India’s malls and high streets are experiencing a downturn in foot traffic and sales, and many retailers are offering steeper-than-usual discounts for longer-than-usual durations.
A brief about India’s fashion retailers are in a bad place because of rising inflation
The offender? Sky-high food inflation as a result of supply chain disruptions and agricultural devastation brought on by irregular monsoon rains.
Since June, tomato prices have increased dramatically, at one point nearly tripling, while those for onions, another ingredient in Indian cuisine, have increased by 80% in some places like New Delhi. With a startling 11.5% increase over June’s 4.6%, food inflation for July reached a three-year high.
Concerns about the health of consumer spending, which had already been slowing even before the shocking increases in food prices, are being stoked by the pain felt by India’s clothing and shoe retail sector, which Euromonitor International estimates will be worth $62 billion in 2022.
According to a store manager who wished to remain anonymous, personnel at a Zink London location in a Mumbai mall, for instance, have been phoning 10 customers every day and sending product photos via WhatsApp in an effort to increase sales.
Under the condition of anonymity, managers at 25 other fashion stores in four Indian cities spoke with Reuters and presented a similarly pessimistic image.
Popular Indian and foreign companies, like Skechers USA and Asics Japan, have been extending their sale periods and offering high discounts—some as much as 70%—far larger than usual, according to multiple store managers.
Some of the managers also noted that even when clients do buy fashion products, they do it much less frequently than they once would have.
Requests for comments from Reuters were not answered by Skechers, Asics, or Zink London.
A decline in spending at restaurant chains like Domino’s has coincided with the decline in fashion spending.
Having said that, not all consumer spending in India is in decline. With the help of certain popular Bollywood films, the largest cinema operator in the nation, PVR Inox PVRL.NS, recently recorded its greatest daily box office income of $5 million.
Wealthier people continue to spend, as evidenced by the record-breaking sales of luxury SUVs.
But concerns about the threat that high interest rates and inflation pose to consumer spending are growing.
According to a research this month by economist Kaushik Das of Deutsche Bank, “the biggest threat to India’s growth will come from private consumption, which constitutes about 60% of GDP and is weak already.”
India’s economy is expected to develop at a slower rate of 6% this fiscal year compared to 7.2% last year, according to the bank.
Tomato prices have decreased from their heights, which is positive. Additionally, the head of India’s central bank stated last week that vegetable prices, which have started to soften, will decrease starting in September.
Retailers and business leaders are also hopeful that the impending festival season, which includes Diwali in November when people prefer to make significant purchases for both themselves and as gifts, would help to boost sales. Others, though, are not always upbeat.
The expectation that people will spend money over the holiday season is constant. But since the inflation issue has also entered, we will have to wait and observe what people spend their money on, according to Bank of Baroda Chief Economist Madan Sabnavis.
Consumers claim that, for the time being, they must practice greater thrift given the rise in grocery costs.
Anjali Mohanty, a housewife in the eastern city of Bhubaneswar, was purchasing pants for her son. “We are looking for branded clothes to fit our budget and are visiting showrooms where there are maximum discounts,” she said.
“We need to change how much our family spends.”
