Second wave a death knell for Indian small apparel manufacturers

It’s common for small-scale Indian apparel retailers to shut shop due to delayed orders. The shutdown of non-essential services since last year has led to the closure of thousands of apparel enterprises and manufacturers have closed their operations due to lockdown of non-essential services. Transportation disruption strategies due to the surge is exhausting retailers efforts in meeting customer demand, says Brokerage firm Motilal Oswal in its new report.

The report states, after the first COVID-19 wave, retailers had managed to recover almost 82 per cent of pre-COVID sales by January-February 2021. However, the onset of second wave coerced retailers to shutter stores.

Lack of demand spells doom

Clothing Manufacturers Association of India (CMAI) attributes the downfall of smaller retailers to consumers’ shift to e-commerce websites. An interpretative study by AP Shemi also confirms, over 86 per cent Indians now prefer online shopping of clothes and accessories over the traditional methods. Lack of demand and antiquated trends have led to the regression of retailing industry in India with around 46 per cent customers now abandoning shopping at physical stores, informs a report by IT company Capgemini.

The Capgemini report states by Inventive, the COVID-19 pandemic has also altered consumers’ spending habits. They no longer seek deals in cash due to their of future job losses and have become more focused on conserving cash. However, the apparel industry failed to capture this market by mobilizing low capital and optimizing costly resources that weakened business for thousands of small retailers.

Financial insecurity blocking future growth

Growth prospects of smaller retailers were also hampered by the lack of financial security promised by the Central and state governments during the initial few months of the lockdown. It is important for the governments to provide these small-scale industries a chance to expand their resources. India cannot boost apparel exports unless it fulfills the striving needs of these small manufacturers.

The industry employs around 45 to 60 million people, and the second wave is proving to be a roadblock in their progress. An extension of lockdown could deteriorate their condition further.