Clothing and lifestyle retailers and shopping malls said there’s a pick-up in entry-level demand for clothes and accessories in the past two weeks, after a bad spell of nearly six quarters, lifting the overall sales of discretionary category. And, the trend is not just restricted to top cities.
V-Mart, a value retailer which operates nearly 470 stores largely in smaller towns, said a conclusive trend will emerge post Diwali although he expects strong demand momentum to continue driven by early winter and weddings. “Sales have improved compared to last year’s festive season and there is surely a pickup in demand which has been sluggish in the past,” said Lalit Agarwal, chairman of V-Mart.
Sales of discretionary items such as apparel, footwear and beauty started slowing down in 2023 after two years of pandemic-induced runway growth. Retailers saw weak consumer sentiment especially in mass and lower priced products after inflation-stressed consumers curtained spending even as purchases on high-ticket items such as automobiles and electronics continued backed by easy loans.
This was further exacerbated by steep inflation in their daily shopping basket, largely food and essentials such as pulses, oil and vegetables, which saw prices go up by a third and forced lower-income households to slash their discretionary spends.
“The good thing is we are seeing some very strong growth in the first or two weeks of October, as the festival season has started kicking in, and we expect this momentum to continue going on to Diwali and for this,” Dinesh Taluja, chief financial officer, Reliance Retail, said during its earnings call.
“The first two weeks of the festive season have been exceptionally good and the aspirational class is leading the growth. With more wedding days, we are expecting a much improved festive season than last year,” said Ravinder Choudhary, vice president-Vegas & Unity Group, which operates half a dozen malls in Delhi and Punjab.
A recent Centrum report said tapering inflation and growing real wages saw rural recovery driving demand with 15% sales growth for value apparel retail.
“Value retail or bottom of the pyramid consumers have started buying in the last ten days which is a good indication for a strong festive season. However, we are still cautious and are waiting for the trend to develop over a month to call it a real recovery,” said Devarajan Iyer, chief executive of department store chain Lifestyle International.
However, they are still cautious in placing new orders for fear of inventory pile up like before. In fact, according to a pre-festive season survey by the Clothing Manufacturers Association of India, nearly two-thirds of the respondents expected to see either the same or lower sales of clothing and apparel compared to last year.
“We would rather have a situation of stock-outs than order more and get stuck with piled up inventory. Hence, we are cautious in our inventory management even though we see a strong sales momentum so far,” said Manish Kapoor, MD, Pepe Jeans.
More than two years ago, apparel and lifestyle retailers increased price-tags across categories after cotton prices surged due to higher shipment cost and rupee depreciation, which started the slowdown trend in the mass-priced category.
