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 !!!

We wanted flying cars, instead we got 140 characters

This was the remark of Peter Theil , a founder of Pay Pal. 

It's true that our current innovations aren't having a big bang appeal which 18th and 19th century innovations had, like a Steam Engine or Iron Clad Ship or Radio. 

But this also explains a bit about inability of human kind to direct innovations in a specific direction and bit more about our inability to predict the impact of seemingly humble tools like Twitter, which asks people to react within a limit of 140 words.

Who would have imagined that those 140 words would have fueled a great socio-political churn in form of 'Arab Spring '. 

In 1990's our childhood dream would have been to travel in a flying car and not typing 140 characters on a glass screen. Jump to 2013. Flying Car is still a distant dream but those 140 characters are moving the world, changing the rules and made the ideator Jack Dorsey, A Billionaire for god sake.

And now he is going to kill another childhood dream of having our own credit cards with unending limits of withdrawal .  

Yes. His product Square is here , to disrupt the existing credit card framework and bring the wallet into our smart phones. Hence now the Credit cards are facing a slow death. How cool is that ?

Though sounding cool, we have no idea about it's supposed impacts on our spending habits and its reflection on actual economy. 

Below are the links which speak on how the present day Innovations is being viewed by majority and its implication ,which are far from unknown.

1. Founders Fund , whose motto goes like /// We invest in smart people solving difficult problems, often difficult scientific or engineering problems///.
Their Innovation document is interesting and it can be found @ What Happened to the Future?

2. An Economist article on whether the present day Idea and Innovation have stopped benefiting the real economy : Has the ideas machine broken down?

3. A case of an unintended effect on real economy by 140 characters :http://www.rocketmill.co.uk/we-w...

Happy reading !!!!