Large retailers restock in anticipation of a spike in demand

30 Jun 2022 , 11:36 AM

When compared to the prior year's quarter, inventory levels at almost a dozen publicly traded Indian retailers increased by an average of 50% as they took precautions against pandemic-related disruptions because they anticipated higher demand following two years of subpar sales performance.

According to media reports, Trent and Go Fashion doubled their inventory levels in the final quarter of FY22, while Page Industries, V-Mart, Relaxo, and Aditya Birla Fashion and Retail raised their stocks by 60—70%. While Vedant Fashions increased its inventory spending by 40% during the quarter, TCNS increased its investment in it by 30%.

Retailers were obliged to use inventory reserves in 2020—2021 as pandemic-driven curbs hampered production and the flow of raw materials. Retailers actively rebuilt inventories over the previous fiscal year when the limitations loosened, partially to protect against such interruptions.

While retailers claimed that the increase in inventory was done to counteract inflationary uncertainty in raw materials, they are also stocking up in anticipation of high demand. V-Mart claimed that because it has been storing up for the forthcoming holiday season, the inventory mix appears to be slightly higher.