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Industry leaders discuss their predictions for retail in 2023 based on trends, inflation, and customer demand.

New Delhi: 2022 was a rebound year for the retail industry. As per the latest data by the Retailers Association of India (RAI), businesses recorded a 19 per cent rise in retail sales during April- November 2022 period when compared to pre-pandemic levels. ETRetail spoke to different industry experts from key retail segments such as fashion and lifestyle, food services, consumer electronics, and beauty and personal care to understand their outlook for the retail industry in 2023.

Fashion, lifestyle, and home retail:

2022 saw the fashion, lifestyle, and home retail segment returning back to normalcy with sales surpassing pre-pandemic levels. Sharing his thoughts, Ramesh Kalyanaraman, executive director, Kalyan Jewellers said, “This year has truly marked the return of normalcy across markets with minimal disruptions, garnering sturdy revival in demand momentum.”

However, he added that there has been a notable shift in consumer preferences towards alternative metals such as platinum, silver, rose gold and white gold as well as luxury products such as diamond jewellery pieces, fuelled by factors such as affordability, minimalism, cultural trends and growing popularity of all-season jewellery.

Amit Pratihari, VP, De Beers Forevermark said, “We’ve seen positive consumer sentiment this year with the industry clocking reasonable sales of both gold and diamond jewellery.” He added that during the festive season both categories grew at around 30-35 per cent.

Commenting on if inflation would be a challenge in 2023, Pratihari said that this year the cost of diamond jewellery went up due to the sanctions on Russian goods plus strong demand and the general market limitation of diamonds, but it did not have a significant influence on consumer demand. “We will have to wait and watch how 2023 pans out. We do expect healthy growth and are positive that sales during 2023 will reflect the optimistic consumer attitude.”

Sharing a perspective of the home decor and furniture industry, Susanne Pulverer, CEO & CSO, IKEA India said that the furniture market is expected to grow and flourish in 2023. Commenting on the demand comparison between online and offline, she said that for IKEA India, online channels contribute around 25 per cent of sales and 75 per cent from offline channels.

Beauty and personal care:

The beauty and personal care market saw an influx of disruptive brands as well as newer growth strategies of existing brands, with positive investor sentiment and a growing focus on offline retail channels.

Sharing her outlook for 2023, Vineeta Singh, co-founder and CEO, SUGAR Cosmetics said, “The minimalistic, less-is-more approach toward beauty that we saw gradually rise during the pandemic will be making a major comeback and will be set in as fearless, bold, and unapologetic.

Shankar Prasad, founder and CEO of vegan beauty and skincare brand, Plum shared that he expects the strengthening of three key beauty trends going forward. These include the increasing significance of digital touchpoints such as content and online discovery, curiosity about ingredients, mechanism of action and clinical proof, and premiumization as inflation moderates and disposable income increases.

Answering where the make-up brand expects more demand to come from, whether offline or online, Singh from SUGAR said that the brand has undertaken strategies that can cater to its consumers across channels. She highlighted that during the pandemic, the beauty retailer continued to add shelf space and pushed its offline expansion. Currently, 55 per cent of SUGAR’s sales come from its retail stores across the country as compared to 35 per cent pre-pandemic.

“In 2023, we foresee a healthy mix of both offline and online demand from our consumers across the country,” Singh commented.

Sharing a similar thought, Prasad said that Plum is seeing strong demand in both channels. He said that on the offline front, further expansion and deepening of its store presence, more exclusive outlets and more category width at retail stores will be a driver of growth, while on the online side, growth from new customer acquisition, repeats as well as newer channels like quick commerce and curated commerce will help the brand grow.

Consumer Electronics

Consumer electronics and home appliances makers expect to see a declining inflationary trend in 2023 with innovation and technology expected to be drivers of growth.

“For 2023, we foresee that an effective combination of category innovation and distribution will drive the growth of the consumer market. We are hoping that the overall inflationary trend will witness a decline, and we may notice an increase in discretionary spending on items like consumer appliances, especially from rural areas where we are seeing some green shoots in demand,” commented Ravindra Singh Negi, COO – consumer products, Bajaj Electricals.

Sharing how the consumer electronics market is expected to play out in 2023, Madhav Sheth, CEO, Realme India said that smartphones, gaming accessories, smart bands, smartwatches, tablets, and other products will all contribute to the consumer electronics market’s continued expansion. He added that due to shifting market dynamics and rising customer expectations, there is an increased demand for products with cutting-edge design and features which is expected to grow in 2023, especially with the rollout of 5G.

Commenting on inflation, Sheth said, “We believe that any slowdown will only last a short while given the enormous potential for smartphone markets in India.” He added that the year 2022 saw the launch of 5G smartphones, and experts anticipate that this percentage will rise to 53 per cent.

Food Services:

Dine-in and delivery are working together with each other in this evolving scenario of the food industry, said experts while sharing trends and outlook for the food services industry in the new year.

Talking about the growth of dine-in, Sanjeev Agrawal, Chairman, McDonald’s India – North and East said, “We are squarely focused on two growth drivers in 2023 – accelerating modernization of our existing restaurants to Experience of the Future (EOTF) and opening new EOTF restaurants.” He explained that EOTF offers convenience and personalization via self-ordering digital kiosks, guest experience leaders and table service. Agrawal highlighted that McDonald’s India – North and East plans to double the number of restaurants in the next 3 years, adding new states/cities to its footprint.

Commenting on the growth of the online ordering business, he said that from accessibility to convenience, delivery has seen the biggest thrust during the last 2 years. The consumption habits formed during the last 2 years are continuing and the burger chain is witnessing sustained momentum in delivery while in-restaurant consumption is building up at the same time.

Sharing similar thoughts, Ankush Grover, co-founder, Rebel Foods said that the food industry is continually evolving with dine-in and delivery working together with each other. He said that the brand will continue to add its food court to more locations as per customer demands and will focus on recreating the dine-in experience while enhancing the ordering cycle.

Commenting on the growth of online ordering, Grover said that cloud kitchen is no longer a trend but here to stay and is more crucial for the industry now saddled with a lasting change in consumer behaviour. “The industry will boost the trend of an increased preference among consumers to order online and a consequent rise in the share of online orders as a percentage of the total revenue of a restaurant.”

Sharing his insights on the trend, Rajat Agrawal, CEO Barista Coffee Company said that coffee as a product is always preferred out of the home. The brand expects delivery to grow well but the absolute value growth from dine-in will always be higher than delivery in its case he noted.

“Dine-in business has come back with vengeance and we expect the momentum to stay positive towards Dine-in, online business has also evolved over the last 2-3 years courtesy pandemic and a lot of new aged activations and developments, especially around packaging which makes the delivery experience standout.”

Currently, Barista has close to 350 outlets and looks to open a minimum of 5 outlets each month with the current pipeline.

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