Quick Summary
India's apparel and footwear retailers were expecting a sharp consumption revival following the GST rate cuts announced in mid-August. Instead, the sector witnessed one of its most muted festive seasons in recent years, weighed down by an early Diwali, weak discretionary spending and erratic monsoon patterns. Despite the Goods and Services Tax rationalisation aimed at making mass-market clothing and affordable footwear cheaper, most retailers reported subdued growth or even a decline in sales d
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FAQ :
While the GST rate cuts theoretically made mass-market clothing and affordable footwear cheaper, they did not lead to a significant consumption revival in the September quarter. Many retailers reported subdued growth or sales declines.
Uncertainty surrounding the GST transition led to delayed buying. Consumers and channel partners postponed purchases to avoid input tax credit mismatches, especially with a long window between the announcement and implementation of the rate changes.
Mass-market categories and the mid-segment of the footwear market generally underperformed. Retailers like Bata India and Khadim India reported declines in revenue and sales for these segments.
Premium brands such as Metro Brands and Aditya Birla Fashion and Retail Ltd (ABFRL) reported smoother demand trends. Customers in these segments intentionally waited for the rate cuts before shopping, leading to increased footfall after September 22.
The festive season was impacted by an early Diwali, unseasonable rains and cyclonic warnings across several states, and deep discounting by online marketplaces. These factors fragmented spending patterns and pressured retailer margins.
Analysts expect the GST cuts to have a gradual positive impact over the next 6-12 months. While some improvement is anticipated in the third quarter, growth is expected to remain constrained by low discretionary spending and high competition.
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