Friday, 14 June 2013

Why are branded Clothes Costly in India ?

Have always wondered by Brands price their clothes at disproportionately high prices , but never cared to look into the reasons why. 

Thank you Dhivya Sabapathy for asking this question for it actually pushed me to seek answers. And here I would like to add that , am writing this answer based on what I see and it is certainly open to revision , if its wrong. So comments and suggestions are always welcome. 

And getting back to this question, 

Here are the factors which I believe is the reason why branded clothes are costly in India . They include 

1. Psychology : Here, am making a claim which is open to discussion. Wish people can come in to debate on this. Branded clothes are usually kept at higher prices in order to safeguard the 'Aspiration' value of the brand itself. I generally feel that the higher prices of the brand act as class differentiation and hence evolve as a status symbol. Once the price is reduced that value vanishes so the differentiation would be just quality. So my claim is Higher prices translate itself into status value associated with the brand and hence position itself as a brand that people aspire to be associated with. Its indeed a Win-Win situation for both Brands and the people who choose to wear them. 

2. The value that the brand command : Irrespective of what the brand is , the clothes usually get produced in sweat shops in India, Bangladesh and other low cost apparel production centers. So here the brand-tag that they sew in the cloth carries more value than the cloth material itself. Along withe inherent vale of the brand, the marketing that goes into the brand also gets added up in the MRP we pay.

3. Logistics : The global apparel production facilities have become polarized geographically. The apparel need for the whole world is now being managed by production facilities in handful of countries. With the brands being MNCs they add these logistics costs across regions to earn a profit. The logistics that's involved is usually high and its costs increasingly would get higher.

4. Local Taxes and Tariffs : With the demand for the branded clothes increasing year on year, Governments in general find it enticing to tax them. In India, this has resulted in 20-45% rise in MRP of branded clothing. On the downside this has resulted in lower product uptake and hence the inventory stock is increasing. This should result in lowering of prices to clear the stock. 

Branded clothing may stay expensive this year


This McKinsey Report should give us an idea of why our Branded clothes market  are structured in the way it is : India’s fast-growing apparel market . They quote that our prices are 20- 30 % higher due to the inefficient Supply chain and also due to limited competition . 

This Infographic by an Online shopping firm Everlane would explain why the branded clothes are priced the way they are.






Here, you need to take into account that the cost we pay includes a margin that covers for the clothes that don't sell and make up the inventory. In showrooms this is an appreciable component for they have to always maintain an inventory for the customers to pick and choose. And moreover much investment goes towards the development of factory outlets of specific brands. So all those costs gets covered in the MRP they fix. 

Full article with views from Designers : Why Clothes Cost What They Do

This answer is open to debate and editing. So please express your views and quote facts.

Happy Reading !!!


7 comments:

  1. i totally agree with ur comment on " I generally feel that the higher prices of the brand act as class differentiation and hence evolve as a status symbol. but this raises a question,what is the cause for sudden blooming of these showrooms(i accept this psychology has been tre from the days they invented monetary system).. as far as i remember during my younger days the only brand i knew was raymonds and nothing else but these days imagine fingers of 4 limbs are inadequate wat does this show? that india is emerging as a big consumer in global market, if yes its a good sign right, people may argue but the sad truth none of these are indian products but as the author said made from indian labour... but the value of indian rupee is 60 for us $.... i think we are deviating from the topic... coming bak to our topic, this also shows that 50-60% of the population have the power to purchase these over priced or costly dresses and this encourages the brands to raise their price and as usual we indians ignore everything convincing ourselves that this s for a greater good

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  2. the branded clothes are costly because the value of our currency is too low.the economic health is weak in india thats why the currency can't buy good things in less so we have to pay higher prices than other countries,its not at all about tarrif or other bullshit things you are telling about.

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  3. if the value of currency is higher then everything becomes cheap,for ex. cars in other on western countries.even a dishwasher can buy a car there but here in india its too difficult for a common man to buy a car these days because value of our currency is not that much so it can buy big things in less units.its same with the case of clothes

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  4. its the same scenario with each and every commodity being sold.

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  5. There are many online portal that provides the top apparel brands in India at a great market price.

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  6. "Thanks for the post!
    I was looking for a few articles on Top Apparel Brands in India and I came across yours inspiring read."

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