Bitten by inflation, Indians buying fewer clothes this season
- The great Indian festival season is expected to bring in muted sales for apparel makers who saw spectacular sales last year.
- Hit by inflation and other economic factors, Indians are likely to buy children apparel the most this festival.
- Discounting is becoming a key driver for sales report retailers who have lost many full-price sales days in Q2 due to the delayed festival season.
AdvertisementLast year, the Dusshera-Diwali festive season was the first after two years of lockdown. As expected, people spent with vigour on clothes, shoes and more. This year, not only has that fervour gone down, but inflation and other worries have cropped up. Little apparel is moving from the stores without discounting, say retailers.
A survey conducted by Clothing Manufacturing Association of India (CMAI) indicated widespread pessimism amongst merchants. As many as 78% of those surveyed expect the sales this festive season to dip up to 25% as compared to last year.
Half of the survey respondents feel that kid’s wear will lead the way in sales, followed by 36% citing women’s wear. Only 12% bet that men’s wear will perform better.
“This aligns with the broader slowdown experienced in the domestic garment sector during the last 4-5 months. Nevertheless, we anticipate a market upswing after Diwali, considering the extended wedding season that lies ahead,” said Rahul Mehta, chief mentor of CMAI. The festive season sales are likely to see same store de-growth, it predicts.
Gone with the pandemic
Pepe Jeans India too believes that the pandemic-era growth has tapered. The UK-based brand saw its India sales rise by 55% in 2022 — which is 40% higher than the pre-pandemic sales. This year, it expects to grow at 18% but believes it will finish the year with 12-18%.
“Last year was phenomenal. But the truth is that we are growing on a high base. The festive season has also been subdued. While Pujo and Onam sales were good, we will wait for the impact of the Diwali sales season which are yet to pick up. So, growth is there but its muted,” Manish Kapoor, MD & CEO, Pepe Jeans India told Business Insider.
Discounts the key driver for sales?
Indians have turned wary of discretionary purchases with lower-than-expected salary increments and rise in inflation — softening the sentiment. And, the only thing that’s re-energizing this market is the discounting.
Let’s take India’s top apparel company Arvind Fashions which saw a good 9% like-to-like sales growth, but most of it was driven by discount season. Its retail discounting went up 3% in the second quarter.
“This quarter can be divided into two parts. We had delayed the End Of Season in July due to good sell-throughs. And we saw good double digit like-to-like retail growth in August and July, but it was slightly negative in September due to less number of full-price days as festive season season dates shifted to October,” said Shailesh Chaturvedi, MD & CEO of Arvind Fashions in an earnings concall.
AdvertisementThe shift in wedding and festival season has also affected Shoppers Stop. “The demand environment remains weak. Across cities, towns and categories, unlike last quarter, or earlier quarters, where it was more driven by rural or non-metro weakening of demand,” said Kavindra Mishra, CEO of
It too had to resort to discounting that has affected its margins too. “Our performance on private brands last year was based on the pent-up demand immediately post-Covid. Given the slowness in the market, we liquidated part of our merchandise at a higher discount,” Mishra said.
(This article is a part of Business Insider India’s ‘Boom to Bust’ series which will discuss post-pandemic demand trends)
The Quick and the Dead: How fast food players lost their pandemic boom effect
AdvertisementDiamond demand heads for a hard landing with ‘temporary disruption’ at play
Popular on BI
- Top 10 must-visit destinations in South Africa
- Indian markets continue record run, Sensex scales 69K peak as power, bank shares advance
- Stock markets continue record run, Sensex scales 69K peak as power, bank shares advance
- Icy pebbles may be carrying water to developing planets across the cosmos!
- With $500 billion in reserves, LIC is the world’s fourth largest insurer