The big fat Indian weddings have not been as glitzy and extravagant this wedding season of May-June 2023. Most wedding garment manufacturers reported average to poor sales this season, mainly due to a general economic slowdown, high prices, and weakening of the post-pandemic pent-up demand. With India having almost 25 per cent of the world’s weddings, which translates to one out of four weddings happening on earth globally, this segment has always been a very lucrative one with most Indians ready to spend beyond their means.

The wedding market was at an all-time high in 2022 after Covid years of stalled wedding plans, but now as the economic situation hits ground reality with the general rising inflation along with the high costs of food and clothes wedding supply chain, has come down.

CMAI report highlights slow growth

A recent survey of around  110 wedding garment manufacturers by the Clothing Manufacturing Association of India (CMAI) shows almost 83 per cent respondents feel there has been slow growth in May- June wedding season compared to last year. More than 60 per cent of wedding market outfitters and other suppliers have attributed this slowdown to general economic inflation while 14 per cent feel it’s the high cost of practically everything. Another 13 per cent say it’s the lesser number of auspicious dates as compared to 2022 that has led to a drop in sales.

“Currently the market is seeing a fairly significant slowdown, which has been caused by the overall inflationary conditions in the market. The first quarter of the current financial year is likely to be disappointing for the industry, and the impact is being felt by both the value as well as the upper segments of consumers,” says Rajesh Masand, President of CMAI.

Cost cutting limits guest list and wedding paraphernalia

With persistent heat wave across India, lighter embroideries, and pastel colors were in demand compared to heavier designs and mid-range wedding apparel for the guests and the bride’s trousseau sold better than expensive varieties. Media exposure to Western culture is influencing dressing patterns, of the younger generation leading to a gradual shift from traditional clothing to Indo-fusion clothing, which has affected sales of pure ethnic wear.

The grand Indian wedding with its huge guest list and wedding trousseaus has always been the growth driver of fashion and luxury business. India's luxury market is one of the fastest growing in the world, with a projected value of $8.5 billion in 2023 which has increased by around $2.5 billion from 2021, says Euromonitor International.

Although with the post-pandemic high, the apparel industry for 2022-23 was estimated to grow by 15-20 per cent, it seems with overall cost of production having gone up substantially, this volume growth would still be below previous year by 3-5 per cent.  Although the average size of weddings has come down, the budgets have not been drastically reduced as people are now spending the same amount but in smaller and experiential ways, such as a smaller guest list but at a resort or destination wedding; having many functions spread over the week with limited guests than a huge one-day extravaganza. However, since no one wants to make a big sacrifice on their wedding day, wedding outfitters are accepting the cut in good faith while remaining hopeful of the good days continuing to roll.

26 June 2023, Mumbai

UAE's Max Fashion brand has unveiled its latest store in Udaipur, Rajasthan. Spanning 18,000 sq. ft., the outlet is situated at Urban Square Mall, owned by Bhumika Group.

Announces the store's launch on LinkedIn

The company shared the news on LinkedIn, describing the store as an incredible addition to Max Fashion India's offerings, including unisex fashion, kids' fashion, and trendy accessories. Max, owned by Landmark Group, is a value fashion retail chain known for its diverse collection of clothing, accessories, and footwear.

Landmark Group's Max Fashion India offers an array of collection

After its establishment in the UAE in 2004, Max made its debut in India with a store in Indore, followed by a recent opening in Ahmedabad. Urban Square Mall, covering 1.8 million sq. ft., features prominent brands like Adidas, Puma, and Shoppers Stop.

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22 June 2023, Mumbai

Cautious optimism; Cautionary consumer behavior, and lackluster sales impact fashion retailers as prices rise. Retail sales have been weak, prompting early end-of-season sales. Analysts anticipate slower revenue growth of 10% this year, down from 51% in the previous year.

Softening demand currently but H2 is to pick up

Demand for lifestyle products remains soft across categories and regions, though June shows modest improvement. Retailers Association of India reports 7% sales growth in May, with moderate growth in jewelry and apparel but lowest in sportswear since the pandemic.

ICRA expects demand pressure to continue in H1, improving during the festive season.

Headwinds

However, inflationary headwinds will moderate revenue growth in FY24, with listed retail entities projected to see a 10% decline in revenue and a 5.7% drop in profit margins. Since 2022, tepid demand persisted due to high raw material costs passed to consumers.

