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IFF 2024: High discounting a prevalent issue in fashion retail: Shailesh Chaturvedi, MD & CEO, Arvind Fashions

Three decades ago, doing the business of fashion in India was simpler than it is today. However, consumer preferences, along with their market behavior, has considerably changed in the last 25 years. Now more than ever, there are multiple challenges to this ever-growing industry. Earlier growing a company was simpler, you could open up new stores sensibly and strategically and your business would grow. But now, the unorganized is becoming more organized.

“You know there are infrastructure gaps, our high streets are, not even today, not as clean as they should be. There are a lot of challenges. So that’s why I always say that India disappoints both optimists as well as pessimists. But the good news is that India keeps moving forward,” said Shailesh Chaturvedi, MD & CEO, Arvind Fashions and Convenor India Fashion Forum 2024 at the event.

Up until 25 years ago, there were no hindrances to growth in the Business of Fashion in India. Businesses just kept opening their stores and kept growing. It was much simpler than how it is today. “People have more watches than their wardrobes. They have more shoes in their wardrobes, they have maybe less number of ties, but they have probably more jeans in their wardrobes and many such categories which have exploded. The consumption per capita has gone up. The industry has grown because the consumption continues to grow,” he explained.

But businesses are now recognising that fashion is indeed becoming difficult, even though it is moving from the unorganized to the organized sector. “There are very few companies which deliver a double digit EBITDA or deliver a certain stock return. There are only certain companies that deliver a rosy return on capital employed.” But it is a large business opportunity, it is a growth story, the industry, but there are clear obstacles, roadblocks, and challenges.

He outlined some of those challenges:

High Discounting

High discounting is becoming a prevalent issue in the fashion retail industry. Chaturvedi emphasized the detrimental impact of continuous discounting on profitability and the perception of value. He explained how departmental stores and malls want to put discounts as early and extensively as possible to drive more sales. Making money as a business is really hard at this level of discounting.

But there are companies like Manyavar who have a very low discounting policy, their discounting is in low single digits. “Manyavar delivers almost 50% EBITDA where industry EBITDA is in high single digit. And you see the difference of that 40 odd percent in EBITDA that Manyavar delivers versus what the industry delivers because of this discounting,” he stated.

Driving the fashion business in India to greatnessShailesh Chaturvedi also criticised the practice of ‘high-low pricing’ in online retail. High-low pricing is a pricing strategy that manipulates the pricing of a product through perceived discounts, aka, the company puts an inflated price on a product and subsequently decreases the price through discounting. According to him, this practice erodes customer loyalty and he advocates sustainable pricing strategies that can restore profitability and integrity within the fashion retail sector.


According to Chaturvedi, heavy discounting in the fashion industry is a reflection of something deeper, he believes that the industry is getting commoditized. He addressed a bigger problem in the fashion industry today, i.e., a lack of originality and innovation due to a heavy reliance on trends from sources such as WGSN. He argued that this reliance on trends and commoditization leads to repetitive collections. “Very rarely do you see some brand collection which takes your breath away. Rarely do you see an ad campaign which makes you pause or flip back a page of the magazine or the newspaper. So where are those ads, where are those collections which take your breath away?” he asked.

Chaturvedi further explained how commoditization leads to discounting of the products. “So we need to figure out what are the new sorts of inputs that will create differentiation. You have these rivers of chinos, you know in the same beige, khaki colours, olive colour. It’s the same commodity, rivers of commodity after commodity, then you get the discount because if you play on the commodity the only way of differentiation is pricing, right. Then you have these intelligent ideas like high, low pricing. So, therefore, commoditization is leading to discounting, which in turn leads to a lower-margin industry which makes it harder to find fresh investment in the industry.”

High Inventory Level

The management of such a huge level of inventory poses another problem to the growth of the business of fashion in India. Chaturvedi highlighted the lack of respect for capital in the retail industry and criticized the prevalent Sale or Return (SOR) model.

Driving the fashion business in India to greatness“There’s so much capital gone into that SOR model, then you’re pulling back stock and typically everybody is keen to obtain the inventory but nobody is keen to return the stock on time. So you have money blocked in launching the season and then there’s a slow movement of return from the market. Your money is blocked. Your EBITDA is getting impacted by discounting and your capital employed is getting impacted by high inventory in the SOR model,” he explained, saying that this results in a low return on capital employed and impacts the industry’s performance and valuation.

Concluding Note

In the end, Chaturvedi used the example of Tata Trent’s impressive growth. “They are growing at 50% top line, with a market cap of Rs. 140,000 crore, while only a few months back it was Rs. 1,00,000 crore. They are a great company,” he stated. Another company he mentioned was Titan, which is currently at Rs. 3,50,000 crore. “We need a larger mass of our companies to reach that greatness that Tata Trent is exhibiting.”

He urged self-reflection within the industry while also recognising the current challenges it faces to be able to make the fashion business great in the country. According to him, failure to overcome these challenges can hinder the growth of the industry while curbing its ability to attract talent and invest in critical areas like technology and personnel due to lack of returns.

India Fashion Forum 2024

In February 2024, India welcomed the 23rd edition of its most prominent fashion business event, India Fashion Forum (IFF). Held at Conrad Bengaluru, the mega key influencer and catalyst of fashion retail evolution event saw over 300 speakers and 2000 fashion professionals from across the nation talk on how to ‘Make the Fashion Business Great Again’.

Chaired by Shailesh Chaturvedi, MD & CEO of Arvind Fashions Ltd, IFF 2024 addressed key challenges hindering the profitable growth of the fashion industry in India, including talent shortages, supply chain issues, and rampant discounting.

Expressing his commitment to elevate India’s fashion industry to new heights, Chaturvedi stated, “These are transformative times for the business of fashion. Consumer behaviour, digitalization, discounting impact, supply chain snags, and sustainability demands are challenging us. The larger ecosystem has started terming the fashion business as ‘difficult’, whereas it was seen a couple of decades back as an area of immense opportunity delivering secular growth. It is time we rethink, reimagine, and remodel our industry, so that it becomes a great force again. It’s time to shake off what has been and give life to the next Golden Age of Fashion Creation.”

“IFF 2024 has been designed to empower their growth — not just in India, but across the world — with deep-diving intelligence, knowledge experiences and business networking that cannot be gathered anywhere else,” added Nikhil Behl, CEO – Fashion Business, IMAGES Group.

IFF 2024 boasted partnerships with some of India’s leading fashion and lifestyle companies, including Arvind Fashions, Pepe Jeans India, PUMA India, Reebok, and United Colors of Benetton, among others. The success of previous editions underscored the significance of IFF as a platform for innovations and idea exchange within the fashion industry. With a lineup of over 700 brands, 250+ speakers, and 1500+ delegates, IFF 2024 witnessed packed conference sessions, solidifying its position as the country’s premier fashion event.

The event saw immersive experiences, featuring masterclasses by industry giants like Google and Meta, the LIVE India Brand Show runway, IFF Master Talks by design experts, and the unveiling of India’s top fashion designers through the IFF Innovators Club. Distinguished speakers at IFF 2024 included Abhishek Ganguly, Co-Founder & CEO of Agilitas Sports, Dhiraj Agarwal, CEO & Co-Founder of Campus Sutra, Amisha Jain, SVP & MD of Levi Strauss & Co, and Vineet Gautam, CEO & Country Head of BESTSELLER India, among other renowned names in the Indian fashion industry.

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