NEW DELHI/MUMBAI: On India’s high streets and high streets, the mood in fashion boutiques is somber: foot traffic has declined, sales are low, and many brands are embarking on bigger-than-usual discounts for longer-than-usual periods.
The culprit? Rising food inflation after erratic monsoon rains ruined crops and disrupted chains.
Prices of tomatoes have soared, almost quintupling since June, while those of onions, a staple of Indian cuisine, have risen by as much as 80% in some places such as New Delhi. Food inflation in July reached a staggering 11. 5%, well above June’s three-year high of 4. 6%.
Burger King says tomatoes are on ‘vacation’ as India fights inflation
As the threads of handbags tighten, struggles being felt in India’s apparel and footwear retail sector (worth an estimated $62 billion in 2022 according to Euromonitor International) are stoking considerations about the appropriateness of customer spending, which is already slowing even before the shocking rise in food prices. . .
At a Zink London store in a Mumbai mall, for example, staff at the national womenswear chain call 10 consumers a day and send product photographs via WhatsApp in an effort to boost sales, according to a store manager who declined to be contacted. identified.
Interviews with managers of 25 other fashion retailers in four Indian cities who spoke to Reuters on condition of anonymity painted a similarly pessimistic picture.
Popular Indian and foreign brands, along with Japanese shoe stores Asics and Skechers USA, are offering significant discounts, some as much as 70 percent, well above normal, and have also extended their sales periods, several store managers said.
Even when consumers buy fashion items, they buy less than before, some officials also said.
Zink London, Asics and Skechers responded to Reuters’ requests for comment.
The slowdown in spending in the fashion sector has been accompanied by a drop in spending at restaurant chains such as Domino’s.
That said, Indian customer spending is not declining lightly. The country’s largest cinema operator, PVR Inox, recently recorded its highest turnover at $5 million, thanks to some successful Bollywood deals.
Hollywood saves India’s PVR Inox as Bollywood bombs office
The other richest people also continue to spend, and sales of high-end SUVs reached an all-time high.
But considerations are developing about the risk that inflation and top interest rates pose to customer spending.
“The biggest risk to India’s expansion will come from consumption, which accounts for about 60% of GDP and is already weak,” Kaushik Das, an economist at Deutsche Bank, wrote in a report this month.
The bank expects India’s economy to grow at a slower pace of 6 this fiscal year, up from 7. 2 last year.
In an encouraging sign, tomato costs have fallen from record levels and India’s central bank leader said last week that vegetable costs, which have to come down, would decline from September.
Retail outlets and industry executives are also hoping that the upcoming festival season (with the addition of Diwali in November, where other people like to do big shopping to make gifts and for themselves) will bring some relief to sales. But others are not necessarily optimistic.
“People are expected to spend during the holiday season . . . But we will have to wait and see what other people spend, as inflation has also come into play,” said Madan Sabnavis, lead economist at Bank of Baroda.
For now, consumers say they want to be more frugal given rising grocery bills.
“We look for designer clothes that fit our budget and stop at showrooms where there are maximum discounts,” said Anjali Mohanty, a housewife in the eastern city of Bhubaneswar who buys denim for her son.
“We want to adjust our family’s expenses. “