in East India growing to 19%, while South India showed a growth of 12%, North India indicating a resilient 18% and West India growing by as much 11%.

Sales across categories too are showing a steady increase with sports goods indicating a strong performance followed by footwear, QSR, and jewelry with impressive performance ahead of other categories. Prominent amongst those is the womenswear segment has seen a huge surge in demand.

Sales triggers

If we were to pinpointedly underscore some of the factors that galvanize the upward growth trajectory & fundamental growth tailwind: The ease of doing business for MSMEs is clearly one such factor. 

Revenge buying as it is been commonly been regarded after restriction to home for almost two years & 1st normal year in three years notwithstanding the anchored inflation outlook. What gives a very bullish outlook is a lot of social gatherings including weddings are now happening and strong order pipelines helping raise the growth outlook. There has been a significant uptake in occasionwear and bridalwear, besides workwear. 

E-commerce firms are expected to log a 28% year-on-year growth in sales at USD 11.8-billion during the festive month this year, and in 2021 overall online retail GMV (gross merchandise value) of $52 billion is likely to grow by 30% hitting $68 billion in 2022.

The growth is expected to be driven by the doubling of online shoppers during festive sales as against 2018 ahead of festivity, as it is seen that in the 1st week itself, the sales are likely to hit around USD 5.9 Bn. Additionally, the quick Y-O-Y comparison of 28% rise V/s corresponding period of USD 4.8$ Bn gives a big heart a Redseer report said recently.

Revenge buying drives retail sales

On the back of economic recovery and improving business & consumer confidence with Covid fear concerns fading. Who doesn't want to celebrate? These newfound expectations will be the key to driving sales revenues for brands during the festive season leading to an increase in volume & hopefully value sales. 

Cautious optimism

India is continuously becoming a more & more consensus market. As we are seeing sustainable optimism in India both in business confidence & consumer sentiments, especially at the premium end of the market/against the entry-level and incremental %age of GDP going up, up & away on the private consumption side of the economy.

India is doing well given the economic revival though the global economy is not doing well as a lot of upheavals are going on in the background.

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13 September 2022, Mumbai:

Covid has been a big disruptor in many ways affecting/transforming almost all economic sectors. Noteworthy amongst them is the Indian fashion space having witnessed the phenomenal rise of private labels in both the online and offline retail domains. The innate advantage it enjoys is that of high availability besides providing great control over pricing one over the other/established brands. So much so that one today would reckon dozens of Indian private brands famously known as private label and store brands, are typically designed to be made and sold for a specific celebrated retailer to stay relevant & competitive. The fundamental premise driving synergies here is that private-label products are getting sustainable favour & appeal from consumers across sub-sets within the fashion & retail space.

Find below some of the famous case studies to drive home the point:

1. "Reliance Retail", India’s largest & biggest retail company mirrors 'the shape of things to come'. It is an entity with Rs 1,49,925 crore of revenues in FY21, having launched ver four dozen private-label brands across all consumer wearables, consumables, grocery segments, etc. Anecdotally the apparel segment has witnessed the introduction of key private labels like Netplay (formal office wear), Performax (specialized activewear), Fusion (fusion-wear for women), Avaasa (ethnic wear for women), and Rio (fashion wear for working women). Its annual report in FY21 reports that the company has earned over 75% of its revenue from its fashion and apparel, footwear chain "Reliance Trends" entailing in-house brands, where the contribution of private labels to its revenue is a whopping 60% or thereabouts.

2. AJIO, a fashion and lifestyle brand, is Reliance Retail's digital commerce initiative and is the ultimate fashion destination for styles reports that Private labels comprise almost 50% of the top brands currently sold on its platform. This feat includes outselling stalwart leader brands such as Levi’s, Superdry, and US Polo Assn. What is remarkable is that the platforms’ popular private brands Teamspirit, Mix N Match, and Avaasa are hands-down ahead of the top-selling brands notably experienced during festive season sales.

3. Myntra, the case is no different, having an army of private labels most specifically across a lower price spectrum accounting for say 35% of its revenue. Here the spotlight shifts to the plethora of private labels involving/developed/backed by celebrities such as Hrithik Roshan and Deepika Padukone brands like 'HRX' and 'All About You' respectively.

