Mumbai: India’s retail market remained topsy-turvy last quarter despite a robust festive season as demand slowed after Diwali amid persistent inflation, according to Shoppers Stop. the country’s oldest department store chain.
“In an informal discussion with other peer members, there was a unanimous view that the last quarter was lower than expectations, particularly considering the slowness we had in the first two quarters (of FY25),” Kavindra Mishra, managing director of Shoppers Stop, said during a post-earnings investor call on Wednesday.
Discretionary spending stayed subdued and consumer sentiment – though better than the previous quarter – remained below pre-Covid and FY23 levels, he said.
“Inflation continues to be higher though it has tapered down in the last week,” Mishra said.
Shoppers Stop reported a 7% year-on-year increase in its revenue for the December quarter to ₹1,585 crore while its same-store sales grew 4%, powered by increased demand in premium segments. The premium portfolio accounted for 64% of the firm’s total revenue, up from 55% two years ago-highlighting continued slowdown in the mass-market segment.
The retail industry witnessed lower store additions and negative same-store sales growth (SSSG) in the first half of FY25, resulting in a moderation in the revenue growth, according to India Ratings and Research (Ind-Ra). It attributed lower growth to a tepid consumption demand and high base effect after revenge shopping after the pandemic.
Ind-Ra, however, said a recovery is expected in the second half of FY25 and FY26, helped by improved consumer financial health with an increase in income levels and lower inflation. Higher disposable income and a spike in weddings-due to a higher number of auspicious days-would push clothing demand while favourable monsoon rains drive demand in rural areas and smaller towns, the rating agency said.
“Organised retailers’ steps to rationalise stores (and) undertake controlled expansion, coupled with a focus on segments with relative outperformance such as fast fashion, luxury and ethnic fashion will support their credit profiles,” said Adarsh Gutha, associate director, corporate ratings, at Ind-Ra. Rationalisation of non-performing stores and rightsizing stores to improve store productivity led to moderate growth in retail area of less than 9% on year in the first half of FY25 compared to around 12% growth in FY24.
“We had closed seven departmental stores and resized three department stores during the year,” Shoppers Stop’s Mishra said. “The stores were closed as they were making losses due to multiple factors and to improve productivity also resized three stores. If we had continued to operate those stores, our growth would have been circa 10% this quarter,” he added.
