Retail Sector India

Franchise India Blog : The retail industry, particularly the apparel and clothing stores, that has seen a slump in demand owing to poor consumer sentiment has pinned its hopes on the soon-to-be-formed new government to put economic growth back on track to help improve demand.

“The year 2013 was a bad one for the retail industry. The economic situation in the country impacts consumer sentiment, which, in turn, affects sales,” If there is an improvement in sentiments, retail will be the first industry to feel the impact,” he said.

Pradeep Hirani, Chairman, Kimaya Fashions Pvt. Ltd., said while all segments of the apparel industry had been impacted, it was the luxury segment which had felt the maximum impact. “Last two quarters were bad for business. The effect was in terms of sentiments and it impacted the average billing price. People are looking to cut costs,” he explained.

The retail sector, including apparel segment, has been impacted due to rise in input costs, on the one hand, and lower consumer purchases on account of poor sentiments due to rise in inflation and interest rates, on the other.

Mr. Hirani sounded hopeful of sentiments changing once a new government was formed. “Sentiments will change immediately if hopefully the government changes, which looks like is on the cards…I don’t see a reason why it will not happen. India story still holds. We have the numbers, we have the young population. We have all of it, they just have to add up and this addition will happen.”

Rachna Nath, Retail and Consumer Leader, PwC India, said consumer sentiment was not very related to the elections but on economy as their spends depended on how economy did. Hence, until the economy revived sentiment would remain the same.

Emergence of e-commerce was also impacting sales at the physical retail stores, which were struggling to attract customers when sales were not on, as buyers were getting better deals online, she added.

Echoing similar views, Managing Director of Being HumanManish Madhana, said, “Economy does play a big role in the development and growth of the retail environment because you are paying costs, you are paying rent, you are paying salaries… so if consumers are not spending it does impact the health of a brand of a store.”

Anuj Sawhney, Managing Director, Swiss Military Worldwide, said, “It will be difficult to say if the new government will change the consumer outlook as there is no clarity on the policies for this sector. One of the biggest factors in the expansion and growth of the retail sector is FDI, and unless there is some clear decision on this issue along with the tax structure becoming more liberal, the future continues to look uncertain. Being a part of this multi-dimensional sector, we are moving cautiously but also hopeful that some concrete decisions shall be taken to make the environment more favourable.”

Rajesh Jain, CEO and Director, LaCoste India Sports & Leisure Apparel, said, “All retailers are looking for stability. It is not about X party or Y party forming the government but there should be stability, a government that can make decisions. So, we are very hopeful that once a stable government comes and the policies are clear, then the customer sentiment will also come back and they will start spending on discretionary purchase.



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