Apparel retailers see demand pickup soon
After a tepid festive season and winter, the next two quarters are key
Apparel retailers expect demand to pick up over the next two quarters, after witnessing lukewarm sales in the festival season and winter. tepid wedding season coupled with a warmer December dragged down demand for clothing, said several top retailers. Consumers are also spending on other discretionary categories such as travel and eating out, straining demand for products such as clothing and electronics.
“2022 saw a huge upswing in demand for apparel because after a long time, that is, two years of covid, consumers stepped out, went back to malls and bought a lot. As a result, their wardrobes were more or less full. Increasingly, after covid, clothing is no longer a status symbol. Clothing as a category is now competing with other discretionary products such as electronics and other home-linked EMIs and, therefore, you see less demand for the category,” said Rahul Mehta, chief mentor, Clothing Manufacturers Association of India (CMAI).
Mehta added that demand is expected to remain muted in the ongoing fiscal year as well. “May be in the next year, the cycle will turn,” he said.
Apparel and footwear sales in FY23 were down 8.9% after posting a strong growth of 28.6% in FY22, according to the private final consumption expenditure data released last month by the government for FY23.
Meanwhile, a delayed winter in the month of December also led to an inventory pile-up for clothing brands.
“End of season was OK—the entire industry was sitting on a lot of merchandise till December end and getting nervous. We couldn’t really see the weather changing; however, demand shot up in January, but by then, everyone had commenced sales.
Hence, profitability was hit as brands liquidated stock,” said Sanjeev Wadhwani, consultant, Killer Jeans, part of Keval Kiran Clothing Ltd.
Wadhwani, however, said demand for summer clothing is reporting an uptick already, with franchisee partners associated with the menswear brand stocking up for the season.
“For the last four quarters, growth in the
APPAREL and footwear sales in FY23 were down 8.9% after posting a strong growth in FY22
DELAYED winter in the month of Dec also led to an inventory pile-up for clothing brands we are concerned, we had a very good festival (season) and even the wedding season was very good for us. We don’t have an inventory issue because we managed our inventory very well. We are eagerly waiting for the summer season to kick in,” said Ambuj Narayan, CEO, Taneira, an ethnic wear brand under the Titan Co.
Retail sales grew 7% in the months of October and November when compared to a year ago, according to the Retail Business Survey by the Retailers Association of India (RAI) released in December 2023. Retail sales were up 5% in January this year, RAI said, adding that consumer demand for apparel and electronics remained muted. “Retailers had anticipated double-digit sales growth during the Puja and Diwali season in October and November 2023 however, the sales growth has been muted for many retailers...Many retailers, especially in the apparel category, only grew over last year because of new store openings and online sales,” RAI said then.
DEMAND is expected to remain muted in the ongoing fiscal year as well.
apparel market has been sort of muted; especially for a lot of listed apparel players. A lot of these brands also had an issue with inventory because they bought a lot and they were not able to sell. So, if you see in the last four months, a lot of these brands have been on extended sales and they’ve been trying to liquidate inventory. As far as