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Ordering of Products

Around 5% of the merchandise is imported from Hong Kong / the Chinese mainland and Bangkok. They think that there is a need for importing apparel as some of the innovative fabrics are not available in [this] country, or even if these are available, they do not come at competitive prices.
The imported apparel is priced at between 15% and 20% higher than regular locally produced merchandise at the store.

In-season Management

The management has decided to go for a new ad-line called "fashion from Pantaloons". Internationally, in this business of fashion retailing, while the margins on individual garments are high, eventually, the margins are low. That is because the unsold stocks have to be liquidated through heavy discounting. For instance, it takes 90-120 days to design and ship, say, a new line of fashion merchandise. This means two things. One, the company will always be forced to order in lots of 90-120 days, lest it runs out of stock halfway. Two, if the fashion changes, the company is saddled with inventory which then has to be liquidated. If the margins on every garment are 50%, but company is going to sell half of them after a 12% markdown, the margins are already down to 44%. And so, the company is trying to crash the time to market from 90 days to about 21 days. Pantaloon has a neat model that is trying to launch new lines in less than 21 days (Right now, the company has brought the time lag down from 90 to 40 days.). What made it possible is that it had its own factories. Faster manufacturing will let the company keep fewer inventories, which will make it more responsive to market changes while reducing the amount of stocks to be sold at a discount. At the same time, as fresh stocks hit the market faster, sales will rise. By becoming much more responsive. They can have their margins by 5-6%.

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* Contributed by -
Manasi Panigrahi,
Pursuing MBA, Batch of 2006,
ICFAI Business School, Hyderabad.