Economy

Last-minute shoppers add sparkle to Diwali sales

Our Bureaus October 16 | Updated on January 08, 2018 Published on October 16, 2017

Shopping hub The Diwali shopping crowd at T Nagar in Chennai. Rains failed to dampen last-minute shoppers’ enthusiasm, and retailers had no complaints   -  K Pichumani

After a year of upheavals, retailers eye double-digit growth this festival season

After relatively muted consumer demand during the Navratri and Dussehra period, consumer durable companies and retailers say they are seeing an uptick in sales in the past couple of days, bringing the industry some much-needed Diwali cheer, and raising hopes of double-digit growth this festival season.

Nilesh Gupta, MD, Vijay Sales, said: “Around Dussehra, we had only single-digit growth; as compared with last year, demand was a bit muted. But in the past couple of days, we have seen a surge in demand. We believe overall that it will be a good Diwali, with 15 per cent growth over last year.”

In June, before the Goods and Services Tax (GST) was rolled out, retailers who were wary of uncertainties over input tax credit had gone on a de-stocking drive, offering big discounts. This led to nearly 40 per cent growth in secondary sales (from retailers to consumers), even though primary sales (from manufacturers to retailers) had been adversely impacted.

This may have accounted for the tepid demand for appliances during Navratri and Dussehra as consumers had advanced their purchases, especially for entry-level products.

Kamal Nandi, Business Head & EVP, Godrej Appliances, said: “Since Dussehra fell at the end of the month, when consumers typically have less disposable income, sales were impacted. But after the bonus and salary payments, there has been a rise in demand since the beginning of this month. In just the past three-five days, secondary sales have grown by as much as 15 per cent.”

Last year, post-Diwali buying and wedding-related purchases had been severely impacted by demonetisation. But this year, Nandi says, the company hopes to see demand even after Diwali.

“We believe November and December will be much better than last year and we plan to continue to launch new products,” he added. Most consumer durable companies like Godrej have been focussing on new launches and entering new categories since Onam.

Last week, Amit Gujral, Chief Marketing Officer, LG Electronics India, told BusinessLine that the company believes it will achieve 15 per cent sales growth this festival season. The company is seeing good traction for premium products, he added.

Eric Braganza, President, Haier India, too said the company expects to see strong double-digit growth in October.

Mumbai: Mixed sentiment

On the streets of India’s financial centre, the mood in the run-up to Diwali is somewhat mixed. Anwar Ali, a men’s apparel street hawker in Colaba Causeway, sounded upbeat since business had been brisk over the weekend. “Over the last 15-20 days, we have earned ₹9,500 so far,” he exulted.

“Diwali has always been the best time for us; this year is no different. I am even accepting payments on Paytm, so that has helped me. I have encouraged other shopkeepers to do that as well,’’ Ali added.

Neville Noronha, MD and CEO, Avenue Supermarts Ltd, echoed that sentiment. “We’re seeing good traction in Diwali sales and footfalls have been strong,” he said.

A mall operator who did not want to be named concurred. “There has been a spike in sales of departmental stores, hypermarket, electronics. The trend is upward compared to last year and there is good upswing in these categories,” he said.

A spokesperson for Big Bazaar noted that pre-festive season sales have been doing extremely well for the past month and a half, especially in the fashion segment. And in the past 10 days, “ we have seen good sales numbers in homeware, home fashion, food and electronics.”

In particular, he added, rural markets had grown 20-25 per cent more over the to urban market, as has been the case for the past two years.

These sentiments, however, are not universally shared. Riaz, who sells women’s clothes at Colaba Causeway, said: “Diwali hasn’t brought us any cheer. This route used to be packed a week before Diwali, but that isn’t the case this year. My friends say people prefer to shop on e-commerce platforms these days.”

Similarly, a representative at Anupam Chappals said: “It has been very dull this year. Business is down by at least 40-50 per cent, with barely two days to go. In the past 15-20 days, earnings have been about ₹14,000 a week, against about ₹30,000 last year.”

Ajay Srinivasan, Director, Crisil Research, summed up the sentiment thus: “It’s very mixed. With consumer durables, demand peaked with the offers that were on before GST came in, with stores trying to clear stocks. I don’t see this season being as good as the previous festive season. Consumer sentiment is a bit subdued compared to what you normally see.”

