As the lights dimmed on the mega sales period that began in October and stretched on until Diwali in mid-November, a pattern’s emerging on how Indians shopped–making for an interesting narrative on the country’s growth and consumption patterns.
While companies did report growth over the previous year’s festive season, several of them, especially offline sellers of apparel, lifestyle and consumer goods, said shoppers at the mass end of the market spent frugally. These consumers spent on gifts and mobile phones, but went easy on more expensive purchases.
“It was decent. I won’t say great, but it was decent,” said B Sumant, executive director, ITC Ltd, which sells a range of products including packaged foods, gourmet coffee, soaps, and deodorants.
“I think the stress in the economy is what is affecting the bottom of the economy. At the top of the economy, people have money and they are buying, but you need everyone to buy. We are seeing some of that strain.”
To be sure, what had fuelled expectations of bumper festive sales this year was India’s higher-than-expected GDP growth in the September quarter.
E-commerce order volumes grew 37% from a year earlier during the just-concluded festive season, according to Unicommerce, maker of an e-commerce software platform. Fashion and beauty and personal care categories were among the most prominent in terms of order volumes. Automakers reported record sales in November.
But as this report had cautioned, consumer sentiment had seemed subdued, with many shoppers responding to a survey saying they planned to spend less than in the previous year’s festive season, and were only eyeing small purchases.
Vidhi Maheshwari, 38, said she waited for Diwali sales to buy clothes and beauty products apart from gifting items. “I did spend because of the sales everywhere. I usually wait for Diwali for electronics, but this year I didn’t have anything on my list,” said the New Delhi-based marketing professional. “I prefer shopping online than getting stuck in retail rush.”
Biscuits maker Parle Products reported 10-11% growth this festive season versus a year ago, but said demand had been okay.
“I’m not saying it’s been terrific,” said Krishnarao Buddha, senior category head at Parle Products, adding that demand in rural markets had not improved sequentially.
Distributors of fast-moving consumer goods said growth across the industry was not promising.
“There has been growth from festive to festive (season), but only value growth, i.e., pricing growth; volumes may have suffered,” said Dhairyashil Patil, president, All-India Consumer Products Distributors’ Federation (AICPDF). “Festive season was largely okay and not as expected. Distributors are still sitting on a lot of inventory.”
Packaged foods did well, followed by beauty and personal care as well as home care, he said.
Apparel retailers said the salience of festive season shopping has diminished over the past decade, as shoppers are buying more during the end-of-season sales. Also, middle-class shoppers are also prioritising other expenses as high inflation has eaten into the overall cost of living, said industry executives.
“Festive season was so-so compared to last year and many brands would have seen a degrowth,” said Rahul Mehta, chief mentor, Clothing Manufacturers Association of India, an industry body that represents apparel manufacturers, clothing brands and retailers. “The wedding season is about to start, so we are hoping it season will help lift (consumption).”
Mehta said apparel retailers reported an average of 5% growth in sales this festive season, albeit on the high base of the previous season, which benefited from a post-Covid shopping rush.
“Last year’s festive season was abnormal with several retailers reporting very high levels of growth. This year, middle-class spending has slowed down quite a lot as they are prioritising other expenses. Consumers are probably spending more on upgrading mobile phones or paying off vehicle EMIs,” he said.
Consumers also went easy on buying large appliances.
Nilesh Gupta, director at electronics retailer Vijay Sales, said while demand remained strong for devices such as laptops, smartwatches, and mobile phones, large appliances such as refrigerators recorded low single-digit growth this festive season; sales of washing machines were flat.