Wedding & Festive Season To Bolster Jewellery & Fashion Sales
A good monsoon may boost agrarian consumption, but cautious spending in the mass segment concerns retailers, who await the Union Budget
As per a media report, fashion and jewellery retailers are optimistic that the festivals and wedding season in the latter half of the year will drive increased demand, following a period of subdued discretionary spending. A favourable monsoon, which provides income to those employed in the agricultural sector, is also anticipated to boost consumption.
While there was an uptick in consumption towards the end of the March quarter, a full recovery in demand is still pending. The mass segment has been the most affected, with reduced spending from lower-income households. In contrast, the premium segment continues to perform well.
Joy Alukkas, Chairman and Managing Director, Joyalukkas Group, mentioned that the mass segment, burdened by economic pressures, is exhibiting ‘cautious spending behaviours’ and is recovering at a slower pace.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI) highlighted, “The biggest requirement in the market is for the bottom of the pyramid to come in and spend.”
Rajagopalan added that retailers are concerned because they had anticipated significant growth, but demand has remained stagnant.
The upcoming Union Budget will be crucial for the industry, which will be closely monitoring it. Industry executives indicated that middle-income households, particularly those earning between Rs 5-8 lakh annually, appear to be under greater financial strain.
FY25 may see improvements, but it’s wise to plan for a gradual uptick, understands V S Ganesh, Managing Director, Page Industries (exclusive licensee of the Jockey brand in India), during the company’s Q4 earnings call. “Maybe we are also looking at a good monsoon, good industrial output, agricultural output. These are all good things which should help us to boost demand in the later part of the year.”
A Deloitte India study involving 660 respondents revealed that about 32 per cent plan to reduce their spending on apparel and footwear over the next 12 months. The study also showed that accessories such as watches and jewellery had the lowest percentage of respondents intending to increase their purchase frequency. Additionally, 30 per cent of respondents cited financial constraints as the primary reason for their decreased likelihood of spending on consumer durables.
The major risk is that the mass segment may not recover as quickly as anticipated in the near term, leading to continued pressure on volume growth, feels Anand Ramanathan, Partner and Consumer Products & Retail Sector Leader, Deloitte India. Additionally, the premium segment may also remain sluggish as consumers feel their needs have already been met by past purchases, he added, addressing the near-term challenges to consumption.
Paritosh Tiwari, Head of Retail, Raymond Lifestyle Business, noted that the company experienced an increase in consumer spending in Q4. However, spending significantly declined in Q1, primarily due to fewer wedding dates.
“The heatwave and national elections restricted consumer movement, adding to the low customer walk-ins and pushing retailers to initiate an early EOSS (end of season sale) and mid-season sales,” Tiwari continued.
