Festive and wedding season and increasing preference for fast fashion is expected to help the organised retail apparel sector log 8-10 per cent revenue growth this financial year, a report said on Tuesday. The organised retail apparel sector will clock a revenue growth of 8-10 per cent this fiscal riding on higher demand stemming from a normal monsoon, easing inflation, festive and wedding season and increasing preference for fast fashion, which is inexpensive, trendy clothing that mimics high fashion designs and popular styles, Crisil Ratings said in a report.
“The mass market segment accounts for 60 per cent of total sales now, compared with 56 per cent before the pandemic, due to the rising popularity of fast fashion, which is expected to be the primary revenue driver this fiscal. The likely increase in demand for premium clothing during the upcoming festive and wedding seasons will also contribute to overall revenue growth of 8-10 per cent this fiscal,” Crisil Ratings Senior Director Anuj Sethi said.
However, revenue growth will be slower than the compound annual growth rate of 11-12 per cent seen between fiscals 2018 and 2023, making retailers cautious at opening new stores, the report noted.
Instead, retailers will focus on enhancing efficiencies at existing stores, controlling costs and limiting reliance on external debt, which will help maintain their operating margin at 7.2-7.4 per cent despite continued high marketing expenses, thereby ensuring stable credit profiles, it added.
In the apparel retail business, the mass market is the largest segment, followed by premium and luxury.
