Big Retailers stock up in the hope of a surge in demand

Inventory levels at nearly a dozen listed Indian retailers surged by 50% on average in the quarter ended March compared with the year-ago period as businesses, expecting higher demand after two consecutive years of below-par revenue performance, moved to insulate against pandemic-led disruptions.

The last quarter of FY22 saw

and double their inventory levels, while , V-Mart, and increased their stocks by 60-70%, data from earnings presentations showed. TCNS’s investment in inventory rose by 30% while spent 40% more on it during the quarter.

In 2020-21, retailers were forced to dig into inventory reserves as pandemic-led curbs disrupted production and the raw material supply chain. Last fiscal, as the restrictions eased, retailers aggressively rebuilt inventory, in part to insulate against such disruptions.

Big Retailers Ramp Up Stock in Hopes of Rising Demand

“We also have built up some strategic stock, as far as raw material is concerned. This is to enable us to insulate to some extent from the volatile input price and the inflationary pressures which we are facing as far as the inputs are concerned, especially in cotton,” VS Ganesh, chief executive officer at Page Industries, told investors. “This is really helping us for the first quarter as well because we now don’t have the kind of sales loss or the opportunity losses, which we had in the past because of lack of supplies.”

While retailers said the inventory build-up is to offset uncertainty in raw material inflation, they are also stocking in anticipation of strong demand. V-Mart said the inventory mix looks marginally higher because it has been stocking up for the upcoming festive season.

“The increase in inventory is also an indication of the higher expansion plans in store for most retailers this fiscal year,” V-Mart Retail MD Lalit Agarwal said.


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