It may not be a bright Diwali for India's apparel brands with a majority of brands expecting sales to dip by 25% as compared to last year this festive season. According to a survey conducted by the Clothing Manufacturing Association of India (CMAI), which included 166 apparel manufacturers/brands, approximately 22% of those surveyed anticipate the market picking up during the upcoming festive season. However, around 78% expect sales during this festive season to decrease by up to 25% when compared to last year's sales.
CMAI states that the decline in sales is primarily attributed to an economic slowdown and inflation. "Around 30% of respondents cited an overall economic slowdown as the main cause behind the sales expectations staying lower than last year," CMAI said in a statement.
The size of the Indian apparel market is estimated to be ₹6.80 lakh crore, and has grown by between 15-20% in FY2023.
Rahul Mehta, Chief Mentor, CMAI says that despite there being some positive sentiments over the past few days, there remains a widespread sense of pessimism among CMAI members in line with the broader slowdown experienced in the domestic garment sector during the last 4-5 months.
"Nevertheless, we anticipate a market upswing after Diwali, considering the extended wedding season that lies ahead. As many as 60% of the respondents felt offline stores will do better during the festive season whilst 40% felt online portals will perform better," Mehta added.
Apparel retailers say lower pricing and better options in clothes could help drive sales this festive season.
In terms of categories, CMAI's survey indicates that kids wear could be a major driver of sales, followed by 36% citing women’s wear and 12% men’s wear as the clothing category that will perform better. Also, Tier 2 and Tier 3 cities are expected to outshine the Metros in clothing sales with around 80% of respondents voting in their favour.
“The survey findings shed light on the current dynamics of the apparel industry, as we eagerly anticipate the upcoming festive season. A majority of respondents expect the market to be subdued and that economic factors as well as the pricing strategies continue to be pivotal in shaping sales expectations. However, the industry remains resilient to navigating these challenges," Rajesh Masand, President, Clothing Manufacturers Association of India (CMAI) said.
This also reflected partly in the recent data from Retailers Association of India, where apparel sales were up only eight percent in September over the previous year, while footwear grew four percent.
Retailers too have alluded to this slowdown. Shoppers Stop, while reporting its Q2FY24 results also flagged off weak demand but said that there are some greenshoots being seen in September.
RAI too, said that there is anticipation of a pick up in sales through the festive season. Sunil Pathare, Chairman & Managing Director at VIP Clothing also echoed this sentiment. "The recent survey by the Retailers Association of India is certainly encouraging for the entire retail industry. It shows that consumer confidence and spending are on the rise, which is a positive sign for businesses like ours," he added.
(Edited by : Anand Singha)
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