The once-booming fashion and lifestyle sector is experiencing a prolonged downturn, leaving brands struggling to predict a resurgence. A two-year slump in demand for apparel, electronics, and similar discretionary items continues, defying initial expectations of a swift recovery. Aggressive discounting, including early end-of-season and Republic Day sales, has failed to ignite consumer spending, leading to flat growth compared to the previous year’s Republic Day period. Industry insiders now anticipate a potential rebound only in the latter half of 2025.
Post-pandemic exuberance has given way to a more cautious consumer. Following a period of significant growth, sales of non-essential items like clothing, footwear, and beauty products began to slow in 2023. Organized retail segments saw only mid-single-digit growth last year, a stark contrast to the 15% surge in 2022. Experts suggest that this moderated growth rate represents a “new normal,” a departure from the post-pandemic boom.
Even typically high-performing categories like electronics have felt the chill. Republic Day sales, usually a peak season for electronics due to heavy discounts, yielded disappointing results. While premium products experienced some growth, the entry and mid-range segments struggled, particularly in smaller towns. Online sales, too, failed to meet expectations during the Republic Day period.
This extended slowdown has prompted retailers to acknowledge the depth of the challenge. While Diwali’s festive period initially offered a glimmer of hope, subsequent months proved sluggish. Elevated inflation, coupled with restrained discretionary spending and dampened consumer sentiment, has created a challenging environment. Many retailers reported that the crucial October-December quarter fell short of projections.
Several factors contribute to this consumption lull. High food inflation, modest salary increases, consumer debt, a slowdown in job creation, rising housing costs, and increased spending on experiences like travel have all played a role. The industry is now pinning some hopes on potential income tax reductions in the upcoming budget to stimulate consumer spending. However, the overall outlook remains uncertain, with brands navigating a challenging landscape and seeking new strategies to capture the attention of a more discerning consumer.
