The Indian footwear industry, once hailed for its resilience and growth, is now grappling with a harsh reality as demand takes a nosedive.
This is first time in last many decades – economic slowdowns, changing consumer behavior, unsold inventories, pandemic-induced disruptions have converged to create a perfect storm, leading to a significant slump in demand.
Forecasts suggest that this downward trend is likely to persist for at least the next 2-3 quarters, presenting significant challenges for industry players.
Factors Contributing to the Slump.
Economic Downturn: The Indian economy has been experiencing a slowdown, exacerbated by the impact of the COVID-19 lockdowns. Reduced consumer spending power and uncertainty about the future have led to a decrease in discretionary spending, including on non-essential items such as footwear.
Shift in Consumer Behavior: Changing consumer preferences and lifestyle shifts have further dampened demand for footwear. With remote work becoming the norm and social gatherings limited, there is less need for formal and fashionable footwear, leading to a decline in sales.
Supply Chain Disruptions: The footwear industry relies heavily on a complex global supply chain. Disruptions in the supply of raw materials, logistics challenges, and production delays have hindered the ability of manufacturers to meet demand, further exacerbating the situation.
Competition from eCommerce: The rise of ecommerce platforms has intensified competition within the footwear industry. Online retailers offer a wide range of options at competitive prices, attracting consumers who are increasingly opting for the convenience of online shopping over traditional brick-and-mortar stores.
Impact on Industry Players.
Manufacturers: Footwear manufacturers are experiencing a significant downturn in orders, leading to production cutbacks and inventory pile-ups. Many are facing financial strain as they struggle to adapt to the changing market conditions.
Retailers: Footwear retailers, particularly small and medium-sized businesses, are feeling the brunt of reduced foot traffic and declining sales. Many are being forced to offer heavy discounts and offers in a bid to clear excess inventory.
Workers: The slump in demand has also impacted workers employed in the footwear industry. Layoffs, wage cuts, and temporary shutdowns have become common as companies look to reduce costs amid dwindling revenues.
Forecasts and Outlook.
Industry experts predict that the current downturn in the Indian footwear market is unlikely to be short-lived as many companies like Bata, Relaxo, Campus failed to show any uptrend in the overall demand.
Campus Activewear shown Zero returns in its Q3 results which is not common in the footwear industry that too be on 3rd Quarter which is known for best sales, although they are stating some other reasons for this, which is hard to acknowledge.
With economic recovery expected to be gradual and consumer sentiment remaining subdued, demand is forecasted to remain depressed for the next 2-3 quarters at least and can extend up to 4-5 quarters if no sign of recovery visible.
Conclusion.
The Indian footwear industry finds itself at a crossroads, grappling with unprecedented challenges that threaten its stability and growth. As industry players navigate this uncertain terrain, innovation, agility, and a customer-centric approach will be crucial in weathering the storm and emerging stronger on the other side.
While the road ahead may be fraught with obstacles, it also presents opportunities for those willing to adapt and innovate in response to changing market dynamics.
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