4. RutuMody-Kamdar, the founder of Jigsaw Brand Consultants, says, "Private labels provide a remarkable play helping retailer designing promotions, advertising or even the packaging of the label to the business requisites".

It is nothing new as prominent retailers like the Future Group, Reliance Retail, K Raheja Corp-owned Shoppers Stop, and the Aditya Birla Group have already seen private labels' demand tailwinds clocking impressive performance on the back of ease of getting credible ‘contract-manufacturing’.

Umashan Naidoo, head, of customer and beauty, Trent operating Westside, alludes that their brands in apparel, footwear, and other accessories contribute over 99% of sales"

There are interesting instances where Private Labels have even been launched in the open market to compete fairly & squarely in the marketplace stimulating growth. Therefore, as the advantages overweigh prompting Amazon & Flipkarts of the world not to shy away from investing reasonably in their private-label portfolios than ever before.

Bottomline

In fact, what intrigues is that they carry the name of the seller but are manufactured by a third party/contract-manufactured. So it is no brainer that private labels margins are better due to supply chain efficiencies and better control over operations leading to it catching everyone's attention. The article dives in deeper to give greater insights, and let readers learn more about decoding the phenomenon of unfolding private labels.

It is widely evidenced that the merit of the exercise is purely for their economic merit given that private labels broadly don’t share marketing costs. One of the actionable points is that it allows you to select the customer base avoiding information asymmetry.

Last but not least is that private labels have helped online retailers attract new consumers notwithstanding the looming inflationary concerns biting common man helping trajectory of growth, optimizing sales particularly when festivity is already upon us.

(CREDITS: fashionatingworld.com)

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10 September 2022, Mumbai:

The 17 Sustainable Development Goals (SDGs) are part of the 2030 Agenda for Sustainable Development. The Global Goals are ambitious & aspirational, but what's certain is that if every one of us commits to making 1 positive change it is doable & we can make a tangible impact.

In effect the Sustainable Development Goals (SDGs) are a universal call to action to eliminate poverty, mitigate the environmental scourge, protect the planet and improve the lives and prosperity of every single human being. The semblance is Goals outline the blueprint to accomplish a secure and more sustainable future for one & all.

The Goals provide a relevant and universal framework & are designed to be universal (for both developed and developing countries). It is sanguine to upfront iterate here to address the global challenges we are facing every day, including the scourge of abject poverty, inequality, climate change, environmental degradation, injustice, etc.

Call To Action

Simplistically the prerequisites for SDGs as in a call to action is successfully getting key stakeholders coherently on the same table (including employees, vendors, regulatory bodies, and investors). The SDGs present an unparalleled opportunity to bring on the same page the ongoing sustainability initiatives whatsoever an entity may have through shared value & pooled architecture fuelling the textile industry’s efforts to face & surmount impending odds in the textile global supply/value chain.

A case in point is the global apparel industry of approximately $2.5 trillion to $3 trillion with scale, scope, technical & operational capability to optimistically deliver and achieve SDGs targets, aligning local value chains well within this ever-connected globalized supply chain. Pulse Check

Given that the textile sector, which ranks among the most polluting in the world, so proportionately there is greater scope for Textile companies as one would reckon to go down the path of sustainability. Again being a sector generating huge jobs creator & an economic force multiplier. To take full cognizance of the sector where two-thirds of textile industry supply chain workers are women. Companies in the sector are therefore presented with an incredible opportunity to continue to be constructive in attaining the goal of achieving gender equality, improving economic livelihoods, and mitigating climate impacts.

Key takeaways

The time clock is ticking for this Industry to contribute as a global supply chain to the SDGs by 2030 to drive the synergies. This article was presented to showcase the demonstrability of the industry per se and how well it has currently aligned the larger purpose of integrating the SDGs into its business missions, vision & current engagement.