Spring-Summer 2023 collection prices remain high due to previous cotton price increases, but cotton yarn prices are softening. Retailers offer advanced discount sales to stimulate demand and clear inventory. Footfall decreased by 7-8%, potentially due to consumers prioritizing experience-led expenses over apparel.

Consumer Spending and Overall Footfall

Consumers may be shifting their spending from apparel to experience-led expenses like food and beverages, resulting in a decline of 7-8% in overall footfall across the country.

Bottom-line

The combination of cautious consumer behavior, lackluster sales, inflationary pressures, and shifting spending patterns poses challenges for fashion retailers.

The industry expects a moderate growth rate for the current financial year and anticipates improved demand during the festive season.

Retailers are adjusting their strategies by offering discounts and managing inventory to navigate these challenging market conditions.

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03 July  2023, Mumbai

Uniqlo, a Japanese success story, gained fame for its simplicity, in 1990s since its launch in 1949.

Impressive Sales Growth

It revolutionized the Japanese market by popularizing affordable fleeces, previously expensive and unfashionable, making them accessible to the masses.

Global Presence Seeking New Markets

Now, Uniqlo seeks to expand beyond China, where sales have been lacklustre due to Covid-19. In Asia, sales outside Japan and China surged by over 70% in six months, with operating profits up by 48%. Uniqlo aims to become India's best-selling retailer, capitalizing on the country's consumption market and reducing reliance on China.

Showcasing competitive garment manufacturing

Automation and artificial intelligence are transforming Uniqlo's manufacturing processes, while India's young workforce makes it an attractive destination for garment manufacturing.

The Indian government may support Uniqlo's expansion, creating jobs and boosting domestic consumption and investment.

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24 June 2023, Mumbai

Fashion retailers anticipate 10% revenue growth in the current fiscal year, impacted by inflationary challenges.

Growth and Margin Decline

ICRA's analysis of 11 listed retail entities reveals a projected 100 basis points decline in operating profit margins (OPMs) to around 5.7% due to weaker demand and sustained high advertising and promotion expenditures.

Expected Demand Revival

The value fashion segment experienced a consecutive quarter-on-quarter decrease since Q3 FY2023, while the premium segment displayed demand slowdown signs in Q4 FY2023, with sales per square foot below pre-pandemic levels. Retailers expect demand pressures until H1 FY2024, improving during the festive season.

Cautious Optimism

Despite robust growth driven by network expansion, OPMs remained 100 basis points below pre-pandemic levels. Retailers remain hopeful for demand recovery in H2 FY2024 and plan to increase discounting levels. Store expansion continues, with capex outlay projected to rise by 10% to Rs 1,600 crore in FY2024.

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22 June 2023, Mumbai

One of the top credit ratings agencies in India, ICRA has projected that on the back of the success of retail across the country, malls will be big beneficiaries as their trading values could increase as much as 4 to 5 percent in FY 2024. ICRA is confident malls are going to increase their rental incomes between 8 and 10 percent.

In the retail sector, jewellery and electronics will see healthy growth while food and beverages, beauty, apparel, accessories, and entertainment will continue to see higher footfalls and sales.

Malls continue fast-forward growth

The rental income of the country’s top six cities witnessed robust growth of 78 percent YOY in FY2023, even though it was on a much-lower based FY2022. This growth is at least 25 to 27 percent higher than pre-Covid times and reinforces economic growth and attitudinal recovery of consumers as they are spending more on non-essentials.

As Anupama Reddy, Vice-President and Co-group Head of corporate ratings points out, this is being driven by higher revenue shared backed by increasing retail trading values and an increase in levels of occupancy across malls.

While malls enjoyed 90 to 95 percent footfalls before the pandemic, now they attract anywhere from almost 125 to 127 percent footfalls.

Many Indian malls have been enjoying high occupancy rates and will be renewing leases at higher rates this year. ICRA has marked mall retail operators’ status as stable.

ICRA states, higher disposable income and preference for experiential shopping, especially for premium product categories, are expected to support retail malls in the medium term.

Many fashion and beauty stores are adding interactive features, such as AI-driven virtual assistants, to synergise the online and offline experience and create experiences beyond just shopping. Consumer confidence continues to recover from the historic low recorded in June 2020.

As per RBI’s Consumer Confidence Survey of May 2023, household spending was buoyant over the last year on the back of higher essential and non-essential spending. This is expected to support retail sales for the mall tenants.

How are iconic high streets faring?

