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Pepe Jeans’ India MD and CEO Manish Kapoor spoke to businessline on consumption trends seen in 2023 and the outlook for the upcoming year. Excerpts:
How has 2023 panned out for the industry, especially from the apparel segment point of view?
Last year, the industry witnessed strong growth, and players were expecting that growth momentum to continue this year. This was even as players understood that revenge buying trends were built into last year’s revenues, but they were still anticipating decent growth rates. However, it has been a lukewarm year.
We at Pepe Jeans have done relatively better than our peers. We have gained market share and grown by around 15–16 per cent. The like-for-like growth was driven by the renovation of existing stores and a focus on premiumisation in terms of the product mix.This growth was also driven by the addition of new stores as well as growth in the e-commerce channel. Though we have seen decent growth, it has been a little lower than our initial expectations.
What has led to this lukewarm year?
The economy is growing, and consumption is still happening. But clearly, consumers are looking at a better value proposition and better experiences, and whoever is able to deliver that probably is able to do better than others in this market.
If one looks at indicators such as strong occupancy on flights and hotels and consumer willingness to spend on fine-dining restaurants, cars, and homes, clearly consumption is happening.I think experiences are taking precedence as compared to just simple consumption. Today, you are not just fighting with competing brands in the same category but also competing with other categories.The share of wallets in fashion or apparel has taken a hit as the sector is competing with many other categories.
But do you think certain consumer cohorts belonging to lower socio-economic segments have stressed budgets?
A larger proportion of our sales have come from tier-2 and tier-3 markets. One can’t generalise that a particular market is stressed in terms of socio-economic structure. Even if one looks at it from the value segment perspective, look at a player like Zudio, which is growing exponentially. So clearly across the value chain, the consumer is looking for brands that will offer them a better experience with a better price-value equation.
What’s your outlook for 2024?
I think this trend of consumers seeking better value and better experiences will continue to dominate. Even in the premium segment, brands will need to focus on fulfilling consumer aspirations rather than just needs. Gone are the days when brands were able to compete just on prices or discounts. Even online marketplaces are no longer looking at increasing transactions by way of discounts.
In 2023, sales in the summer season were sluggish for the industry, with various challenges such as high raw material costs. In 2024, we expect to see good sales in the summer season. Inflationary pressures have cooled off, and there has also been a price correction. Factors such as elections and weddings will also lead to more money flowing into the economy.
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