In his estimation, there has been a small shift towards malls and organised players, which are equipped to provide discounts.

“Shoppers are chasing discounts, especially for apparel and footwear, and the smaller guys are feeling the pinch.” Additionally, he said, the unseasonal rains in Mumbai, Bengaluru and Hyderabad over the last few weeks had dampened sentiment.

Chennai: Festival cheer

In Chennai, rains on Monday failed to dampen last-minute shoppers’ enthusiasm, and retailers too have no complaints. Buyers thronged the various shopping hubs during the last weekend ahead of the Diwali festival on Wednesday, and T Nagar, the textiles and jewellery hub in the heart of the city, was choked with traffic on Sunday.

Nalli Kuppuswami Chetti, Partner, Nalli Chinnaswami Chetti chain of silk sari and apparel stores, said sales were better than last year’s and there had been a pick-up over the weekend.

Usually, the Diwali sale coincides with the wedding season sales, but this year, with the festival coming a little early on the first day of the Aipasi month (October 18) on the Tamil calendar, the festival sales are quantifiably distinct. Shoppers expect the wedding sales to start after Diwali.

In recent years, shoppers have tended to buy closer to the festival because readymade garments have become popular and need no stitching. This time around, sales had picked up from the extended four-day weekend early this month, he said. Kuppuswami noted that the 5 per cent GST has had no adverse impact on sales.

Previously, there was no sales tax on textile and handlooms, and the new tax had been a concern.

K Sivakumar, MD, RmKV, a leading textile chain, said the group had managed to sustain last year’s sales even though this time around it had been “purely Diwali sales.” There had been a spurt in sales during the weekend as last-minute buyers thronged the shops.

Fireworks sales have lost their glitter, with the number of retail outlets down to less than half their usual numbers, said K Mariappan, General Secretary, Tamil Nadu Fireworks and Amorces Manufacturers Association.

Authorities have clamped down on issuing temporary licenses in Tamil Nadu and across a number of States. In Punjab, Haryana and Chandigarh, the courts have decreed a 20 per cent cut in the number of licences. Even production has dropped to half the usual volumes.

Hyderabad: Hopes surge

In Hyderabad, retailers are betting on increased footfalls in recent days to translate into resurgent sales during Diwali.

Karan Bajaj, Director of Bajaj Electronics, a leading retail chain of electronic goods and mobile phones, said: “The sentiment is slightly down due to heavy rains in the past couple of weeks. However, things have begun to look up in the last two days.” In fact, he said, sales were down by about 15 per cent during Dussehra, and “we would have been happy just to match last year's sales numbers.” He recalled that last year, Dhanteras and Diwali had come during a weekend, which also aided business volumes.

Venugopal, Managing Director of Kamal Watch Company, said: “Consumer sentiment is definitely down when compared to last year, but in the past few days, things have improved. The sentiment was affected in the wake of demonetisation and due to GST, with customers postponing purchases. However, we expect to see better sales volumes during Diwali and after.” Gopikrishna, Director of Manepally Jewellers, said: “The sentiment is positive and is expected to pick up by Diwali, when people typically buy jewellery.”

“The stable price of gold (₹28,000/10 g) over the past three months has aided sales after the sentiment was hit by demonetisation. Some of the issues like excise duty, restrictions on purchase of jewellery owing to KYC stipulations and the need to furnish PAN card details had impacted the overall sales, but those have already been eased and things are looking up,” he said.

In Bengaluru, Rahul Agarwal, founder and CEO of Organic Harvest, a ₹50-crore personal care company with skincare, facecare and bodycare products, said: “Sales have increased 27-28 per cent in the pre-Diwali season, fuelled by increasing consumer awareness of the benefits of organic products and the increase in our distribution footprint to 10,000 multi-brand outlets pan-India, our presence on Amazon and Flipkart, and some of our exclusive outlets in Mumbai and Delhi.”

(Inputs from Meenakshi Verma Ambwani in New Delhi, Tanya Thomas in Mumbai; R Balaji in Chennai; V Rishi Kumar in Hyderabad and Sangeetha Chengappa in Bengaluru)

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Published on October 16, 2017
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