Despite the festive season, the demand for apparel and lifestyle products in the last quarter of 2023 is expected to remain subdued, going against retailers’ expectations of double-digit growth. Retailers have begun offering discounts earlier than usual to attract shoppers due to the delayed winter. The Retailers Association of India (RAI) reported that retail sales in October and November 2023 grew by 7% compared to the same period in 2022.
However, industry experts remain cautious about the future demand. Devarajan Iyer, CEO of Lifestyle International, said that the last few months have shown muted growth even during the festive season. The lack of peak winter weather has affected sales, and it is hoped that demand will pick up by June of next year.
The fashion retail segment has been struggling with a demand slowdown since January 2023 due to inflationary pressures. Sales growth slowed to 6% in March and April and slightly increased to 9% in August and September, indicating the slowest sales expansion in 14 months.
Retailers, such as Marks & Spencer and Lifestyle, have acknowledged the low festive season sales. Lalit Agarwal, chairman of V-Mart, said that the muted festive season has prompted a reevaluation of store expansion strategies. High hopes are now placed on winter sales to make up for the low festive sales.
Kumar Rajagopalan, CEO of RAI, noted that retailers were anticipating double-digit sales growth during the festive season but were disappointed. He highlighted the overall decline in footfall despite sales figures being similar to the previous year. The value fashion segment has been more affected than the premium one and is yet to reach pre-pandemic levels of sales per square foot.
Pankaj Renjhen, Chief Operating Officer at Anarock, explained that people are prioritizing spending on homes, cars, and experiences, resulting in lower demand for apparel. Many retailers have resorted to slashing prices or offering steep discounts to clear unsold inventory from last year’s price increases.
Despite facing challenges, some retailers experienced growth in high-value products. However, the majority reported negative performance in like-for-like store businesses. The industry remains hopeful of a turnaround in demand in the coming months.
