Apparel retailers to skip big discounts this festival season as high costs pinch

As per the latest business developments, Apparel retailers have decided to move away from heavy discounting this festival season as costs of various inputs — from manufacturing, transport to final packaging — keep climb, impacting margins, Retailers Association of India (RAI) chief executive officer Kumar Rajagopalan told Moneycontrol.

While the top line could see a double-digit expansion amid improved consumer confidence, margins could be stressed, Rajagopalan stated. Retailers are additionally struggling to keep stores sufficiently staffed for the season amid shortage across the country.

"I don't think discount is going to be a big strategy this time. The biggest strategy would be to have stocks that are different, innovative and to ensure there's some kind of experience when it comes to physical retail,” Rajagopalan stated.

Every time the crude prices spike, every time a channel gets blocked, some key components such as carry bags are not available. Retailers find themselves trying to manage cost. “I think margins are going to be questioned more than the top line for many retailers," Rajagopalan stated on the sidelines of Manning Modern Retail (MMR) Conclave 2026.

RAI counts Tata-owned Trent, Reliance Retail, Arvind Fashions, Aditya Birla Fashion and Retail Ltd among its members.

While Rajagopalan did not quantify the overall gain in raw material costs, he flagged key pressure points, saying man-made fibre costs have surged by “elevated double-digit” percentages, while fuel costs in India are up 15–20 percent.

The comments come as the apparel retail sector’s performance remained broadly consistent with previous quarters, with several players sustaining double-digit expansion.

"A major headwind during the first quarter was the occurrence of Adhik Maas, which led to a moderation in occasion-led consumption and wedding-related purchases. This seasonal shift particularly impacted ethnic and wedding wear, pushing some demand into the second and third quarters," brokerage Systematix wrote in a note on August 18.

Adhik Maas is an extra month in Hindu Lunar calendar during which some people choose to avoid big-ticket purchases.

It noted that premium players are shifting the product mix toward elevated-value materials (like high-value wool and linen) and experiential retailing to drive elevated average transaction values (ATV). The growing war shadow

During Q1, most retailers chose to partially absorb these costs or implement small, calibrated hikes to maintain consumer value and competitiveness while protecting margins, with a heightened focus on inventory freshness.

"Retailers are very aware that macroeconomic conditions can go either way — thanks to the situation in Russia and Middle East. So they're trying to do planning and bring in stocks very close to time, so they don't land up overstocked," Rajagopalan stated.

That stated, many retailers found themselves understocked in August after failing to anticipate the sudden rebound in demand.

"The constant ability to keep moving stock up and down is the biggest challenge retailers have got," Rajagopalan stated.

To counter geopolitical supply-chain disruptions, some players chose to scale up their safety stock as a buffer, Systematix stated. Staff shortage

Staffing stays another challenge heading into the season.

"The one thing that kept coming up — talking to retailers in Chennai, in Delhi in the last 15 days — is people availability… One out of ten people have got the attitude to serve. That's always a worry," Rajagopalan stated.

Elara Securities market watchers expect premium categories to continue to outperform amid the inflationary environment. Mid-market demand will likely stay selective and promotion-led.

(Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)