The standard for exceptional shopping experience before the flood of malls took over metros and cities, the fashionable high street did not have the convenience of “all-under-one-roof” and the cool and sanitized environment of modern and plush malls.

India has had some major high streets such as Colaba Causeway in Mumbai, Connaught Place and Khan Market in Delhi, Brigade Road and Indiranagar in Bengaluru, and Park Street and New Market in Kolkata.

Unveiling the Charms of High Streets

While shopping malls are the better fit for premium and international labels, high streets offer the convenience of a range of budgetary options, a personalized service built over customer relationships of generations, and of course the opportunity to get on with a bargain.

Moreover, iconic high streets also have the gravitas of hosting chic labels on their own. Most importantly, a vast percentage of mall foot-fall is deemed as the popcorn crowd, in for some entertainment and a lot of window shopping whereas a high street shopper is more likely purpose-driven.

The Enduring Allure of India's High Streets

Proof that India’s famous high streets continue to be popular is amply demonstrated by the fact that Delhi’s Khan Market is one of India’s most expensive retail rental sites.

According to a Frank Knight report, in terms of efficiency, high streets offer 100 percent efficiency due to low maintenance costs, whereas in the case of shopping malls, the efficiency can range anywhere between 50 to 60 percent depending on the grade of the shopping mall.

This is largely due to high maintenance costs for common areas, central air conditioning, and escalators.

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UAE-based retailer Lulu Group plans to enter Telangana with its first Lulu Mall and Lulu Hypermarket in Hyderabad.

Signifies Lulu Group's commitment to the state

The move follows discussions and an MOU signed with the Government of Telangana during a previous visit to the World Economic Forum. The Hyderabad project is part of a Rs. 500 Cr investment commitment to Telangana.

Diverse entertainment options

The rebranded Lulu Mall, formerly Manjeera Mall, will feature a mega Lulu Hypermarket, over 75 local and international brands, a cinema, food court, and children's entertainment center. The mall, located in Kukatpally, is expected to employ over 2,000 personnel.

Additional investments planned

Lulu Group also plans to invest in a meat processing plant, shopping malls, and an agriculture hub in Telangana. With over 250 hypermarkets and supermarkets across 22 nations, Lulu Group is rapidly expanding in India and has a strong presence in the Middle East and North Africa region.

23 June 2023, Mumbai

Chinese online fast-fashion giant Shein has gained approval to re-enter India by striking a strict licensing agreement with Mukesh Ambani's Reliance Industries Ltd., anonymous sources revealed.

Boost Made-in-India Goods

Reliance's retail arm will own the domestic business, while Shein, headquartered in Singapore, will provide production support and training to over 25,000 local suppliers.

This arrangement allows Shein to tap into India's growing consumer demand, increase the share of made-in-India goods on its platform, and potentially add $6.1 billion in exports.

India's Stringent Requirements

Strict data security measures require all data to be stored in India and inaccessible to Shein. The agreement showcases India's strategy to leverage Shein's expertise for domestic manufacturing growth while maintaining distance.

Diversifying Manufacturing Sources

Shein's expansion plans also involve diversifying manufacturing sources worldwide.

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Planet Fashion, a division of Aditya Birla Fashion and Retail, has expanded its reach in Mumbai with the opening of two new stores.

Strengthens Retail Presence

Spanning 1921 sq ft in Lokhandwala and 1400 sq ft in Dombivali, these outlets will showcase a wide range of fashion options, including casual wear, denims, and seasonal clothing, as well as formal attire such as shirts, trousers, suits, and blazers.

Offers diverse fashion portfolio

The brands featured in these stores include renowned names like Louis Philippe, Van Heusen, Allen Solly, and Simon Carter. Farida Kaliyadan, the COO of Planet Fashion, expressed her excitement about providing customers with an enhanced retail experience through these new locations.

Exceptional retail experience

With 164 stores across 143 cities in India, Planet Fashion continues to offer premium brands under one roof, catering to the diverse fashion needs of its customers.

26 June 2023, Mumbai

Reliance Retail's Trends, India's premier apparel and accessories specialty chain, has unveiled its latest store in Banki town, Cuttack district, Odisha.

Democratizing Fashion

With a mission to make fashion accessible to all, the expansion aims to connect with consumers across metropolitan cities, mini-metros, Tier 1, 2 towns, and beyond.

Modern and Affordable

The new Trends store in Banki town boasts a modern and inviting ambiance, offering a wide selection of top-notch fashion merchandise that resonates with the local shoppers.

