Brick and Mortar Apparel Retail Revenue Growth Expected to Reach 7-8% in FY23-24
Brick and mortar apparel retail revenue growth is expected to reach 7-8% in the financial year 2023-24 (FY23-24), according to a recent report by CRISIL Ratings. This is being driven by the upcoming festive and wedding seasons, as well as the return to office and buoyant corporate activity.
The report, which analyzed 39 apparel retailers who accounted for 25% of Rs 1.9 lakh crore revenues in FY22-23, also found that demand from the premium segment is rising gradually, with consumers increasingly preferring branded garments.
This is helping to offset muted-to-low demand from the economy and value segments, which generate 60% of total revenues.
However, the report also cautioned that there are some challenges that retailers need to be aware of, such as commodity inflation, the impact of erratic monsoon, and inflationary pressures on purchasing power.
Additionally, the report found that capital expenditure on store expansion in FY23-24 is expected to be around Rs 2,000 crore, lower than the Rs 2,500 crore spent in FY22-23.
Overall, the report is optimistic about the future of brick and mortar apparel retail in India, with revenue growth expected to reach 7-8% in FY23-24. However, retailers need to be aware of the challenges that lie ahead and take steps to mitigate them.
Key takeaways:
Despite mixed indications from leading retailers, the upcoming festive and wedding seasons are expected to provide a boost to sales.