Unexpected Slowdown in India’s Retail Market Raises Concerns
India’s retail sector, long considered a robust growth engine, is showing unexpected signs of deceleration, raising concerns about the broader economic outlook. Even major players are struggling to maintain growth momentum in what was thought to be a resilient market.
The most striking evidence comes from Reliance Retail, a bellwether for the Indian retail market. The company reported a modest 7% year-on-year revenue growth in the first quarter of fiscal year 2025, falling significantly short of analyst expectations of 15-20%. This underperformance is particularly alarming given Reliance’s market leadership and its aggressive expansion strategies in the past decade.
Adding to the concern is the continued trend of store closures and a marked slowdown in new store additions across the sector. Reliance Retail added only 82 net new stores in the quarter, a sharp decline from its historical average of 740 stores per quarter in fiscal year 2023. This unexpected pullback in physical expansion plans suggests a deeper uncertainty about future consumer demand.
The slowdown is not limited to a single player. Even DMART, which outperformed Reliance with 18% year-on-year growth, showed signs of caution in its expansion strategy. The broader industry trend of subdued performance in fashion and lifestyle categories points to a more widespread retreat in discretionary spending.
Perhaps most surprisingly, this retail slowdown comes despite resilience in categories like groceries and consumer electronics. The divergence between essential and non-essential retail categories hints at a shifting consumer mindset, possibly influenced by broader economic concerns.
The unexpected slowdown, and particularly its impact on market leaders, raises some questions about the true state of India’s consumer economy.