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We hosted a virtual conference call with Kewal Kiran Clothing’s distributors and a Raymond retailer, covering Maharashtra, Odisha, Jharkhand and Goa. The objective was to seek insights regarding the demand context, premiumisation trends, raw material price increases and competition.

The shift from the non-branded to the branded segment, swelling demand, premiumisation, and controlled price hikes to counter raw material price rises, are some factors that have worked well for the apparel category post- Covid’19, per the speakers. Key highlights follow.

Shift in demand to branded products. Covid-19 led to an increase in demand for branded apparel. It became difficult for small manufacturers in the unorganised segment to conduct operations during lockdowns (procure fabric, etc.). With Covid-19 restrictions easing, FY22-23 has been good for apparel, per speakers. Demand was good in Jan/Feb’23 but slowed in Mar. Sales picked up again in Apr however, with the start of the wedding season.

Controlled price hikes to offset raw material price rises. To pass on higher raw material prices, Kewal Kiran hiked prices 10-12% vs. 30-40% by competitors in denim. Controlled price hikes, good quality & better styles and finishes worked in the company’s favour, per distributors. Competitors matched Kewal Kiran’s product prices after a 20-30% discount. Per Kewal Kiran distributors, even at similar prices, customers prefer its products rather than the discounted products of other brands.

Raymond usually raises prices 7-8% every six months. In Dec’22 however, it hiked fabric prices only 2-3%. Its apparel category (rather than its fabric category) was more affected by the rise in cotton-yarn prices. The company raised apparel prices 8-10%.

Premiumisation trends. Under its Killer brand, Kewal Kiran introduced premium products, which were still at lower prices than competitors’. Quality assurance, good fabric & fit and the comparatively lower prices for its premium products led to increase in customer loyalty to the brand. The company’s prices of similar quality jeans are ~30-40% below those of its major competitors.

The Raymond retailer said a premiumisation trend was evident, with customers shifting toward higher prices (Rs2,500-3,500 for shirts) along with a visible move toward premium fabrics at Rs4,000-5,000.

Reduced discounting. Per distributors, discounting is at a peak now and will be contained in the near future. Offline stores are more relevant as physical shopping offers assurance in terms touching and feeling fabrics and products,
and try-outs to check fits.

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