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Value retailers are seeing their stocks fall sharply amid expectations of a muted second quarter, as restrained consumer spending and inflation weigh on sales growth. On Monday, DMart-operator Avenue Supermarts Ltd fell 6.67%, while V2 Retail Ltd plunged 16.63% and Vishal Mega Mart Ltd declined 1.26%. Trent Ltd slipped 0.86%, while V-Mart Retail Ltd gained 3.19%. The weakness reflects growing investor anxiety that higher prices and softer demand could squeeze the value-retailers’ core proposition just as the festive season gets underway. Avenue Supermarts fell despite a strong September-quarter showing. It reported a revenue of ₹19,206.18 crore, up 18.4% year-on-year and 4.7% quarter-on-quarter, while its store count rose to 518. Sandeep Abhange, research analyst for consumer and midcaps at financial services firm LKP Securities, said he did not see any major negatives in DMart’s update. “I thought the update was good overall,” he said. Q2 outlook The broader concern, he added, was the outlook for value retailers as inflation and higher costs make consumers more cautious. Abhange expects the value-retail segment to have a muted Q2 FY27, with festive spending happening gradually rather than in a broad-based surge. “It is like it's in bits and pieces,” he said. “If someone wants it, then they are taking, but it's not like across the board.” Consumers are becoming “more cautious” even as the festive season gets underway. That puts value retailers in a difficult spot, as raising prices could undermine the affordability that draws shoppers to them. “If you raise prices, then there is no point of value,” Abhange said. Meanwhile, cost pressures are squeezing retailers' margins, with higher crude prices raising costs for petrochemical-based materials, packaging and freight. Apparel retailers face a separate hit from cotton, with yarn prices up about 60% this year to around ₹400 a kilogramme from ₹250 at the start of 2026, according to the Apparel Export Promotion Council. Retailers are absorbing some of the increase and keeping price hikes in check to protect demand, according to a recent Nuvama report. The pressure comes as India’s retail inflation accelerated to 4.82% in August from 4.45% a month earlier, while food inflation rose to 5.95% from 5.52%, according to data from the ministry of statistics and programme implementation (MoSPI). V2 Retail’s weak same-store performance prompted the retailer to cut its full-year same-store sales growth guidance to 5-7% from 8-10%, even as it retained its target of more than 50% revenue growth for the year. The second-quarter revenue rose 28.4% to ₹905 crore, but the same-store sales growth was just 0.5% on a festival-normalized basis. The company added 49 stores during Q2 FY27, taking its network to 427. On a calendar basis, same-store sales declined 14.9%, although the comparison was distorted by the festive calendar. Navratri and Durga Puja, which fell in the September quarter in 2025, shifted to October this year, with V2 expecting festive demand to benefit the December quarter. V-Mart, which largely caters to value-conscious consumers in smaller cities, reported 18% revenue growth to ₹953 crore. Same-store sales growth was 3%, but rose to 11% after adjusting for the shift in the festive calendar. Trent, which operates the Westside and Zudio stores, reported a 23% year-on-year jump in standalone revenue rose at ₹5,788 crore in the quarter ended 30 September. The retailer opened 27 net stores across Zudio and Westside during the quarter, taking its total store count to 1,342. Zudio crossed the 1,000-store mark during the quarter. Vishal Mega Mart has not released its Q2 results. Stiff competition Abhange also pointed to valuations as a concern for V-Mart and Trent, saying the stocks had run up significantly and were trading at high multiples. For Trent, he also flagged inflation and the possibility of price increases as concerns. He also flagged growing pressure from quick commerce, where he sees strong momentum despite cautious consumer spending. “The momentum is quite strong,” he said. Physical retailers carry high fixed costs, while quick-commerce players continue to expand their dark-store networks, adding to competitive pressure on traditional retailers.
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