Top global apparel and fast fashion brands have struck a strong chord with young customers, racking up sales growth in a 40-60% band in FY23, bucking the market trend where demand for discretionary products slowed down.
Swedish fashion retailer H&M and rival Zara reported a 40% increase in its topline, while Japanese brand Uniqlo saw a 60% jump in sales. American denim maker Levi Strauss and British brand Marks & Spencer posted a 54% growth, latest filings with the Registrar of Companies showed.
Revenues jumped 46% on a large base for Dubai-based department store Lifestyle International. These brands garnered combined annual revenues of nearly $2.6 billion, more than double compared to FY21 when it was $1.1 billion all put together.
“With consumers getting brand conscious, global brands have a natural advantage. There is a distinct aspirational momentum for international brands that carries them through. Also, they can sustain having unsold inventory and discounting better than smaller local peers,” said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm. “These brands have not yet reached the saturation point in terms of network and hence can invest further to widen their reach.”
The revenue surge was also buttressed by brands’ shifting focus on ecommerce that now accounts for more than quarter of their sales, even as they face intense competition from both local and global rivals in an increasingly crowded market where web-commerce firms continue to offer steep discounts. Over the past two years, sales growth for most retailers has been price-led, reversing the historic trend when volumes or actual demand drove bulk of the sales.
The fashion retail segment has been struggling with a demand slowdown since January last year due to inflationary headwinds. The overall retail growth slowed to 6% in both March and April, increasing to 9% in August and September before falling slightly to 7% in October and November, according to the Retailers Association of India.
“Spends are shifting to experience, holidays and big-ticket purchases such as cars. Stronger retailers which had the right product to price proposition works for consumers who are not necessarily looking at brands from global and local lens. What helped our sales was product rationalisation, renovation of stores as well as our value proposition,” said Manish Kapoor, MD at Pepe Jeans that clocked 54% growth to ₹560 crore in FY23. “The current fiscal has been muted and we expect election spending and improved sentiment to drive recovery next fiscal.”
The world’s most populated country is an attractive market for aspirational apparel brands as rising disposable incomes cause the base of consuming pyramid to broaden further.
By Sagar Malviya
https://economictimes.indiatimes.com/epaper/delhicapital/2024/jan/05/et-corp/india-sales-zoom-for-global-fashion-retailers/articleshow/106554680.cms
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