29 December 2023, Mumbai

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Revitalizing Indian Retail: New National Trade Policy Unveiled

Boosting Efficiency: Streamlined licensing, reduced compliance woes, and a national portal simplify retail operations.

Empowering Women: Removing barriers and encouraging full-time participation through flexible and part-time options.

Modernizing Retail: Focus on infrastructure upgrades, skill development, and boosting labor productivity.

Supporting Traders: Providing accident insurance, pension plans, and establishing a national welfare board.

Impact:

• Unified Framework: One strategy replaces diverse state regulations, fostering consistent growth.

• Global Competitiveness: Creates a sustainable environment for Indian retail to thrive.

• Inclusive Growth: Supports both the organized and informal sectors, building a robust retail ecosystem.

The policy, in its final stages, holds immense potential to revitalize the Indian retail landscape.

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30 December 2023, Mumbai

In the dynamic landscape of Indian apparel retail, 2023 unfolded as a tale of contrasts, with both challenges and opportunities shaping the industry. Rising consumer confidence and the resilience of certain segments offered a glimmer of hope, while inflation and evolving consumer priorities demanded adaptability from brands.

This comprehensive overview dissects the intricate canvas of the year, analyzing the performance of premium, mid-segment, and economy segments amidst economic headwinds and shifting consumer behavior.
Inflation Pinches Margins: The year saw a pervasive impact of inflation on apparel retailers as global disruptions and domestic pressures led to soaring raw material costs, expensive transportation, and increased operational expenses. Despite an estimated revenue increase of 8-10% for organized retailers, profit margins remained under pressure, challenging the financial resilience of the industry.
Shifting Sands: Consumer Priorities Reshuffled: Post-pandemic shifts in consumer priorities became evident in 2023, with wellness, experiences, and financial security taking precedence over discretionary purchases like apparel. This reshuffling of priorities, especially prominent among younger generations, forced brands to rethink their strategies and reimagine the value they provide to consumers.
E-commerce Plateau: The Online Buzz Subdues: The meteoric rise of online shopping plateaued in 2023 as consumers, yearning for personalized experiences and physical touchpoints, increasingly favored brick-and-mortar stores.

This shift prompted the need for omnichannel strategies that seamlessly blended online convenience with offline engagement, highlighting the importance of a holistic retail approach.
Threads of Hope: Bright Spots Emerge: Amidst the challenges, certain sectors found fertile ground for growth. The athleisure trend gained prominence, with brands like Decathlon and Nykaa Fashion's activewear line witnessing a surge in demand, reflecting a shift towards comfort and functionality.

Direct-to-consumer (D2C) disruption continued to thrive, as brands like Myntra's private labels carved a niche through personalized experiences, competitive pricing, and trendy collections.
Sustainability also emerged as a key differentiator, with brands like Fabindia and Anita Dongre resonating with conscious consumers by embracing eco-friendly materials, upcycled clothing, and ethical production practices.
Premium Podium: A Tale of Continued Elegance: In the luxury and premium segment, resilience was the hallmark of success and few brands focusing on exclusivity and exquisite craftsmanship, experienced sustained growth.

Data from Edelweiss Securities indicated a 12-15% growth in this segment, fueled by strong demand for bridal wear and personalized experiences.
Mid-Segment Squeeze: Finding Foothold in Fluid Ground: The mid-segment, the backbone of the Indian apparel market, grappled with the double whammy of inflation and changing priorities. Brands faced significant margin pressure due to rising costs, and consumers shifted spending towards essential goods and experiences.

Adapting to inflationary pressures, optimizing supply chains, and offering value-driven propositions became crucial for brands navigating this challenging segment.
Economy Echo: Resilience in the Face of Headwinds: The economy segment, catering to budget-conscious consumers, demonstrated remarkable resilience.

Aggressive discounts and promotions helped clear excess inventory, and data from Technopak suggested a flat to marginal growth in 2023. To thrive in this space, focusing on affordability, local sourcing, and embracing digital platforms became key strategies for brands.
Looking Ahead: Stitching a Resilient Future: As the Indian apparel retail sector stands at a crossroads, adapting to evolving consumer preferences, navigating economic uncertainties, and leveraging technology will be paramount for success.

Sustainability, omnichannel integration, and a focus on Tier-2 and Tier-3 cities hold immense potential for growth. By stitching together these threads with agility and innovation, the Indian apparel retail sector can navigate the challenging landscape and weave a vibrant future in the years to come.

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30 December 2023, Mumbai

WHY India

With retailers adopting new technologies to cater to the industry’s evolving demands, the Indian retail sector is set to grow at a rate of 10–13 percent next year.

Growth in the sector is likely to be driven by the expansion of the retailers’ network, a growing demand for luxury brands, increasing traction for value brands in smaller cities, and general elections, says Rajat Wahi, Consulting Partner, Deloitte India. .
The rapidly expanding e-commerce sector, with its hyperlocal delivery services and impulse purchases, will also boost growth, Wahi adds.

However, the sector will remain troubled by concerns including rising inflation, supply chain disruption and geopolitical uncertainties. There is likely to be an erosion of customers’ incomes with potential job losses and rising food and fuel inflation. This would have an adverse impact on the retail sector, as per the experts.

Meanwhile, the online sales channel will grow next year as numerous brands and retailers will benefit from the government-promoted Open Network for Digital Commerce (ONDC).and the customisation services offered by the D2C brands.
Anghsuman Bhattarcharya, Consumer Products & Retail Leader, EY India says, the retail sector in India will continue to remain one of the fastest-growing across global markets.

To ease inflationary pressures, retailers will have to innovate their product basket and try to promote luxury products wherever possible, adds Puneet Mansukhani, Part-Retail, PMG India. They would need to adopt regional localisation and fulfilment centres besides introducing festive season to ensure the desired growth in their toplines

Retailers would also need to use data-driven insights to seize performance improvement opportunities, beat rising costs, and identify new markets, products, or services, he notes.

The sector underwent a transformative journey in 2023, notes Kumar Rajagopalan, CEO, Retailers' Association of India.

With the upcoming elections injecting more money into the hands of the poor, sales of valuable items are expected to rise. There will be substantial growth in the business of some D2C brands as they leverage the growing offline market and potential funding.
Moreover, a significant number of retailers are expected to integrate AI (Artificial Intelligence) to enhance business efficiencies and achieve excellence in customer service, adds Rajagopalan.

Wahi opines that, the retail sector would witness an increase in the adoption of technologies like AI, VR (Virtual Reality) and AR (Augmented Reality), enhancing customer experience and operational efficiency.

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