Currency deomonetisation hits apparel retail

Just when the retail industry was celebrating a good festival season this year after two years of dull growth, came the currency impact. Mid-segment fashion retail chain, Max Retail, for instance, has witnessed a 15 per cent dip in sales recently since the currency demonetisation. For Max, 30 per cent of sales happen through cash payments.

Almost 40 per cent of Pepe’s sales in metro markets come from cash transactions, while it is as high as 50 per cent in Tier II or III towns. However, in the medium to long term, it is not formats such as Big Bazaar or Max that would face the brunt, but premium and luxury brands across segments. Bridge-to-luxury and luxury brands are segments where cash transactions are as high as 60 to 70 per cent, and these may take a huge beating in the coming months. Spends on luxury and premium brands are expected to slow down.

High-end fine dining restaurants are also likely to be impacted, as they attract a high rate of cash transactions. The other segment that may de-grow is the luxury used car segment. Most doctors and chartered accountants use their unaccounted money in buying second hand luxury cars, as buying a new luxury car would require pan card details.