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CoverStory Apparel Retail Affected Post demonetisation Demonetisation is defined as the act of stripping a currency unit of its status as legal tender. Since the announcement of Demonetisation, <strong>India</strong>n economy has been fluctuating in terms of increase in Inflation, increased GDP rate and increase in the rate of imports and exports. It has impacted individuals, businesses and industries drastically. Major impact will be on common man with the sudden decision of currency withdrawal. <strong>India</strong>n economy is depending on cash, as more than half population use banking system for monetary transactions. Economists say that the impact of Demonetisation will be more on consumer spending and economy growth. Apparel retail industry too is feeling the heat, be it manufacturer, distributer, workers or exporters all have been impacted by these measures. Team Apparel & Fashion spoke to a lot of manufacturers and distributors about the situation post demonitisation. Demonetisation has shown positive impact on e-wallet companies like Paytm, PayU,MobiKiwik, Freecharge. Companies rushed to hire for various roles to meet the demand across sales and marketing. While sectors such as real estate, micro finance, retail, banking, fashion, gems and jewellery, infrastructure, transport logistics run on cash, witnessed negative impact. “The initial impact of demonitization was quiet severe; we registered a 60% fall in business. At that time starting of the week remained barren and demand was basically restricted to weekends. From December onwards things started to improve mainly due to the wedding season.” said Anand Kumar proprietor of Mumbai based ‘Pay V Enterprises’. Kumar pointed out “We introduced other payment avenues such as Paytm, and swipe machines only after demonitisation, I find that many are 12 January 2017 APPAREL&Fashion
CoverStory still hesitant to use these options as they have security concerns.” Even the exporters who do not depend on domestic demand are facing problems paying their workers and procuring raw materials “We are an exporter hence we were not affected due to this on the demand side, however, for procurement of raw material and paying our workers we faced problems” says Sheetal Sharma the proprietor of Ritu Kreations. Distributors were also not left untouched by the impact either, Ajay Chopra from AC Enterprises, a Mohali based distributer explains how demand has gone down since demonitisation “50% bookings have gone down and as long as money flow does not take place consumer demand would remain low, forcing the manufacturers to cut production.” Some feel that the full impact of demonitisation is yet to be felt. “The wedding season is a peak shopping period and is mandatory for families. Hence the impact is lesser. The after effects of demonetisation will be more evident in January and February as during that time we will find the sale clearance to be low and this would result in early sales,” said Amit Luthra, a New Delhi based distributer. Kirti Gandhi, a Delhi based distributer said, “Demonetisation is a big mistake; the Prime Minister will regret this decision. This step has led to unemployment for the working class, businessmen are suffering due to paucity of demand, people are unable to withdraw their money and generally everybody is unhappy with this decision.” CK Satangi, Sita Marketing (Bhilwada based distributer) agrees with Luthra saying that the market would take a while before normalizing completely. “Sales are down by around 65%, November- December inventories would be carried forward to January and February affecting the inventory then. Readymade sales are highly dependent on cash and there is a lot of uncertainty among traders about new policies which might be introduced by the government. Until the traders know what sort of a system would be in place uncertainty would prevail.” Since traders have been doing cash transactions for years expecting a sudden and drastic change is impractical. “In Bhilwara denim factories are closing down for 25-30 days and naturally even after they restart operations it would take time to come back to normalcy,” says Munish Sharma, Fashion Masters Worldwide(a Patiala based distributer). He added, “About 50% of the market consists of non- branded segment that mainly operates in cash and they are the ones who are badly affected. However, those who are organized and do everything through online transaction will be benefited by this move.” SRTEPC’s vice-chairman Narain Agarwal while highlighting situation in Surat said, “From manufacturers to wholesale to retail and consumer, there is no demand in the market. Liquidity of cash is almost squeezed Amit Luthra, Amit Enterprises “ The wedding season is a peak shopping period and is mandatory for families. Hence the impact is lesser. The after affects of demonetisation will be more evident in January and February as during that time we will find the sale clearance to be low and this would result in early sales” Kirti Gandhi “ Kirti Gandhi, a Delhi based distributer said, “Demonetisation is a big mistake; the Prime Minister will regret this decision. This step has led to unemployment for the working class, businessmen are suffering due to paucity of demand, people are unable to withdraw their money and generally everybody is unhappy with this decision.” APPAREL&Fashion January 2017 13
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