The consumer sector had been betting on a recovery by the second half of this fiscal.
But with companies posting poor results for April-June quarter, experts say the recovery is nowhere in sight.
Almost all FMCG players have recorded single-digit volume growth, while on the retail front, same-store sales growth continues to struggle in the mid single-digit range.
A research report by India Ratings has maintained a negative outlook for the retail sector, even for the second half of the year.
“The fiscal 2013 private final consumption expenditure (PFCE) growth rate was at an eight-year low. We do not expect any significant improvement in this for the second half of 2013. Deterioration in PFCE is possibly emerging as a well-entrenched trend,” said Janhavi Prabhu and Priyanka Poddar of India Ratings & Research.
Companies have continued with high promotions and advertisement spend to lure consumers. Along with freebies, special offers have also been doled out to woo customers, but it has failed to yield any results. Several big players such as HUL, Dabur, Jubiliant FoodWorks and ITC have all seen a decline in volume growth as compared with the last quarter.
Abneesh Roy of Edelweiss Securities said, “Even if you compare historically, volumes have come down in the first quarter of this fiscal. As a result of good monsoon one can expect some recovery in the rural market in the second half of the year, but it is unlikely that the urban segment will show any significant improvement.”
In fact, experts said that overall the third quarter may be better owing to a pick-up in rural demand and the festive season.
“Wage inflation continues to be lower than food inflation, and as a result a recovery is unlikely. However, going ahead consumers may not downtrade but will still continue to stay away from discretionary spends,” said another analyst.
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