Demand for lifestyle products and apparel remained weak despite retailers offering discounts of as much as 65% during their ongoing end of season sales (EOSS).
Most brands also advanced their EOSS by two weeks to early December compared to January, hoping to mop up sales before ecommerce platforms begin their Republic Day sales.
“There is definitely a stress in the mass value segment and everyone was expecting EOSS to provide much needed momentum to the sale. But the growth is tepid and we are hoping the summer will be better,” said Manish Kapoor, managing director of Pepe Jeans.
According to industry experts, the apparel retail sector is likely to face another quarter of slowdown and any recovery is expected only after April. Most of the brands have reported flat to low single-digit same store sales growth during Q3FY24, according to ICICI Securities. EOSS helps retailers liquidate unsold inventory before the new season merchandise arrives.
“Despite discounts, growth is still muted and we see no signs of recovery during the January-March quarter. With the rise in disposable income, people are preferring to spend the money on leisure and travel but we hope demand to be back in April onwards,” said Devarajan Iyer, chief executive of department store chain Lifestyle International.
The fashion retail segment has been struggling with a demand slowdown since January 2023 due to inflationary headwinds. Overall retail growth slowed to 6% in both March and April, increasing marginally to 9% in August and September before slowing to a 7% increase in October and November, according to the Retailers Association of India.
“While restaurants continue to do well, there is a stress in fashion retail and the growth is mainly due to the store expansion. However, we believe this is temporary as there will be demand for physical retail and brands need to regularly reinvent themselves,” said Muhammad Ali, CEO, Forum Malls of Prestige group.
ICICI Securities surveyed India’s top seven retail companies – Shoppers Stop, Reliance Trends, Lifestyle, Pantaloons, VMART, Max, Westside – and found that at 66%, Shoppers Stop is offering the maximum discount against peers at 20-40%. Discounts offered by Reliance Trends, Lifestyle and Pantaloons were 40%, 41% and 42%, respectively. This is largely due to aggressive private label discounting by Shoppers Stop.
Over the past six to eight months, most companies have been either cutting prices or offering steep discounts to clear unsold stocks after price increases across apparel categories last year.
Segment-wise, the value fashion segment remained the most impacted and is yet to attain its pre-pandemic level average sales per sq ft.
