Clothing and lifestyle retailers have seen a positive shift in demand for apparel and accessories in the past two weeks, following a period of slow sales lasting six quarters. This increase in demand can be attributed to the early winter season and the upcoming wedding season. Retailers are cautiously optimistic about the rise in demand, noting signs of recovery among lower-income consumers and in smaller towns.
V-Mart, a value retailer with nearly 470 stores primarily located in smaller towns, has noticed an improvement in sales compared to last year’s festive season. Chairman Lalit Agarwal expects this strong demand momentum to continue, driven by the early winter season and upcoming weddings. Sales of discretionary items such as apparel, footwear, and beauty products had slowed down in 2023 after two years of pandemic-induced growth. Consumers, especially those with lower incomes, had been cutting back on spending due to inflation in essential items like food and pulses.
Reliance Retail has also observed a significant increase in sales during the first two weeks of the festive season. Chief Financial Officer Dinesh Taluja stated that the aspirational class is driving this growth, and with more weddings on the horizon, they are expecting a better festive season than last year. Similarly, the Vegas & Unity Group, which operates malls in Delhi and Punjab, has seen strong growth driven by the aspirational class.
A recent report by Centrum highlighted the role of rural recovery in driving demand, with a 15% increase in sales for value apparel retail. However, retailers remain cautious about placing new orders to avoid excess inventory. The Clothing Manufacturers Association of India’s pre-festive season survey found that two-thirds of respondents expected either the same or lower sales compared to last year.
Despite the positive sales momentum, retailers like Pepe Jeans are prioritizing cautious inventory management to prevent overstocking. Two years ago, retailers had increased prices across categories due to rising cotton prices, leading to a slowdown in mass-priced items. The current increase in demand is a welcome change for retailers, but they are proceeding with caution to ensure a successful festive season.
Overall, the return of demand for apparel and accessories is a positive sign for retailers, especially after a prolonged period of sluggish sales. As the festive season approaches, retailers are hopeful that this momentum will continue and lead to a successful period of increased sales and consumer activity.
