Largely dragged down by lower sales across apparels, the organised bricks-and-mortar retailers are expected to close the current fiscal with a 19 per cent drop in revenues, but at the same time they also expect a 23-25 per cent growth in revenues in the next fiscal.
This growth is expected owing to a broad-based demand recovery, increased footfalls and revival in discretionary spending, and also on account of a low base effect.
This was claimed by the Crisil Ratings based on a study of 145 bricks-and-mortar retailers.
In FY21, apparel retailers will see a dip of over 40 per cent. The Crisil has projected that in FY22, revenues for apparel retailers will grow by 30 to 35 per cent.
The Crisil said in a note that revenues at such retailers will reach the pre-pandemic mark of Rs. 5.7 lakh crore next fiscal. The growth will ride on a low base as the sector is set to log an estimated 19-22 per cent revenue de-growth this fiscal due to the pandemic, which led to temporary store closures and restricted footfalls in the first half.
As per the report, sales had recovered to over 80 per cent of pre-pandemic levels in the third quarter of the current fiscal and are expected to recover almost fully by the end of the current quarter.
The recovery has been better for food and grocery retailers, while discretionary segments such as fashion and apparel retail are lagging.
This report comes as companies reported slight recovery in their December quarter earnings.
Apparel retailer Aditya Birla Fashion and Retail Ltd. swung to profit in the December quarter. Meanwhile, Avenue Supermarts (hyper-retail chain DMart) reported 11 per cent rise in consolidated revenue to Rs. 7,542 crore during the same period.