Retailers Go Easy On Leasing Warehouses Amid Slow Spending
New Delhi: The share of warehouse leasing by retailers fell by nearly a third in the first half of 2023 as consumers continued to cut back on discretionary spending.
Retailers leased 9% of warehouse- sing space between January and June this year, compared to 13% in the same period last year, ac cording to CBRE data. Consumer goods companies, however, doubled their share to 6% while the share of the automobile segment rose from 5% to 7% during the same period.
Consumers began to curb spending on non-essential items such as apparel, lifestyle products, electronics and dining out since Diwali last year due to inflation, increase in interest rates, job losses in sectors like startups and IT, and an overall slowdown in the economy. It is, however, expected to rebound in the second half of this year backed by an anticipated increase in consumption du ring the festive season.
“Over the last six months, there is a consolidation, but we already started seeing activity in Q2. Du- ring the first half of this year, there was a small blip but de- mand has started coming in,” said Rajesh Jaggi, vice-chairman, real estate, Everstone Group, which operates warehouses across the country
Experts said companies are al- so looking to outsource the space they had taken during the pandemic.
As per CBRE, the retail sector, across categories, will witness accelerated growth with the fashion and apparel category expected to expand by over 12 times by 2047. “India’s retail landscape is undergoing changes, owing to a surge in retailers, store expansion, and rapid growth in online
shopping. Also, successful new brand launches are forcing retailers to streamline their business and explore the untapped tier-II. III, and IV markets for both stores and warehousing.” said Anshu- man Magazine, CEO, India, South East Asia, Middle East and Africa, CBRE.
For most retailers, post-pande- mic, the warehouse is the epicentre for omnichannel distribution network for offline as well as online clientele.
Over the past 6-8 months, most companies have been either slashing price tags or offering steep discounts to clear unsold inventory after raising prices across apparel categories last year.
“We are expecting festive sea- son to bring back the demand. July-September quarter has also seen muted growth and with the festive season shifting, we are anticipating demand boost from the third week of October,” said De- varajan Iyer, chief executive of department store chain Lifestyle International.
Source-The Economic Times