The recent unfortunate incidents must have depressed the consumer mood, but are unlikely to change norms and needs of a luring lifestyle being adopted by the urban affluent classes.

The cotton crop failure, which has wiped out billions from the rural economy, will curtail the demand for summer cotton fabric, however.

The 5pc annual growth trend of the past few years may not be sustained as the lower buying power of rural households may squeeze sales of the medium to small textile manufacturers more than the well-known brand holders because of the geographical market pattern. The textile SMEs depend much more on the low-end rural consumer base while big players target the primarily high-end market of urban elite and upper middle class.


The summer wardrobe spending of elite customers is high and rising. This class has higher propensity to respond to latest fashion trends


The summer wardrobe spending of elite customers is high and rising. This class has higher propensity to respond to latest ashion trends and adjust budgets accordingly. Their demand is perceived to be price inelastic.

“If it was not for brand war the finer fabric could have been priced still higher without fear of losing customers. This category of buyers includes socialites, professionals and overseas Pakistani families who think in dollar terms. For them a cotton suit of Rs20,500 is priced at $200,” said a retail manager of a dedicated brand store.

The huge hoardings of beautiful models adorning colourful printed ‘Lawn’ of various brands all over the country are said to be indicative of stiffer competition as more people are vying for a share in the market pie currently not so fast growing.

“For every success there are some failures. The gain of X is at the cost of Y. Yes, female population is big but the size of an average family budget is still too small to allow ladies spend liberally on their clothing,” said Bashir Ali Muhammad, Chairman of Gul Ahmed Group.

Talking to Dawn he referred to the cotton crop failure and its impact on the domestic consumer market. The dumping of under-priced low quality fabric and the hyper active copycat mafia cause market distortions and limit the scope of lawful corporate sector.

“We are rendered uincompetitive on the global market because of higher production cost thanks to increasing tax rates than competing nations. Again millers in the formal sector are disadvantageously positioned as smugglers and tax evaders have pushed us to the sidelines.”

“It is a sad situation as one has to pay a premium on honesty. We invest in research, technology, designing, quality and marketing but the rogue elements spoil the market by producing and flooding the market with cheap replicas. We do try but chasing them out of the market involves cost in terms of money and time,” he said over phone.

Talking about entry of newcomers in cotton market, he said: “They come and go with the same speed. The long-term players understand the market better and have assumed scale and the capacity to absorb shocks, but those who enter for a quick buck without a proper exit strategy often end up losers”.

Kanwar Usman, Director R&D Federal Ministry of Textile, broadly agreed with the views of the big business but thought the cotton crop loss is overstated and did not necessarily affect textile millers who made up for shortfall through imports. He did agree that the crop shortfall and lower commodity prices will clip the size of the domestic consumer market.

“It is better to rely on the government data as business lobbies pepper facts to promote their own interests. The ginners, I believe, understated last year cotton crop size and overstated this year’s shortfall. According to Cotton Crop Assessment Committee (CCAC) crop is short by 3.5m and not 5-6m bales projected by ginners. This year crop size is 10.38m bales against 13.9m of last year,” he said.

“Yes cotton imports spiked 193pc in value and 300pc in volume. Total imports during July-Feb this fiscal year are worth $510m against $174m last year,” he told Dawn over phone from Islamabad. For over a year the textile ministry is without a minister.

All Pakistan Textile Mills Association officials from Punjab confirmed the visibly dull activity at the retail end of cotton fabric market particularly outside Lahore. They attributed the slide to three factors: squeezed rural economy, closure of a significant section of processing units in Faisalabad and cash flow issues that the industry is facing because of delay in the settling refund claims of the textile exporters by the government.

“Yes billboards are up but retail markets are quiet so far. Summer is just starting, the market may pick up with time,” another miller hoped.

Published in Dawn, Business & Finance weekly, April 4th, 2016

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