Encompassing apparel, footwear, beauty, and quick service restaurants (QSRs), India's discretionary retail sector witnessed a sharp slowdown in 2023.
Nuanced data-points
Growth in the segment halved to just 9 per cent compared to the previous two years' pandemic-fueled surge. This reflects weakening consumer sentiment, despite continued spending on high-ticket items like cars and electronics aided by easy loans.
Hardest hit was the budget-conscious value category in apparel and footwear, says a report by the Retailers Association of India (RAI).
Same-store sales growth (SSG) for the organised retail sector stood at a meager 2-3 per cent, indicating an underlying drop in demand for everyday items like clothes, shoes, cosmetics, and fast food.
Study
Based on a survey of top 100 modern retailers, the report highlights that like-for-like’ growth remained muted throughout 2023. Though network expansion fueled some growth, it did not reflect organic customer demand.
The sector was further impacted by price hikes in 2022, driven by cotton price surges and rupee depreciation, followed by steep discounts to clear unsold inventory in 2023. The initial pandemic-driven'revenge shopping’ boom, particularly for athleisure wear, also stabilised.
While premium products fared slightly better, the value category remains significantly below pre-pandemic sales levels, explains Kumar Rajagopalan, CEO, Retailers Association of India (RAI).
Mixed bag
Within segments, the apparel and clothing segment grew slowest at 8 per cent, while furniture, sporting goods, and jewelry grew at 12 per cent, and beauty, electronics, and food and grocery grew by 11 per cent each.
