16 September 2023, Mumbai
India's clothing and lifestyle retailers are enjoying a prosperous streak as consumers expand their spending horizons during the ongoing festive season, which is projected to endure until the close of 2023.
Retailers are implementing extensive discount schemes across various product categories with reduced price points and special festive packages at the core of their promotional and marketing strategies. This marks a welcome upswing following the post-pandemic spending slowdown.
The festive season, commencing with Onam in August and encompassing Ganesh Chaturthi, Durga Puja, Dussehra, Diwali, Bhai Dooj, and culminating with Christmas in December, interspersed with wedding festivities, promises to be the most remarkable one yet.
Study
Surveys tracking consumer spending trends indicate positive signs. Most reports and surveys are brimming with optimism about a lucrative festive season on the horizon. Discretionary spending in India is currently at a turning point, with per capita GDP hovering around the $2,500 mark, and numerous luxury brands witnessing substantial traction.
According to the Axis My India consumer sentiment index, approximately 22 percent of consumers plan to boost their spending on clothing, accessories, and lifestyle products this year.
Notably, overall household spending has surged by over 58 percent for most Indian families. While this represents only a 2 percent increase in the past two months, it stands as the highest growth rate in the past five months.
RAI
Festive fervor is driving this optimism. The Retailers Association of India (RAI) reports a decline in sales earlier this year, with April being the slowest month in the last 14, at just 6 percent. May and June followed suit, registering dismal growth of around 7 percent each. However, retail sales saw an upturn in July, reaching 9 percent, a trend that has persisted since, encompassing both discounted and full-priced products.
The festive season of 2023 is anticipated to contribute one-third of total retail sales, with retailers preparing to unveil their latest collections.
Data point; "The perception is that the upper-middle class and middle class are inclined to spend during festivals, which will drive a focus on premium products across various categories, from clothing and accessories to consumer durables and IT products. Consequently, we are forecasting robust growth of 10-11 percent," states Kumar Rajagopalan, CEO of RAI.
The era of discounts and clearing unsold inventory appears to be receding for now. After the post-COVID spending surge in the lockdown years, consumers began curtailing their non-essential spending, which included garments, accessories, lifestyle products, electronics, and dining out. This belt-tightening trend began at the end of 2022 after Diwali, primarily due to inflation, rising interest rates, job losses, and a sluggish economy.
Prominent departmental stores like Pantaloon, Shoppers Stop, Lifestyle, Centro, and numerous mall-based retailers were compelled to slash prices and offer substantial discounts to move stagnant inventory over the past 6-8 months, as consumers became more budget-conscious.
Observation
Devarajan Iyer, CEO of Lifestyle International, acknowledges that the past few months have been challenging, but they are now witnessing single-digit growth in same-store sales. Retailers have adeptly managed their inventory for the festive season, gauging the boost in demand.
The heightened demand for gift-giving to friends and family, further fueled by discounted prices and bulk purchases during the ongoing festive season, has given Indian apparel retailers renewed hope of generating sufficient profits to weather the remainder of the year.
India's Clothing and Lifestyle Retailers See a Boost in Sales During Festive Season
- Consumer spending is on the rise, with 22% of consumers planning to increase their spending on apparel, accessories, and lifestyle products this year.
- Retail sales have been improving in recent months, and are expected to account for a third of total retail sales during the festive season.
- Retailers are all set to launch their new collections and are forecasting a robust growth of 10-11% during the festive season.
- The increased need for gifting to friends and family is driving sales, and retailers are managing their inventory accordingly.
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