Although higher inflation will have an impact on discretionary demand, strong same-store sales, new store openings, and increased online channel contribution will add 21–23% revenue growth for apparel retailers in India in fiscal 2023, or about 500 basis points (bps) more than the pre–pandemic (fiscal 2020) level.
According to a research by the analytical firm CRISIL, operating margin will expand 175-200 basis points (bps) on-year to 7.75–8%, driven by scale expansion leading to better fixed-cost absorption, pricing increases, and a higher share of private brands. Higher input costs will, however, constrain the operating margin 50–70 basis points (bps) below the pre–pandemic level. Domestic cotton costs nearly doubled between April 2020 and May 2022, making up one of the major inputs. They are anticipated, notwithstanding considerable moderation since June 2022.