Retail sales in India, including segments like clothing and cars, are slowing down after a post-pandemic surge triggered by revenge shopping. Major retailers like Zara and Starbucks saw their slowest sales growth in India in FY24. Vedant Fashions noted a weak wedding season for five consecutive quarters. Retail sales growth rates fell consistently each month in the previous fiscal year. This reflects weak consumer sentiment across various segments such as apparel, footwear, and quick-service restaurants.
The Retailers Association of India reported a sustained 4-7% growth rate for the year, with a 42% increase in April. Pressure was slightly higher in tier II cities.
Shoppers are being cautious with spending as they prioritize essential products over discretionary items, according to Devarajan Iyer, CEO of Lifestyle International. The slowdown in consumer spending is expected to continue for an extended period, with no signs of recovery in the next three to four months. Vedant Modi, CRO, expressed that the situation is unprecedented and how they navigate through it will be a unique experience.
At an analysts’ call at Vedant Fashions, it was discussed that after five weak quarters, typically there is better growth in the following quarters. As Covid restrictions eased, there was a surge in sales of athleisure wear, apparel, and lifestyle products due to pent-up demand. However, the rapid growth seen in the post-pandemic period was not sustainable, leading to a slowdown in growth. The CEO of RAL noted that high-ticket purchases on EMI, such as electronics and cars, by middle-class consumers affected their spending on discretionary items like clothing.
Industry experts predict a recovery in the market after two to three quarters. Direct-to-consumer brands in social commerce are gaining market share from established brands. While fashion brands are a concern, categories like electronics and beauty are growing, helping companies like Nexus Select reach their targets.
