In this briefing:
1. India Consumer Discretionary: Growth Slowing on NBFC Liquidity Tightness, Demand Softness
- While many NBFCs pulled back on disbursements in 3QFY19, the sharpest declines were in SME/MSME, LAP and Loan Against Shares (LAS) segments
- The pullback in SME/MSME financing has reduced working capital financing in some supply chains. This has impacted stocking in some discretionary items.
- A number of players alluded to weakness in discretionary consumption post Diwali owing to the NBFC liquidity squeeze
- With supply chains selectively impacted by liquidity tightness and weakness in demand, consumer discretionary players could not pass on input cost increases during the quarter
2. FRETAIL IN
We visit the large format stores of Future Retail (FRETAIL IN) fbb, Big Bazaar and Big Bazaar Gen Next, along with visiting stores run by Future Lifestyle Fashions (FLFL IN) Brand Factory and Central in Ahmedabad, Gujarat to understand some of the drivers behind SSSG of over 10% over the last 15 consecutive quarters. Our regional checks indicate the large format growth might be maintained in the future driven by loyalty programs like Future Pay. Interestingly the group has resorted to using its stores to mobilise funds for its fixed deposits, which could be a final indication that the planned of deal with Amazon.com Inc (AMZN US) is finally being called off.
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