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14 September 2022, Mumbai:

Due to its fragmentation and heterogeneity, the textile industry is one of the most complex industrial industries. It happens to be one of the top energy consumers, and without doubt in the textile mill, there is an upward tick in its electricity consumption. It is all owing to installation of modernized cutting edge machines and continuous usage of the advance & high output equipment replacing traditional tools & physical infrastucture.

Weaving uses about 23% of the energy, spinning uses 34%, chemical processing uses 38%, and other uses 5%. While electricity dominates the consumption pattern in spinning and weaving, thermal energy plays a significant role in chemical processing.

Two processes in textile mills use the majority of the thermal energy. They are water drying and water heating. The amount of water used in a textile mill directly relates to the amount of fuel utilized. So, cutting back on water consumption will also result in energy savings thus reduced water footprints.

Energy Management Quick Review

The fast development of process industries, which has resulted in significant energy consumption in textile operations, has made energy management been attached the utmost importance. And this has paved the way for energy conservation, which may be influenced by changes to processes and gear, the use of technological breakthroughs for process optimization, and the development of novel techniques to meet the challenge of significant energy savings in textile wet processing.

Therefore, replacing traditional procedures with more modern ones is necessary to save time, money, and energy significantly. Due to the global energy crisis and the high cost of fuels, increased efforts have been made to maximize energy conservation.

Energy is the new oil

One of the most important ingredients in every industrial operation is energy. However, the supply is not limitless. Due to the global energy crisis and the high cost of fuels, increased efforts have been made to maximize energy conservation. Energy Global economic crisis and rising fuel prices prompted an increase in efforts to save as much energy as possible. The fabric Industry is one of the sectors that use the most power and has the lowest energy utilization efficiency on record. Generally speaking, electricity is the primary energy used in the textile sector, equipment, lighting, cooling and temperature control systems, machinery, etc.

Whilst oil is fuel for boilers that produce steam, coal, and liquefied petroleum gas. And this has created a method for energy conservation that may be impacted by procedure, machinery adjustments, technology breakthroughs linked to process optimization, and new techniques to address the issue of significant energy savings in textile wet processing.

Energy saved is energy earned

The machinery used in the textile industry is often powered by electrical energy. The current oil, gas, and other fuel shortages have become essential cost drivers for every business.

Analyze electrical energy consumption and identify losses to increase energy conservation in the textile sector and ensure smooth operation. Any textile industry's processing unit is a crucial component where the completed product is produced. Because the processing area of a textile mill has a high energy usage share in terms of both the amounts of money and energy required, advanced energy conservation is thus crucial.

This article compares the effects of various machine operations, lighting load, electrical power losses, and energy conservation in the textile sector while saving 27614 kWh monthly, considering that it is one of the heaviest energy consuming sector & arguably has a dubious record of the least efficiency in energy utilization.

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12 September 2022, Mumbai:

According to recent estimates from McKinsey & Company, consumer goods companies must prioritize supply chain ESG concerns since, for these companies, more than 80% of GHGs and 90% of other environmental impacts occur in supply chains. And among consumer products, apparel/garment and footwear businesses are particularly at risk of doing business with suppliers who mistreat people or degrade local ecosystems.

Suppliers face low margins and fierce competition because brands can obtain the same products from numerous contract manufacturers. This is particularly true in the cut-make-trim (CMT) industry and the countless subcontractors that CMT firms use to outsource tasks like embroidery and printing.

Concerns around human rights violations

The embargo on cotton from Xinjiang, the Chinese region where Uyghur Muslims are subjected to human rights violations and forced labor, has been aimed chiefly at apparel importers. The Xinjian cotton restrictions, which were started by the Trump Administration, have been maintained by President Biden. The Wall Street Journal it was reported that as Xinjiang is thought to produce 80% of China's cotton, "trade attorneys and business organizations predict more import restrictions and disputed shipments as Washington places more emphasis on human rights in its escalating confrontation with Beijing. To successfully address forced labor and other ESG concerns in the textile and footwear supply chains, corporate leadership pledges and persistent, cautious execution by the procurement and supply chain departments are required.

According to McKinsey analysts, achieving a supply chain "sustainable goals is an all-encompassing organizational problem and frequently involves transformation for both the product portfolio and the organization." a foundational element of an effective supply chain.

