The Indian retail sector is grappling with a prolonged slowdown in demand for clothing, lifestyle products, and electronics, according to Retailers Association of India’s (RAI) 57th Retail Business Survey report. Despite aggressive discounting strategies adopted by the retailers, including early end-of-season and Republic Day sales, companies have failed to significantly boost sales.
This year’s Republic Day sales saw flat growth compared to the previous year, indicating a continued sluggishness in consumer spending. Overall, the retail sector grew by 5 per cent from 2nd December 2024 to 29th December 2024, compared to the same festive time period last year.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said that discretionary spending is still being impacted by inflation and other financial commitments, such as EMIs. Although categories like clothing saw modest growth over the wedding season, total consumption is still low. The retail sector anticipates policies that combat inflation and increase consumer confidence in the next Union Budget.
This slowdown has been observed across various sectors, including the apparel and footwear sector, which grew by a modest 7 per cent, with footwear growing by 3 per cent.
The report highlighted some key factors that are contributing to this consumer slowdown, including high inflation rates, low salary hikes and stagnant wages, increasing debt levels, and high housing costs among others.
While some companies are hopeful that a reduction in income tax rates in the upcoming budget could stimulate consumption, the overall outlook for the retail sector remains uncertain. Many companies expect a significant recovery in demand only in the second half of 2025.
