The Economic Times daily newspaper is available online now.

    Discretionary spending may weaken in Q4; apparel, lifestyle cos and eateries expect sales to grow only 15%-20%

    Synopsis

    The slowdown is not restricted to apparel. Even the liquor segment that surpassed pre-Covid sales last year, could see slower growth. Analysts also said demand environment remains weak in the quick service restaurant (QSR) space. Fine dining restaurant chain Speciality Restaurants' managing director Anjan Chatterjee said the phenomenon of revenge eating is now tapering down with dine-in business down by 5%-15% for the industry.

    mall spaceIANS
    Mumbai | Kolkata: Demand for discretionary categories such as apparel, quick service restaurants and lifestyle products has started to taper off and companies are expected to grow 15%-20% in sales during January-March quarter, lower than last few quarters, industry executives and analysts said.

    "Demand peak in discretionary categories seems to be behind us. Elevated ticket sizes and store expansion coupled with normalising footfalls aided growth," HDFC Securities said in a report. "However, in retail, many of these variables are now mean-reverting. In Q4, we are already seeing signs of reined-in expansion plans across categories and ticket sizes are also normalising."

    Empower Your Corporate Journey with Strategic Skill Courses

    Offering CollegeCourseWebsite
    IIM KozhikodeIIMK Chief Product Officer ProgrammeVisit
    Indian School of BusinessISB Leadership in AIVisit
    IIM LucknowIIML Chief Operations Officer ProgrammeVisit
    For apparel players, growth will look optically high due to a weak base, but overall demand trends remain broadly unchanged.

    121212Agencies

    "The industry has seen an impact of rising cotton prices in small towns as consumers are more price sensitive. We had a strong sales run during the second half last year, a trend which may not continue for every quarter. There will always be volatility in sales," said Satyen Momaya, India CEO of French apparel brand Celio.

    Analysts also said demand environment remains weak in the quick service restaurant (QSR) space due to muted consumer sentiment and discretionary spend with revenue expected to decline sequentially, since last quarter was a festival season.

    Fine dining restaurant chain Speciality Restaurants' managing director Anjan Chatterjee said the phenomenon of revenge eating is now tapering down with dine-in business down by 5%-15% for the industry.

    "Pent-up demand cannot sustain forever and people are back to normal habits. However, the loss of dine-in is ably getting compensated by deliveries. And people are still indulging in dine-in during weekends and special occasions when restaurants are running at full capacity," said Chatterjee.

    Elara Capital, in an investor note, said Jubilant FoodWorks is likely to post a contraction in same-store sales of 2.5% in Q4 with flat like-for-like growth while Westlife Development could outperform peers due to no significant decline in footfalls but revenue may be hit due to lower demand. "Cost pressures persist in the dairy space, leading to an increase in prices of raw materials. Jubilant and Westlife are expected to report average revenue growth of 19.5% year-on-year, but a decline of 3.5% quarter-on-quarter," said the Elara report.

    The slowdown is not restricted to apparel. Even the liquor segment that surpassed pre-Covid sales last year, could see slower growth. For the alco-bev segment, the January-March period is a seasonally weak quarter compared to October-December and route-to-market change in Delhi could mean that growth is likely to remain under pressure. "We expect our coverage of alco-bev companies to record 1.9% year-on-year revenue decline as we build on a 5% YoY revenue decline for United Spirits post divestiture of the popular portfolio," said a report by Nirmal Bang.



    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News, Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more
    The Economic Times

    Stories you might be interested in