Trekker

The ESG project provides an accurate and up-to-date map of supply chains, one that reaches several levels below direct suppliers to identify vendors and subcontractors. These elusive indirect suppliers may be the source of severe environmental harm and worker exploitation. The Apparel Supply Chain Transparency Pledge and the potential New York statute both have transparency standards that may be met by businesses with the use of such mapping.

The New York law, which could have an effect on retailers as diverse as Shein and Prada, mandates that companies map out at least 50% of their supply chain processes at each stage of production, identify and communicate the process's detrimental social and environmental effects, and establish goals to lessen those effects. According to CBS News's early January investigation, the stores must then achieve their goals and report their yearly compliance.

Pull V/s Push

ESG is receiving more attention from a range of stakeholders, including younger customers who are increasingly adopting an ethical buying perspective and consumers who demand an emphasis on sustainability and social responsibility from their fashion firms. Major retailers are putting downstream pressure on their suppliers to enhance their ESG performance. In light of global warming, investors and governments are pushing businesses to be more transparent across ESG parameters. According to one E&Y survey, "74% of investors worldwide are more likely to divest from companies with poor ESG track records".

Additionally, we may anticipate that enterprises in distant regions where environmental and labor standards were previously less severely enforced would be subject to increased scrutiny and that circular business models will no longer be an option.

As a result, the long-term prognosis is that every participant throughout the value chain of the garment industry now faces an additional challenge and the opportunity for growth.

The aforementioned insights are aimed at providing input into the most pressing issues impinging on growth and challenges in ESG in the Textile/Fashion industry and have been prepared for general informational purposes only.

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09 September 2022, Mumbai:

The textile sector, which ranks among the most polluting in the world, must look into sustainable practices to reduce resource consumption and pollution. Thus there is greater scope for Textile companies as one would reckon that by bringing down total energy use per unit of output at manufacturing plants using renewable inputs such as solar, hydroelectric, and landfill gas. Another argument for gaining currency is the credible use of decentralized renewable energy which promises to modernize and catalyze the textile industry's growth. Also, the good news is that it clearly has the potential to improve the livelihoods of millions by being a sector generating huge jobs creator & an economic force multiplier.

Time to invest in renewable energy expansion

Textile trade is now started to look at strategic investments in renewables to boost energy independence and reduce carbon footprint. Investing in renewable energy is a good long-term strategy for fund managers and green funds alike. Corporates/groups partaking in interest in the renewable energy sector reckon that it is poised to play an absolutely critical/pivotal part in the future as technology sustainably keeps advancing and demand for clean energy will only develop. A good bit is controlling carbon emissions, large-scale renewable power projects also provide demonstrable economic benefits for multi-stakeholders investors and borrowers alike.

Green Funds & Green Investing

Green Investments — Green investments typically are businesses or sovereign/pensionary funds piggy-betting on the urgent need to reduce harmful pollutants or use resources more consciously the clamor for which keeps getting louder. This paper focuses on various green funds, and green investing companies currently investing in reducing carbon emissions across the textile sector. Need of the hour is to shift to sustainable green power in order to remain internationally competitive within this turbulent market environment,” note Richard König, CEO of Enery, and Lukas Nemec, COO of Enery.

"Global players like Lenzing group in order to reduce its carbon emissions even further in line with our strategic targets, aiming in the future to rely to an even greater extent on electricity generated from renewable energies. Concepts such as these will make us less dependent on global energy markets in the medium to long term and further support our transition from a linear to a circular economy model,” comments Stephan Sielaff, Lenzing Group CEO. In 2019, Lenzing became the first fiber manufacturer to set a target to reduce its carbon emissions by 50 percent by 2030 and to be climate neutral by 2050.

Need of the day

One data point which is stood out for us while presenting this article is that" The economic rationale for investing in clean energy is clear and the message is written loud & clear on the walls".

There is an urgent need for efficient and trend-setting interaction between energy companies, regional policymakers, and industry, with a clear win-win situation for all parties involved. Furthermore, renewable energy is a panacea to combating global climate change as the crisis is already upon us.

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