A Centrum analysis states that mixed results are anticipated for the retail industry in India in Q2 FY ’25.
While areas like discount retail are likely to provide robust growth, the footwear sector face severe demand issues due to factors such as high rainfall and reduced out-of-home spending.
Value apparel retail category growth has been primarily driven by tapering inflation and reviving rural demand. It is anticipated that this segment would see same-store sales growth of 15% (SSSG).
Because of the severe rains and the slowdown in discretionary expenditure, footwear companies are expected to post just low to mid-single-digit growth. Mass-market players like Bata and Relaxo are projected to face revenue weakness, while Metro Brands, propelled by its store development plan, is expected to outperform its peers.
Operating margins across the retail sector are projected to remain under pressure, particularly due to increased input costs, aggressive promotional expenditure, and store expansion leading to operating de-leverage.
Notwithstanding these obstacles, long-term trends including the transition from unorganised to organised retail, growing disposable incomes, and growing customer preferences for luxury goods continue to underpin the positive prognosis for the Indian retail industry.
