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Consumers choose shirts over pizzas.

RATIONALISING consumers are not benefiting retailers. This is evident from the thirdquarter results of most companies. In other words, the festive season, which is usually the best quarter, has been quite disappointing. And though apparel and accessories retailers have had it bad as well, they still stand in better stead than quick- service restaurant ( QSR) operators.

The former's same- store sales growth ( SSG) slowed unlike QSR companies, which posted negative numbers.

" A consumer's spend is more on apparels than on food products, which means that he/ she is finding more value in a shirt or a trousers for ` 800 or ` 1,000 compared to spending ` 500 on a pizza," says Amnish Aggarwal, senior vice- president, Prabhudas Lilladher, a leading broking house.

Food service chain Jubilant FoodWorks recently reported disappointing quarterly results due to lesser consumer spend and high cost of raw materials. Gross margin in the third quarter fell 100 basis points to 73.3 per cent while SSG was down 2.6 per cent as compared to the corresponding period a year ago. " People are finding value in spending on durable items rather than spending on food," says Aggarwal adding that even coming off food inflation is unlikely to change things.

Companies are tweaking their strategy to benefit from what is working best for them. Lifestyle retailer Shoppers Stop is looking at refreshing and tweaking its product categories as is Jubilant.

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Publication:Mail Today (New Delhi, India)
Date:Feb 7, 2014
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