With an average of just three new stores opened every day in 2024 as opposed to ten in 2023, India saw a notable slowdown in the opening of new stores. Top retailers are now preparing for the next stage of growth after experiencing modest expansions and cost reductions due to weak demand in discretionary categories including apparel which lead to the rate of new store openings falling in 2024.
However, retailers have stated that they are getting ready for the upcoming network expansion phase and that their store consolidation phase is now over. The companies include apparel retailers Reliance Retail, Aditya Birla Fashion & Retail, DMart and Tata’s Trent.
Vishak Kumar, CEO of lifestyle business at Aditya Birla Fashion and Retail, shared with investors that some of the company’s margin-draining retail stores have been removed, which will positively impact the overall network. He also mentioned that the company is ramping up its expansion efforts, which will drive another wave of growth in the future.
Sales growth in organised retail categories like clothing, footwear, cosmetics, and QSR fell to a mid-single digit last year, down from 15 per cent in 2022, according to the Retailers Association of India (RAI). As a result, the majority of retailers closed several unproductive locations; this trend is expected to continue as companies strive for greater profitability.
Gunjan Shah, MD of Bata India, explained that while net additions (number of new stores added to a retail network over a period of time) have remained flat, the company has still made gross additions (total amount of new retail space that becomes operational in a given period). He added that over the past six to nine months, Bata has focused on closing unprofitable stores. He anticipates this trend will continue for another quarter, after which gross additions will pick up again.
Many factors, such as high food inflation, modest wage increases, consumer debt, a slow rate of job creation, and rising housing and rental prices, are cited by businesses as reasons for the slowdown in spending.
