The retail sector is feeling the pinch of economic slowdown as customers cut spends on discretionary items such as apparel and durables, amid lower salary hikes and high inflation. Shoppers are now saving every rupee they can, say retailers and consultants.
“There is a stretch. It can be seen in the mood of consumers.
"They are careful about what they buy,” says Vishak Kumar, chief executive, supermarkets, Aditya Birla Retail Ltd.
Like other food and grocery chains, Birla Retail is aggressively pushing its private labels and large packs to woo customers. Besides offering value, private labels push retailers’ margins.
“We have been growing. But if the economy was better, we would have grown better,” Kumar adds.
While Birla Retail is yet to break even, earnings of top retail companies such as Raheja-owned Shoppers Stop Ltd, Kishore Biyani’s Pantaloon Retail (India) Ltd, Tata-owned Trent Ltd and Arvind Ltd have seen yo-yo growth in profit and sales in the third quarter, compared to the year-ago period.
Same-store sales growth of retail chains, a key indicator of performance, has also indicated slowdown. SSS growth refers to the growth coming from stores in the business for a year or more.
The SSS growth of Pantaloon Retail in value terms declined 0.2 per cent in the September quarter, the highest in the last 15 quarters. SSS growth in the home segment saw a dip of 3.5 per cent, while lifestyle was better at 10.8 per cent.
The company said it was due to shift in the festive season from September to December. Pantaloon is set to announce results on February 25.
Even Jubilant FoodWorks Ltd, the franchisee of Domino’s and Dunkin’ Donuts in India, has seen its SSS growing 16 per cent in the third quarter, compared to analysts’ estimate of 20