With Indian consumers continuing to go slow on discretionary spending amid sticky inflation, companies across segments in the country are reporting tepid numbers.
Lukewarm demand trends have become the norm for businesses ranging from fashion retailers to quick service restaurant (QSR), ToI reported on August 17.
The demand situation is posing a challenge, as mentioned by a significant number of companies in their Q1 earnings statement. Businesses have now pinned their hopes on the festive season for a likely spending revival, the report said.
“When do we expect the demand to recover, I think definitely not before the festival period,” said Ashish Dikshit, MD at Aditya Birla Fashion and Retail.
ToI quoted Dikshit as saying that even the value-conscious buyers in India’s smaller towns have limited their purchases, which impacted the performance of the firm’s fashion brand Pantaloons.
A late onset of festivals and shift of wedding dates to later part of the year could delay the process of demand recovery, he added.
It may be noted here that festivals have gotten pushed to about 20-30 days later than usual. Besides, weddings have also gotten shifted to the second half of the year.
Meanwhile, sales of apparel have continue to be sluggish. According to Shoppers Stop MD & CEO Venu Nair, “The retail market, particularly apparel, has been moderating since Diwali last year… our private brand sales largely remained flat (in Q1) due to tough market conditions.”
Talking of the industry-wide muted performance of fashion businesses, Nykaa’s executive chairperson, MD & CEO Falguni Nayar said the April-June was an ‘odd’ quarter where companies failed to do anything to pique consumer interest. “It almost felt like the customers were missing,” ToI quoted Nayar as saying.
For footwear businesses too, Things are not currently quite tepid. According to a Bata exec whose statement was cited by ToI, discretionary spending remains quite subdued in the sector.
High inflation across industries and categories has led to a short-term impact on consumer sentiment and demand in the last few quarters, Ravi Jaipuria, non-executive chairman at Devyani International, told ToI.
Devyani International operates brands like KFC, Pizza Hut and Costa Coffee. Consumers have been downgrading amid persistent inflation, which has made companies introduce value offerings.
“… We are trying to build a value layer for KFC so that we can focus on the number of transactions and we are able to get more footfall in our stores,” company officials told the newspaper.
