Business News

Organised retail sales are increasing, but businesses are being cautious.

Sales of organised retail segments during 2022-23 increased 34% compared to those in the pre-pandemic FY20, largely driven by quick-service restaurants, sporting goods and electronics, a report by Retailers Association of India (RAI) has said.

While the bulk of the growth was price-led, consumer demand across categories bounced back as per the report that surveyed top 100 retailers from modern retail across segments.

Retailers are cautious about sales growth in the next few months because around this time last year, pent-up demand had helped them increase revenues, and there has been a slight slowdown in recent months.

“Higher inflation in advanced economies and tightening financial conditions in India have had some impact on demand, particularly in Tier 2 and Tier 3 cities,” Venugopal G Nair, managing director and chief executive officer of Shoppers Stop, said during the firm’s FY23 analyst call. “Last year, during these times, we were witnessing pent-up demand in March and April and that has been considerably moderated this year. This had impacted our sales in February and March. However, we have seen green shoots in April,” he said Venugopal G Nair, managing director and chief executive officer of Shoppers Stop during FY 23 analyst call.

Retail businesses across regions showed growth in sales in FY23. East India reported 42% growth followed by the West (36%), North (32%) and South (27%), the RAI report said. In categories, furniture reported a growth of 34% while consumer durables and electronics grew by 37%. Food and grocery grew 29% and sports goods showed a growth of 41%.

“2023-24 would be seen by retailers with cautious optimism,” said Kumar Rajagopalan, chief executive officer of RAI. “The true potential would only get realised if the economically lower income families too shop with optimism. For that, inflation has to be in check. Travel, health consciousness and occasion celebrations should keep the market buoyant. Rural consumption can be a challenge,” he said.

According to RAI, 2022-23 was especially good for categories like athleisure, occasion wear, consumer durables and IT products.

While retailers who sold to high-end customers saw healthy growth, those who sell low price point items found it much tougher to grow their sales.

Phoenix Mills, which has one of the largest portfolio of malls in the country, said retail consumption in FY23 was 133% of FY20.

For shopping malls, December 2022 was the best in a decade as the sales momentum from festive season continued. Electronic retail chains said growth was driven by televisions, premium smartphones, laptops and air-conditioners.

Leading electronic retail chain Vijay Sales director Nilesh Gupta said these categories drove sales along with a 5-10% price hike across categories.



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