While standing in front of a store, I was thinking the clothing business would be extremely profitable. When I saw those colourful clothing stores, with those charming bright lights across the streets, I believed these people were making a great profit from this business.
Have you ever thought of the harsh reality of the clothing business and their struggles?
Let's understand the business model of the clothing business and its numbers. The clothing business looks cool and trendy from the outside, but in the real world. A shirt is prepared for around 120 to 150 rupees, which comes under making charge. Eventually, factories need to supply the distributors based on demand along with transport charges. Eventually, the store owners think of the margin. Then the shirt would cost around 600 to 800 rupees, when it reaches customers. These are the basic calculations which are in the process of clothing supply.
Now let's talk about the real problems of the store owners, where we think those bright lights and colourful trends make things great. The owner initially invests around 10 to 15 lakhs or more based on the store size and requirements. It would definitely take time, when customers will test and eventually buy it. The store owner is responsible for transport and salaries to the employees, who are constantly smiling across the store to sell. The rent of the store every month would easily cost upto to 10,000 to 25,000 based on size and location. Other silent high-cost charges are bags, tags, electricity bills and daily charges.
All the store owners are scared of dead stock, which are unsold due to size, colour, design and trends which keeps changing frequently. People always prefer latest and fresh clothing, which is a trending fashion in the market. Those dead stocks would either be sold at an offer price with less margin. If a store owner earns 5 lakhs rupees a month, almost 75% of his earnings goes into expenses, making it difficult to handle them.
