Inflation headwinds on consumer spending are still a concern and could impact the upcoming festive fervor, the Retailers Association of India (RAI) said.
“While June 2022 saw growth compared to the same period before the pandemic, the growth rate has definitely slowed down,” said Kumar Rajagopalan, Managing Director of RAI. “Many retailers reported that the second half of June was not very encouraging as there were not too many celebratory occasions such as weddings to drive sales,” he said.
“We will have to wait and watch how the next two months unfold,” Rajagopalan said.
According to RAI, retailers saw revenue growth of 23% and 24% in April and May, respectively, compared to 2019 levels. However, some trade insiders attributed slower sales growth in June to the late start of the EOSS, or end-of-season sale, this year.
Previously, EOSS started in mid-June, but since many retailers were reporting good sales at full price, they postponed sales this year. This, in turn, affected sales last month, they said.
“Sales are down in June compared to May, but with end-of-season sales being delayed and many retailers having gone on sale in July, we expect July numbers to be better,” said Ravinder Choudhary, assistant vice president of Vegas Mall in Delhi’s Dwarka. Contrary to weak demand sentiments for staples and consumer goods, lifestyle retailers saw good footfall and comparable store sales (SSSG) growth in cities and premier malls. plan over the past few months with a healthy recovery in store additions. Most categories saw double-digit increases, with sporting goods and jewelry seeing a 27-29% increase in sales, followed by quick-service restaurants and consumer durables posting a 16% increase.
The sales expansion was driven by price increases in recent quarters, although the recent moderation in commodity prices should dampen gross margins for retailers.
Analysts expect listed retailers to post strong double-digit sales growth for the quarter ended June, the first undisrupted first quarter for the industry since the Covid-19 outbreak in early 2020. Sales momentum will continue in the current fiscal year, they said. . “Overall, revenue traction looks strong for FY23 with a healthy SSSG, and this seems validated by the expectation of higher price consumption in Q1,”
said in a recent note to investors.