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Recovery only after Q2 FY2025: Retailers

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Shiv Joshi
Shiv Joshi
An editor with over 20 years of experience across industry verticals and content formats from tabloids to magazines, he is the Deputy Group Managing Editor at Images Group.

While retailers are hopeful festivals may spark some demand, they expect the slowdown to end only after September 2024 i.e. Q2 FY 2025

New Delhi: A rebound for retail businesses in India—which is currently reeling under a substantial slowdown—could only happen after the second quarter of the financial year (FY) 2025, leading retailers said.

Terming the slowdown as temporary, Spykar co-founder and chief executive officer Sanjay Vakharia expects things to get better from the second quarter of the new FY.

However, Lalit Aggarwal, chairman and managing director of the value retail chain V-Mart feels that recovery can be seen around the third quarter. V-Mart, which has a strong presence in tier 2 and tier 3 towns of the country, will continue expansion adding “a little less than” 40-50 stores in the year, Agarwal added.

Retailers across segments have been experiencing sluggish sales through 2023 with things worsening since mid-year.

This was reflected in the poor financial results of retail companies. Aditya Birla Fashion and Retail Ltd (ABFRL), for instance, reported a net loss of Rs 107.60 crore for the quarter ended December 2023.

“From what I’m hearing from my industry peers in the QSR space, in the FMCG space, and also many of whom I know in the retail sector, there is a silent slowdown that is happening, which is fair; a business has its cycle,” said Sagar Daryani, co-founder and chief executive officer of Wow! Momo Foods Pvt. Ltd in December last year.

The slowdown even pushed retailers into advancing their end-of-season sales and offering deep discounts to liquidate inventory and rekindle demand. Despite their best efforts, December remained lacklustre with retail businesses reporting 4% growth compared to the same period in 2022 as per a Retailers Association of India’s (RAI) business survey.

“In December 2023, growth has been muted for many retailers despite starting discounts midmonth,” RAI CEO Kumar Rajagopalan said.

Daryani guesses that business will gain momentum in the later part of 2024-25. “The initial year (2024) may see a slight slowdown, but the second half will be fast,” he told IndiaRetailing earlier.

According to him, the end of the revenge-buying spree was one of the reasons for the slowdown. High inflation and interest rates, and cautious consumer sentiment are some of the other reasons behind the sluggish growth, retailers told Indiaretailing in December.

Last year, the industry-wide slowdown had even eclipsed the crucial Diwali season which contributes to a large part of retailer’s revenues.

“Even Diwali was not good this year,” Kirti Khosla, director at Ark’s Consultancy, marketers of lingerie brand Yamamay and Carpisa luggage and bags in India for Milan-based Pianoforte told IndiaRetailing in December last year.

The new year brought new hopes. However, January 2024 wasn’t any better with retailers reporting just 5% year-over-year growth with most retailers experiencing negative growth on a like-for-like basis.

“Retail businesses have shown a discouraging trend in January as a comparison to 2023 January. While the marriage season supported jewellery, food and grocery to post growth, most of the other categories have witnessed minimal growth,” added the RAI CEO.

Even Valentine’s Day season was a mixed bag with some players reporting growth like others reporting degrowth. Shrey Sehgal, the Founder and CEO of Flower Aura said that the online gifting platform saw an overall spike of 45% in the total sale, and close to a 55% spike in the same-day delivery during the period. On the other hand, omnichannel gifting player Archies experienced a 10% y-o-y drop in business due to less footfall at stores, executive director Varun Moolchandani said.

Industry veteran Rahul Mehta, Chief Mentor of the Clothing Manufacturer’s Association of India (CMAI) feels that the muted period will stretch through the year. “I feel 2024 will remain sluggish. There could be some pickup in the Diwali of 2024,” said Mehta, who is the managing director of Creative Lifestyle Pvt. Ltd. which manufactures and retails 109°F, Fusion Beats and O₂xygen in India and abroad.

Other retailers are a little more optimistic and feel that festivals earlier in the calendar year could spark some demand.

“We are hopeful that with festivals like Eid coming up, things will start improving,” Agarwal said.


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