Brand success: Fabric manufacturers shifting to retail business

Change in consumer spending gives ideas to new investors.

FAISALABAD: As profits of fabric manufacturing units shrink due to high costs, retail chain stores have become the next viable option for manufacturers to earn their profits.

The retail sector is rapidly growing with huge margins whereas the manufacturers claim that their margins are shrinking. According
to industry experts, the manufactures are likely to experience stringent times ahead due to increasing competition in the global markets and high cost of production.

The fabric manufacturing industries are facing multiple problems including high cost of production, rising prices of electricity, energy shortages and worsening law and order situation which is hampering the business activities.

Similarly, the loom sector in Pakistan largely remains a cottage industry, and due to multiple problems, hundreds of small scale industries have closed down. The manufacturers cannot bear huge losses and are looking for alternatives.

However, the changing behaviour of consumers is offering an opportunity to the owners of manufacturing industries.

In Faisalabad lately, small shops have been replaced by multi-story shopping malls. The middle class is gradually shifting to outlets of main manufacturing units like Ideas and Chen One instead of shopping from traditional markets like the famous Anar Kali bazaar located at the heart of Clock Tower.

“Years of uncertainty have finally brought manufacturers to their knees. The loom owners who are working with brand owners are earning a lot better,” said Council of Loom Owners Association Chairman Waheed Kahliq Ramy.

He added that the cost of cloth per metre is Rs60 to Rs100, cost of high quality cloth is around Rs100 per metre, while the highest quality sells at Rs125 per metre and sold between Rs500 and Rs1000. The same seven metre suit ranges between Rs2000 and Rs7000 at branded shops.

As for the lawn fabric, it is prepared at Rs60 to Rs80 per metre. Designing costs Rs25 to Rs40 a metre. The entire suit that is ready in Rs125 per metre is sold at branded shops at Rs3000 to Rs12000 per suit of seven to eleven metres.

New investors are launching their own brands, outlets and boutiques as they see more profits from the recent change in consumer spending patterns.

Fashion industry is swiftly cashing on the trend. Few major brands like Chen One by Chenab Group of Industries, Firdous lawn by Firdous Group of Industries and Ithad lawn by Ithad Group of Industries are manufacturing the cloth from their own companies. Remaining 80 per cent owners buy cloth from the market and sell at their own outlets. 

Published in The Express Tribune, December 13^th, 2014.

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