Why is designer wear in India becoming more expensive?

From the pandemic to rising overheads like labour costs and raw materials, we investigate what’s driving the prices of Indian wear upwards

Last year, a research report released by EDITED, a data company, revealed that the prices of luxury goods globally have increased by 25 per cent since 2019. For example, a classic Chanel medium-sized flap bag cost US$5,800 in 2019. The same bag’s retail price is US$10,200 in 2023. Closer home, Indian wear, too, has seen its share of price hikes. A simple silk kurta set can now cost ₹35,500, whilst a heavily embroidered lehenga choli can set you back by about ₹14 lakh.

"The economy has been fairly turbulent in the last few years with a recession in parts of the world, the COVID-19 pandemic and regional tensions. Inflation, too, has directly affected costs–every possible overhead in the profit-and-loss statement has seen a 15-20 per cent hike year on year," says Siddhartth Mahajan, Partner & Business Head SHIVAN & NARRESH. From rising costs of raw materials to skyrocketing rentals for retail spaces and an increase in minimum wage rates, The Established finds out what's driving the prices of luxury Indian wear.

Pandemic-induced surge 

For starters, the pandemic did play a significant role. While brick-and-mortar stores closed during lockdowns and craftspeople went back to their hometowns, there were designers who retained their employees, and still paid salaries and rents. "When the pandemic first struck [in 2020], everyone was cutting salaries because that was the only way to survive. However, when you cut people's salaries for a couple of months, the next time you give increments, you have to give them something more. There have been major salary hikes post-pandemic. Everyone suffered so much for those few months in 2020 and 2021 that somewhere people had to figure out a way to make it up," adds Tina Tahiliani Parikh, executive director, Ensemble.

As lockdowns and restrictions were gradually lifted, revenge shopping was in full swing, portraying a classic J-Curve. When demand skyrocketed, so did the prices. For instance, rentals of retail space have seen a significant surge post-pandemic. In January this year, The Economic Times reported that rentals for high-street locations across India in 2022 jumped by 50 per cent. "You're paying substantially higher rent for the same location than you would have a year ago," adds Tahiliani Parikh. And with no rent control system in place, the added input cost is reflected in the price of the garments. 

A domino effect   

Notwithstanding the pandemic, designers have also reported a drastic increase in overheads through the years, which lead to a ripple effect in production. "The cost of manufacturing has gone up, and we tried to absorb it for the first few years, but with such fluctuating prices, it became impossible. For example, global events like the Russia-Ukraine War also shot up fuel prices, which raised prices for manufacturing and different processes like dyeing," says Shweta Kapur, founder of the label 431-88. Russia's invasion of Ukraine in February 2022 caused turmoil in oil prices. With the US and the UK imposing bans on the import of oil from Russia, crude oil prices peaked at $US 120 a barrel, affecting fuel prices globally. 

For brands sourcing materials internationally, the shipping costs increased. Whilst Delhi-based designer Karan Torani procures 90 per cent of his fabrics domestically, he adds that certain types of textiles like 36-gram silk organza or duchess satin come from Europe or China, and with export prices increasing, the cost of the fabric goes up too.

In India, the government's price hikes for textiles don't provide relief either. "The Indian government raised the price of GSM silk, so buying the same beautiful silk to make a lehenga costs the designer more," adds Tahiliani Parikh. The designer then has two choices–either to downgrade and use lower-quality fabrics or to raise the prices. 

Far from smooth-sailing 

On the flip side, mentor-advisor Sabina Chopra doesn't believe that inflationary impact is the only cause of increased pricing. She thinks it is important to deconstruct the factors that currently plague the Indian fashion industry–one of them being the retail scenario for designers. "The retail fashion industry operates predominantly on the 'consignment' model, and the entire risk lies with the brands. For the few fortunate enough to see a 'buy,' the numbers are abysmally low, and not enough to sustain businesses," she says. To stay afloat, designers then charge heftily. Chopra adds that the lack of retail options available to designers has led to a proliferation of exhibitions and pop-ups, thereby blurring the boundary between 'apparel' and designer wear. "These conditions lead to poor production planning, high sampling and production costs, and, most importantly, poor profitability because of higher, unpredictable returns," she says.

Keeping up with the times 

Elsewhere, the cost of social media marketing mounts up–be it campaigns or collaborating with an influencer. Previously, brands could partake in a fashion show twice a year and shoot editorials with magazines and lookbooks, which would get them the coverage they needed. However, with the changing landscape of social media, emerging and veteran designers feel the need to have a constant digital presence. "Content requirements are through the roof. You need a main campaign set, product images for e-commerce, separate image-based ads for performance marketing, and video content and Reels for other marketing channels. This has led to an increase in talent costs and shoot productions," explains Narresh Kukreja, creative director at SHIVAN & NARRESH. Social media campaigns are now mammoth productions with an entire team of people working on them and must be updated regularly to retain the audience's attention.

Furthermore, collaborating with multiple influencers is also required for a more extensive outreach, and depending on the type of influencers a brand works with, the charges vary. However, Chopra feels that “in an organised business plan, a percentage of turnover is always dedicated to marketing. Social media marketing costs have replaced traditional media. I believe it's lack of organisation, inefficient business practices, and lack of business strategy that impacts prices more than simply increased costs.”  

Another factor to consider is the evolution and growth of brands. When a label is just starting, its overheads are lower. But as the team expands, more salaries will be paid. "I have multiple departments, including production, marketing, accounts, retail, and a styling team. I also have full-time lawyers on my payroll. These are all added costs designers didn't previously have," says Torani. Then there is also the question of R&D. Torani adds that his team sometimes spends weeks traveling across India to source fabrics. Additionally, emerging designers must start investing more resources. For instance, a print studio for original prints, a merchandising department, a website, shooting for the website, and so on. "A designer typically starts out with a small set-up with a few tailors, and they're most likely doing the running around themselves. But as they grow, so do the overheads and the expenses go through the roof," elaborates Tahiliani Parikh.

Worker welfare is key  

Lastly, with growing awareness of worker welfare—the wages or working conditions—designers are spending more to ensure employees are well cared for. "We are creating spaces where our industry's workforce has a comfortable work environment, so it's not a sweatshop," says Kapur. With local governments becoming more stringent about labour laws and hiking minimum wages, this then reflects in the price of the garment. For instance, under the Arvind Kejriwal government in Delhi, the minimum wage rates have been increased regularly, with the latest increment in effect since April 2023. "If you're compliant as a brand, you have to pay workers their PF and ESIC–and I think it's about time craftspeople get their dues," adds Tahiliani Parikh. 

Delivering conscious value

Ultimately, despite all the inflationary costs, designers must find a sweet spot for pricing. Passing the burden on to the consumers can't be the only way forward. In India, there are no barriers to entry when it comes to fashion, and e-tailers stock plenty of options. As the consumer evolves and no longer sees value in a certain designer's pieces, there will be other emerging designers offering garments at better prices. "The new consumer values being environmentally conscious, consuming less, and demands quality and innovation. They also know what they want and what they are willing to pay. Both designer brands and retailers need to get ahead of this soon. I also think that as in all evolutionary cycles, we will see a fallout of brands that cannot deliver 'conscious value' to their customers both in design and price," says Chopra.

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