Fast fashion players such as M&S, Zara, H&M see fall in sales growth on spending woes

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December 14, 2024

Sagar Malviya, Economic Times
Mumbai, 14 December 2024

Fast fashion was on a slow lane in the last fiscal year. Sales growth slowed for top retailers and fast fashion brands, show the latest regulatory filings of Marks & Spencer, Zara, H&M, Levi’s, Lifestyle, Uniqlo, Benetton and Celio. The bottom line too had taken a hit, with most brands posting lower profits in the fiscal year ended March 31. Sales growth of H&M and Zara fell from 40% in FY23 to 11% and 8% in FY24, show the filings with the Registrar of Companies. Levi’s growth slowed to 4% from 54% in FY23, while that of Uniqlo halved to 31% from 60%.

The current year is not looking good either, as sticky inflation and stagnant income weigh on consumer spending on discretionary products, say experts.

Devangshu Dutta, founder of retail consulting firm Third Eyesight, said the job market has been under pressure and slower income growth for urban consumer impacted demand, a trend likely to continue even during FY25.

“There is a visible slowdown led by the urban middle class who buy branded products. These brands have been targeting young upwardly mobile consumers, who are tightening the purse strings due to the current economic circumstances of hiring slack and fewer jobs,” said Dutta. “The situation is not hunky-dory at all, and this will continue over the next few quarters.”

Being the world’s most populous country, India is an attractive market for apparel brands, especially with youngsters increasingly embracing western-style clothing. But most international and premium brands have been competing for a relatively narrow slice of the population pie in large urban centres.

Over the past few years, top global apparel and fast fashion brands struck a strong chord with young customers, racking up sales growth of between 40% and 60% in FY23, bucking the trend in a market where the overall demand for discretionary products started slowing down. This has reversed now.

Consumers started reducing non-essential spending, such as on apparel, lifestyle products, electronics and dining out since early last year due to high inflation, increase in interest rates, job losses in sectors like startups and IT, and an overall slowdown in the economy.

According to the Retailers Association of India (RAI), sales growth in organised retail segments such as apparel, footwear, beauty and quick service restaurants halved to 9% last year and slowed further to about 5% in the first six months in the current fiscal year. This slowdown came after a surge in spending across segments-from clothes to cars-in the post-pandemic period, triggered by revenge shopping.

“The base post-pandemic was extremely high, and that kind of growth is not sustainable as there is nothing spectacular in economy to drive demand,” said Kumar Rajagopalan, chief executive officer at the RAI that represents organised retailers. “Our bet was on the festive and wedding season, but we will have to wait and watch until next year for the performance numbers,” he said.

(Published in Economic Times)

Gen Y Workers

Devangshu Dutta

March 24, 2007

The idea that the “younger generation” is from another planet is age-old, and no different from the notion that “Men are from Mars, women are from Venus.”

However, there is certainly a fundamental cultural shift that is taking place at work that is a product of the social, political and economic changes of the last 20 years or so.

In India’s case, I call this Generation-C (C for Choice). The 20+ year olds or younger who are entering the workforce in India are ones who were born after the introduction of color television in India (1982), who have grown up with the explosion of media options, who have always seen multiple models of colorful cars running around on the roads. They’ve savored the fruits of liberalization during their childhood. Similar shifts were happening in China, having started a couple of years earlier — and Eastern Europe — and South Africa — and, of course, the US and Western Europe.

There is absolutely no doubt that these changes mean something to the attitude that this generation brings through the door, when they walk into work. Expectations of the young are always high; this generation’s seem even steeper.

Secondly – it sounds trite – technology has definitely had a significant impact in how truly fragmented we can be as an organization and yet be functional. Rigid attendance rules need apply no longer. Telecommuting is a reality, if not the norm.

However, however…these changes couldn’t happen without the previous generation@work loosening their shirt-collars and work-habits somewhat. That generation – the baby boomers and Gen-X in the case of the US, other labels in other countries – have challenged earlier norms, started the changes rolling, and Gen-Y is building on them.

“Plus c’est la meme chose, plus ça change.”