Premium fashion and lifestyle products are beginning to show an uptick again after months of reeling under a slowdown. March quarter (Q4FY24) results of companies such as Shoppers Stop, Vedant Fashions and Reliance Retail have pointed to a revival in demand, even as the value retail segment, led by companies such as Trent’s Zudio, continue to outperform the sector.
In Q4, Trent reported a 51% year-on-year growth in revenue, led by Zudio, whose store count is the highest within the company at 545. Trent added 86 Zudio stores in Q4 versus 12 Westside stores during the period. Westside’s total store count at the end of the March quarter is 232, less than half of Zudio’s network, indicating the retailer is keen on keeping a firm eye on value retail.
While Trent’s strategy stands apart from the rest, players such as Shoppers Stop, Reliance Retail nd Vedant Fashions are turning their attention back to premium wear. Vedant Fashions, which is the maker of the Manyavar brand of men’s ethnic wear, while reporting mid-single-digit revenue growth (6.30%) and mid-single-digit profit growth (6.33%) in Q4, pointed to an uptick in sentiment in premium wear. Analysts at brokerage Motilal Oswal expect a full recovery for Vedant Fashions by the second half of FY25. Aditya Birla Fashion and Retail and Arvind Fashions are yet to report their Q4 numbers.
Shoppers Stop, on the other hand, reported a 62.5% year-on-year rise in consolidated net profit and a 13.2% rise in revenue in Q4, helped by demand in its beauty segment as well as premium and luxury products.
The sales boost in premium wear resulted in the average transaction value (ATV) at Shoppers Stop growing by 8% in the March quarter, Kavindra Mishra, MD & CEO, said. This is higher than the 6% ATV seen in the December quarter, which included the festive period. The average selling price also increased from 5% to 7% in the March quarter, Mishra said, pointing to a customer shift towards premium preferences.
In its post-Q4-results earnings call last month, Reliance Retail’s CFO Dinesh Taluja, said customer focus towards premiumisation was growing. “Premium brands and premium products are doing better than their peers on the value side. For instance, we had a 20% growth during the year in our partner brands business within premium. Sales uptick has been strong during the (March) quarter within premium,” he said.
Analysts say that a combination of factors, including pent-up demand, weddings and other occasions, are pushing consumers to shop for better clothes, make-up and grooming products.
“With rising affluence, consumers are paying greater attention to how they look. Retailers therefore are bringing their focus back on premiumisation, which had shifted to the value retail segment over the last few quarters,” G Chokkalingam, founder and MD of Mumbai-based Equinomics Research, said.
Mishra, Taluja as well as Vedant Fashions had indicated during their recent results that they were eyeing more premium tie-ups, launches and store experiences to improve sales of their premium products as consumers were beginning to open their purse strings to buy pricier products after months of holding back.
Trent’s chairman Noel Tata, however, said the firm would continue to expand and deepen its store presence, mostly in value retail, as the segment promised robust growth.