Trendy selection

Emphasizing affordability, the store ensures customers receive excellent value for their money. Residents of Banki town can now indulge in a unique retail experience, exploring trendy Women's Wear, Men's Wear, Kids Wear, and Fashion Accessories, all available at pocket-friendly prices.

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22 June 2023, Mumbai

Growth for retailers in May 2023;According to the Retailers Association of India's latest Retail Business Survey, retailers experienced a 7% growth in May 2023 compared to the same month in 2022. Jewellery and apparel were the leading categories driving this growth.

Eastern India saw an 8% increase, while South India and West India saw growth rates of 7% and 6% respectively. However, retailers in North India only witnessed a 5% growth in May compared to last year. Kumar Rajagopalan, CEO of the Retailers Association of India, noted that while moderate growth is being observed, it should be considered in light of the extraordinary growth experienced in April and May 2022.

Sales trends awaited for next quarter

The coming three months will be crucial for drawing definitive conclusions. A report by Motilal Oswal Financial Services also indicated softer demand scenarios and weak footfall in the lifestyle products segment.

Jewellery and apparel categories drive the growth

Categories such as food and grocery, quick-service restaurants, and consumer durables reported moderate growth, while sports goods, furniture, and lifestyle products saw lower growth rates.

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21 June 2023, Mumbai

Online shopping a quintessential convenience for urban lives across India has penetrated territories physical retail brands couldn’t reach earlier.

As per estimates by 2026, e-commerce in India will be worth over $200 billion and by 2027 India will have over 427 million e-commerce users.

With such unprecedented growth, it is only natural for fashion retail to take on a head start and ride this ever-growing wave and become a substantial contributor to the overall e-commerce sector.  

E-commerce fashion retailers ride on the success

Numerous fashion e-commerce websites that have mushroomed over the years including Myntra, Ajio, Kanchan Fashion, Meesho, etc, are now household names.

A Statista’s report highlights India’s fashion market will be around $14.4 billion by 2023 as fashion continues to grow since 2019 at a CAGR of 18.5 per cent. This incredible growth can be attributed to several factors, including the convenience of online shopping, attractive discounts, and a wide range of choices.

Increased access and the reach of e-commerce have eliminated geographical barriers, allowing consumers from the most remote corners of India to access the latest fashion trends. 

Fundamental tailwind

While figures indicate e-commerce is still in its inchoate stage in India, contributing only 10 per cent of the nation’s retail, there is enormous scope compared to e-commerce’s global share in retail which stands at 19 per cent and is expected to become 25 per cent by 2026.

In fact, a June 2022 retailer’s summit in Mumbai estimated fashion contributes around 12 per cent of all sales on e-commerce and this share is expected to touch 30 per cent by 2027. 

Advantages for fashion in e-commerce

The fashion retail sector experienced the taste of outreach through e-commerce wherein it had the largest swathe of the nation as its catchment area.

Fashion retail no is longer limited to urban pockets where it found profitability through physical presence. Today, fashion products are being shipped to every nook and crannies of India, places that weren’t even on fashion’s radar. 

Moreover, e-commerce has given a well-deserved platform for new fashion designers and fashion start-ups who earlier were unable to broaden their market due to operational and marketing costs involved in physical retailing. The popularity of social media that does the marketing for e-commerce has been a relatively inexpensive tool and a welcome opportunity for such designers and businesses.

Technically, today a start-up fashion house can have a similar reach as Ajio or Trends Online. 

Also, physical spaces were a barrier for a fashion brand as it put forward its inventory as its portfolio or collection is now as big as its collection thanks to e-commerce.

Intrinsic advantages

Fashion brands have the luxury of showcasing their complete inventory in the digital space. This highlights their style, sizes, and niche creations to the best advantage.

This can also be extended as a democratic platform where new brands can compete with established labels and domestic brands with international ones on an even playing field. 

What’s more, the restrictive environment of physical space can be set aside to offer convenience and a board for creative inspiration. AI has developed sophisticated software that enables digital trials at the click of a tab over the tedious physical trial of a large number of outfits in a tight changing room.

Metaverse or meta-averse?

The Metaverse provides an extraordinary canvas of a world of fashion to experiment with styles, outfits, and accessories and create individual looks. 

Overall, e-commerce’s transformative impact has created opportunities for job creation, economic growth, and investments, shaping the future of the Indian fashion industry.

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