A few days ago, in fact the day after Prime Minister Narendra Modi dropped the demonetisation bombshell, I made a round at the luxury mall DLF Emporio and some of the Indian fashion designer stores in New Delhi. Let me tell you, the idea wasn’t to see or investigate any thing. It so happened that a friend from Kerala was visiting and he wanted to see some of the fashion and luxury establishments in the city and I was merely taking him around.
What’s the famous saying? “As empty as a church on a Monday morning”?
Well, that was what was seen inside each and every store that we walked into. Not even a fly inside. The store guys were hanging around either talking to each other or texting someone on phone… or taking a long smoke/coffee break. Situation was pretty bad as the folks who came with wads of currency were missing in their stores. In fact, some of the store guys whom I spoke to told me there had been frenetic calls since morning requesting them to accept cash and give them goods which had to be politely declined by the staff.
Case in point? Scene is bad. Pretty bad.
Whether the customers brought in accounted or unaccounted money, their cash registers are no longer tinkling. I remember once I walked into the store of a well-known fashion designer and on their cash counter kept were stacks of cash bundles so high that I couldn’t see the man standing behind it. Outside his store were two armoured vans, which I am told, were kept ready to take the cash to the bank. Yes, this designer apparently insisted on PAN details before he sold even a thread to his customers. He turned skipped those who pleaded with him skip the PAN! Then I met him at a dinner later, after the PM’s announcement, and he was aghast with the bleak look of business in the coming days. “It was like switching off a light… one day the store was milling with clients and next day, it just stopped,” he told me. “I am not sure how this is going to end as far as business is concerned,” he told me.
And he was right. Most clients do most of the high-value transactions in cash terms and most fashion designers accepted that. This holds true for both PAN-quoted transactions and otherwise. Either way, now customers are no longer heading for their favourite designer stores and the designers’ business is badly hit, considering all our fashion designers without any exception make their dough during the wedding season when the Indian families splurge without any hesitation. And Mr Modi put his clamps on black money right when people were ordering their wedding attire from these fashion designers. There has been news of some weddings being called off due to the arrest of 500 and 1000 currencies. “When we take the order we take some money as advance payments and the rest on delivery. Now we are stuck with just the advance and the finished garments as clients are not coming back any more to pick up the merchandise and settle the account with the balance payments,” says the store manager of another well-known fashion designer. “Usually at this time of the year, there are at least 30 clients at any given time in our store… as you can see there is not even one now,” he says.
This being the situation at the retail outlets of most Indian fashion designers, foreign luxury brands are in no better place. As such most of these brands are struggling with high rentals and low foot falls coupled with heavy import tariffs. Add to that the current situation. Fancy cars are still pulling up in front of these luxury malls, but the people hang around in restaurants and coffee shops… not in the stores. Apparently, on the evening of the ‘heart-breaking’ announcement, people rushed to some of these luxury stores and spent lavishly buying both wanted and unwanted stuff. And then it stopped.
Those who did the right thing behind the cash counters are still smiling. And those who didn’t, crying. Whatever the case might be, fashion business seems to be badly hit. And it will take a long time for them to recover from this.