22 October 2022, Mumbai:
The first normal year after three years has triggered vengeance shopping of sorts given we are into the festival season of the year 2022. It is now firmly anchored that two years of pandemic-led restrictions and financial caution were thrown to the wind as Indian shoppers dived into the festive shopping spirit before Navratri and Durga Puja and are likely to continue doing so for Diwali next week.
Premium segment takes a prominence
The trend of robust growth is seen as more pronounced in the premium segment than in the value segment. Many of the retailers observe that the demand that they are currently seeing is the highest ever and a host of factors, including positive consumer sentiment and fresh merchandise, is driving sales. What gives heart to businesses is that there is a pattern change as most of the brands are selling at full price and aren’t offering discounts during the run-up to Navratri and Diwali due to secular popular demand, particularly for apparel/garments and accessories. Some of them had to reduce discounting this time as the demand for full-priced merchandise remained robust.
What are the trends we are watching
Strong indications started from Onam and Durga Puja this time, brands and retailers found there has been a strong run-up right from Onam to Durga Puja. Urban consumers are clearly buying discretionary products without any stress on inflation while a slight slowdown/customer downtrading is seen in value or mass-priced products in non-metros and rural. Malls have also spread their footprint in sync with the energy consumers have been showing.
Consumer exuberance mood
This shopping resurgence has been quoted to have made sales jump by 25% in key malls like Pacific Malls in North India and Phoenix Malls in Western India, Diwali is just rocking it for them. The buzz is everywhere, observe consultants and trade veterans alike. The appliance industry has already seen strong growth this festive season, and other categories including apparel, beauty, wellness, and jewellery are also seeing significant traction. As the festive season approaches, even the e-commerce channels are expecting a sales growth traction of 15-20% YoY.
Pre- and Post-COVID-19 impact
The retail businesses in India have reported around 15% growth in sales compared to pre-pandemic levels, signaling that the festive season sales are expected to level with or even surpass the pre-pandemic levels, especially within the premium segment. “This year it is at a different level and sales are already up 10-15% compared to pre-2019 sales.”
According to Redseer Strategy Consultants, the 2022 festive season is going to grow by 28% year-on-year and touch around USD 11.8 billion. Sanjay Kothari, associate partner, Redseer Strategy Consultants said, “We are forecasting 4x growth in the number of online shoppers from 2018.
How long the party will last?
This growth has been driven by accelerated digital adoption and increasing penetration in Tier 2 and smaller cities. We expect this expanded customer base to reflect in higher sales during the festive sales period as well."
Does this buoyancy indicate that Indian retail has overcome the disastrous two years of the pandemic and is back on track? Or will the slump seep in with the debris of fireworks? Experts think that it is possible that post the festive season, things will be business as usual, as in pre-pandemic given the economic headwinds as there are many moving parts including persistent sticky inflation, softening of consumer sentiment, particularly in low ticket article.
