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'Apparel retail's recovery expected to continue in FY22'
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SME Times News Bureau | 17 Mar, 2021
Apparel retail sector's recovery is expected to continue in FY22, on
back of improving consumer confidence, resumption of store expansion by
organised players and prospects of the vaccine rollout, said India
Ratings and Research (Ind-Ra).
"Although the pressure on
discretionary spending, possibility of a second wave of infection in
certain states and subsequent travel restrictions continue to pose a
threat to the recovery, improved cost structures, liquidity enhancement
measures and omnichannel push should provide cushion to glide through
the same," Ind-Ra said.
Besides, the ratings agency expects part
of the cost rationalisation measures undertaken by retailers during the
pandemic-led crisis to be sticky and sustain even after achieving
business normalcy starting FY22, thereby structurally improving the
margin profile of apparel retailers.
"Store expansionary capex reduced sharply in 1HFY21 on the back of the lack of business visibility."
"However,
Ind-Ra expects the pace of expansion to accelerate in FY22, as the
organised segment continues to gain market share from the unorganised
segment along with an improvement in the operating environment and
resumption in store rollout from 3QFY21, with particular focus on Tier
II plus cities."
Furthermore, the ratings agency cited that while
retailers have been pushing omnichannel offerings for the past few
years, the pandemic has accelerated digital transformation, forcing
retailers to think broadly and invest more rapidly in them.
"Retailers
will continue to allocate an important part of their capex to the
development of omnichannel capabilities to widen their digital and
customer interaction capabilities and thus complement the brick and
mortar business."
In addition, the agency said with the survival
phase following the pandemic now completed, the focus has shifted
towards revival and growth.
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Customs Exchange Rates |
Currency |
Import |
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US Dollar
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75.65 |
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