The Economic Upheaval And Its Impact On Fashion Retail
The economic picture of Pakistan is not a pleasant one lately; the turmoil that started during the last government who opted for a more import-based strategy instigated this chaos that we see today. While the governing body did not consider the impediments this strategy will bring upon the economy, the new government is trying its best to improve this undesirable situation and aid economic stability. However, this comes with a price, as central bodies are taking many steps coupled with robust legislation to ensure corrupt practices are avoided.
This predicament is taking a heavy toll on the local fashion retail too as previously, the brands and people were enjoying a state where there were not any nuisances. In essence, everyone has to pay their taxes and be answerable to the state for what they own; otherwise, jail is the vacation spot for anyone who is found notoriously evading.
G S T (Government Sales Tax):
Ever since the changes in policies of the government, the GST taxes have been revised and escalated to 17% on Sale in retail. This has enforced fashion retail brands to change their pricing strategies and add 17% to the total price of the product. Besides, this raised concerns in the overall market as many renowned brands had to halt their operations and apply new pricings. Moreover, there is a fear of how the response to further changes defines the future of the brands.
Fashion brands put a lot of money in research and development, to develop ranges for a season. This is to say that; procurement is done both locally and internationally. While international sourcing gives the company a versatile option to choose from, it also offers an opportunity to ornament the collection in the finest materials, designs, and trends. As an example, Monark menswear source their groups from Turkey and other countries, explicitly suiting, formal categories, polo t-shirts, and more. However, with the soaring economic crisis, the price of the dollar is erratic and mounting, and this is becoming a challenge for the brand to cope with this situation. Subsequently, many fashion retail brands are shifting their productions and sourcing to local channels to alleviate themselves out of this complicated situation.
People adore the idea of buying cheap stuff, ask yourself this question; would you buy something at full price or choose to buy it at FLAT 50% off. We both know the answer to that. Unfortunately, that is about to change since, the rise in inflation, the economic deficit, and on top of that GST will ensure that prices do not stay the same. You will be startled to see how prices have escalated, for instance a T-shirt that previously cost PKR 1000/- will now be available for around 1500. This does not mean that brands have started an unfair practice, but the increase in the cost of materials, as well as the exchange rate has led to exponential price increase.
Whether you are a logical buyer who buys when there is a need or you purchase based upon your mood and emotion, the market situation will not change for you and likewise for the fashion retail brands as fashion lifestyle is a necessity nowadays. Furthermore, fashion is dynamic, which means constantly changing; people would always shop no matter what. This can be seen as an example of a person who wants to buy a SUIT for his wedding, no matter the price or tax on it the buying of that product will not halt.
All in all, the economic impediment has caused the market to feel jeopardize, and many brands are feeling a hysteria of how the future is going to be, but this is for the greater good as it can uplift our local textile industry which is in dire condition for more than a decade. We should encourage such steps, realizing the long-term benefits and therefore, should not succumb to myopic views.