It has been observed that the Indian fashion industry generally gives so much of Indian touch to all the foreign designs that the original design is overlooked. As Indian fashion brands gear up to meet the challenges of growing domestic demand, the ride ahead could be rocky unless the level of preparedness is high. And all this, as experts will tell you, is primarily because of ‘inventory’.
Fashion business enjoys healthy gross margins but the sell-through rate (percent by volume of merchandise that is sold at full price) for most Indian brands is low-45-50%. This dampens their overall profitability and long-term viability. On top of discounts, retailers end up spending more than 40% of their annual marketing budget on communicating the announcement of sale.
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Fashion brands don’t really need to participate in such ugly-queen contests, year after year, trying to outdo each other by offering more and more discounts. So, what is the way forward? Fast-fashion, which ensures that designs move from catwalk to store in the shortest possible time, has been cited as an effective tool to combat such planned customer behavior. While it reduces incentives for consumers in multiple ways, rapid production reduces gap between demand and supply and decreases the probability of excess inventory. Enhanced product design, on the other hand, gives customers a trendier product that they value more, making them less willing to risk waiting for a sale.