Moderating inflation and reduced concerns with regard to financial uncertainty have helped improve retail sentiment on the ground in the month of May, a survey by the Retailers Association of India (RAI), an apex body of domestic organised players, shows. The survey findings were released on Monday.
May retail sales rose 7% year-on-year versus 6% sales growth seen in the months of March and April each in comparison to the previous year, RAI said. The month of June is likely to be better from a retail sales perspective as categories such as apparels and fashion kicked off end-of-season sales (EOSS) early to exhaust inventory ahead of the monsoon season, experts said.
On Monday, Ajio, part of Reliance Retail, which had kicked off its EOSS called Big Bold Sale on June 1, said that order volumes spiked 40% this year versus last year and that 50% of the total orders were from tier 2 and 3 markets.
“It is encouraging to see the growing uptick from the non-metros during the shopping season,” Vineeth Nair, chief executive officer (CEO), Ajio, said. “With over 1.5 million customers shopping more than once during the sale, Ajio’s reach has grown,” he said.
Apart from Ajio, rival Myntra from the Flipkart group had also launched its End of Reason Sale on June 1, saying that it recorded nearly 50% growth in number of new customers during the sale versus last year. 45% of the growth came from metros such as Bengaluru, Delhi, Mumbai, Pune and Hyderabad, while 55% of the demand came from non-metros, Myntra said.
“As consumers are now getting into their normal routines, the retail sector is witnessing moderate growth over the previous year,” Kumar Rajagopalan, CEO, RAI, said. Apparel and jewellery retail, for instance, have seen a sales growth of 9% in the month of May, while quick-service restaurants (QSRs) and food and grocery retail saw a sales growth of 7-8% during the month. The weaker categories included footwear, sports goods and furniture retail that saw year-on-year sales growth of 2-3% in May.
Despite this, the April-June 2023 period for organised retailers is turning out to be better than the March quarter, when segments such as QSRs and apparels were hit hard by a slowdown in discretionary spends, as inflationary pressures remained high, said experts tracking the market.
A report by brokerage Motilal Oswal on Monday notes that the month of June should see better revenue trends for retailers as they pass on gains due to lower commodity prices to consumers.
“Last year, a strong post-pandemic recovery resulted in limited EOSS. However, this year softening raw material prices could be passed on to keep demand momentum going,” the brokerage said.
RAI says that a sharper retail sales trend will be visible during the festive season when lower overall inflation and a strong shopping mood should aid sales growth.