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Slowdown forces value retailers to hold back expansion plans

Slowdown forces value retailers to hold back expansionThe ongoing economic slowdown is forcing India’s top value fashion retailers to hold off their expansion plans. Faced with muted consumer demand, these players are planning to cut down their store fleet in 2020. A prominent example of this is 1-India Family Mart, which witnessed good footfalls but has not been able to convert it into sales. The retailer, which operates 100 stores across UP, Bihar and MP has seen sales degrowth of about 10 per cent in 2019. This has made the retailer skeptical about opening new stores.

Similarly, V-Bazaar, has revised its revenue target for this financial year from Rs 360 crore to Rs 320 crore.Slowdown forces value retailers to hold back expansion plans The retailer, which mostly operates in UP, Bihar, Jharkhand, Madhya Pradesh, and Odisha, witnessed a 14 per cent decline in sales from July-September 2019. The average ticket size of Delhi-based retailer Citykart also declined 0.5 per cent year-on-year in 2019.

This decline in sales is further impacting the investment flow for retailers. Both private equity and foreign direct investments are drying up as even banks are cutting off credit to these value retailers. This is likely to impact the development of malls in smaller towns.

Small cities, government initiatives key to future growth

However, adding a wave of optimism to this situation are experts who are confident about the long-term outlook for these value retailers. They believe these value retailers have a huge growth potential in Tier II, III and IV cities as these are fashion-conscious markets where retailers like V-Mart etc, have little to almost no competition.

On their part, value retailers hope the government takes sufficient measures to arrest this slide in the economy. They plan to increase investments to boost consumption and encourage consumers to make new purchases including clothing. V-Bazaar has been building on customer relationships to attract more footfalls. For this, the retailer tied-up with EazyRewards, a firm specialising in promoting loyalty programs, and DI Retail, a marketing company specialising in retail and sales solutions. The company is also offering more designs and discounts to buyers, hoping to move inventories faster.

The wedding season is also likely to drive sales of value retailers as retail spending mostly on clothing goes up during weddings. Thus there are exciting times ahead

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