After 2020 washout, apparel retailers expect summer collections to revive business

After dismal formal and occasion wear sales, Indian retailers are now relying on upcoming summer collections to revive business to 2019 levels. As per the November report of India Ratings and Research (Ind-Ra), retailers expect a 40-45 per cent decline in FY21 revenues. They are entering the next year with a lot of caution, a better digital presence and moderate inventories, says a Live Mint report. They plan to buy things nearer to the season, adds Kumar Rajagopalan, CEO, Retailers Association of India (RAI).

Sales recovery to benefit value and online retailers

Rajagopalan says, retailers expect business to recover 70 to 80 per cent next year as compared to 2019. ICICI Securities analysts expect value and online retailers to be better placed next years. They expect apparel retail companies to witness gradual demand recovery by mid CY21. After a sharp 40 per cent year-on-year decline in CY20, revenues of apparel retailers may inch towards CY19-levels in CY21, say the analysts in their December report. They also expect offline sales to recover by 70 per cent of pre-COVID levels.

Apparel, footwear and accessories retailer Lifestyle expects business to recover by around 90-95 per cent by summer of 2021. The retailer plans to add fresh new stock every month besides placing orders for its summer collection. Their summer season was a complete washout as it could not register any sales during the two-and-half months. However, the retailer shifted some of its summer stock into winter and was able to register sales in some categories. The retailer now aims to make a fresh start with a completely new stock month, says Rishi Vasudev, Chief Executive Officer.

Expansion policies to continue in 2021

The pandemic forced most retailers to cut back on their festive and winter wear orders and liquidate their summer inventory. Retailers also had to shut some of their loss-making stores, defer their expansion plans and re-negotiate their rents. Some of these policies will continue to be followed in 2021, especially by brands using digital mediums, says Rajgopalan.

Looking at optimistic demand during the recent festive season, retailers have already started purchases for S/S’21 collections, inform analysts at ICICI Securities. This year, the brand has been more conservative in its purchases and bought lesser inventory now. It plans to fill in stock as the season approaches.