15 September 2022, Mumbai:
Retail businesses across India had a 15% growth in sales as compared to pre-pandemic levels ahead of festivity. Are retail sales set for a bumper growth ahead of festivity as per data? observes Kumar Rajagopalan, CEO, of the Retailers Association of India (RAI). He also alluded that," The growth might pick up around Dusshera but we’ll have to wait and watch".
The effects of inflation
Reading into the data given inflationary/cost pressures it has different impacts across category mix & product spectrum. Inflation affects different stakeholders in a different fashion but on the whole, it is anecdotal that it bites the common man more than anybody else. The same is clear when one wades into the granularity of the data as pricier articles are selling more V/s low ticket/lower price spectrum where we have started to see consumers titrating.
Given the recovering nature of the economy currently, experts are sanguine that consumer downtrading at present is transitory and consumption optimistically gets more wide-based as the festive season merrily kicks in.
Topically sales growth of August 2022 as an apple to apple comparison V/s pre-pandemic period was pretty secular & encouraging as witnessed across regions with sales in East India growing to 19%, while South India showed a growth of 12%, North India indicating a resilient 18% and West India growing by as much 11%.
Sales across categories too are showing a steady increase with sports goods indicating a strong performance followed by footwear, QSR, and jewelry with impressive performance ahead of other categories. Prominent amongst those is the womenswear segment has seen a huge surge in demand.
Sales triggers
If we were to pinpointedly underscore some of the factors that galvanize the upward growth trajectory & fundamental growth tailwind: The ease of doing business for MSMEs is clearly one such factor.
Revenge buying as it is been commonly been regarded after restriction to home for almost two years & 1st normal year in three years notwithstanding the anchored inflation outlook. What gives a very bullish outlook is a lot of social gatherings including weddings are now happening and strong order pipelines helping raise the growth outlook. There has been a significant uptake in occasionwear and bridalwear, besides workwear.
E-commerce firms are expected to log a 28% year-on-year growth in sales at USD 11.8-billion during the festive month this year, and in 2021 overall online retail GMV (gross merchandise value) of $52 billion is likely to grow by 30% hitting $68 billion in 2022.
The growth is expected to be driven by the doubling of online shoppers during festive sales as against 2018 ahead of festivity, as it is seen that in the 1st week itself, the sales are likely to hit around USD 5.9 Bn. Additionally, the quick Y-O-Y comparison of 28% rise V/s corresponding period of USD 4.8$ Bn gives a big heart a Redseer report said recently.
Revenge buying drives retail sales
On the back of economic recovery and improving business & consumer confidence with Covid fear concerns fading. Who doesn't want to celebrate? These newfound expectations will be the key to driving sales revenues for brands during the festive season leading to an increase in volume & hopefully value sales.
Cautious optimism
India is continuously becoming a more & more consensus market. As we are seeing sustainable optimism in India both in business confidence & consumer sentiments, especially at the premium end of the market/against the entry-level and incremental %age of GDP going up, up & away on the private consumption side of the economy.
India is doing well given the economic revival though the global economy is not doing well as a lot of upheavals are going on in the background.
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