“Contrary to the popular belief, organised fashion retailers (departmental stores) have bucked the impact of demonetization.
“…most of these departmental stores are located in Metros and Tier I and II cities where consumers were readily shifting to card payments; resulting in the share of cards as a percentage of revenue increasing to 80-90 per cent in the last quarter (averages around 40 per cent-50 per cent),” the rating agency said in a statement.
Ind-Ra said it expects organised retailers in the food, grocery and fashion retail segments to be unaffected, high value items namely jewellery, luxury items (watches), consumer durables to show contraction in topline in third quarter of 2016-17.
“Ind-Ra expects most companies in the organised retail sector to post low single digit growth with varying impact across different sub-sectors,” the rating agency said.
Observing that the organised retail jewelers is likely to report minimal growth to de-growth year-on-year in third quarter revenues as consumer demand remained muted in the aftermath of demonetization, Ind-Ra said margins are also likely to be impacted given the high operational leverage in the segment; albeit supported by higher gold prices for most part of the demonetization period.