First the good news – contrary to fears, Indian shoppers are opening their wallets this Diwali. But here’s the bad news for players who traditionally do well in the festive season - there is a shift in shopping preferences impacting brands, categories and retailers. Premium products are doing better, especially healthy, high tech, hand-crafted and sustainable, while online retail, including Q-Commerce, is stealing the festive thunder from offline.
The shift
Nirmalkumar Damodaran, Centre Director Phoenix Marketcity and Palladium, Chennai, says, this year, a noticeable trend is the shift towards curated, trend-driven purposeful purchases. “Shoppers are showing a keen interest in fusion apparel, minimalistic jewellery, contemporary home decor, and the latest gadgets.”
The other shift is the growing influence of ecommerce sites whose mega festive sales have impacted offline stores that are reporting dipping footfalls. Avenue Supermarts, which runs D’Mart supermarkets, in its recent management call said that competition from online players was leading to lower growth. A visit to D’Mart stores over the past week showed lower crowds in the runup to Diwali, compared to a year ago.
However, on the weekend before Diwali, things seemed to be changing as last-minute shoppers crowded into malls and high street stores. Said Abhishek Bansal, Executive Director of Pacific Group, which runs several malls in the north. “In the past few days, things have changed on the ground. We are seeing a strong uptick in footfalls across all malls. Actual sales conversions are also very good.”
But here again, the tardy shopper has an alternative in Q-commerce players who have smartly stocked up on Diwali staples, gifts, ethnic wear and mithais and are reporting good sales.
What’s doing well
High-end consumer durables are showing healthy demand on all channels. Says Sanjay Chitkara- Senior VP-Home Appliances, LG Electronics India, “We are witnessing good demand for products featuring AI & IOT Technology. It is encouraging that premium products’ demand has increased in tier 2 and tier 3 towns during this Diwali.”
Corroborates Pulkit Baid, director of Great Eastern Retail, the leading consumer electronics retail chain in eastern India, “ In terms of sales, mass and affordable segments are not doing well. Premium products across categories are doing well.”
The apparel segment which had seen a somewhat sluggish Diwali last year said this season is shaping up to be much better. But players like Libas are reporting higher festive sales revenues from online channels than offline.
Auto is an interesting story of tepid demand reported from manufacturers but optimistic festive projections at the dealers’ end. “Footfalls are strong, bookings are strong and deliveries are strong,” said C S Vigneshwar, President, Federation of Automobile Dealers Associations (FADA). This augurs well for movement of stockpiled inventory leading to fresh demand for the industry in the next few months.
What’s disappointing
FMCG sector has been sluggish – more so offline. On the other hand, ecommerce enablement Saas platform Unicommerce’s analysis of the first 10 days of the festive season sale this year shows that certain FMCG segments like healthy foods, dietary snacks as well as beverages witnessed a 63 per cent plus order volume growth compared to the same period last year.
Ahmedabad is reporting a drop in bookings for Diwali parties. “Every year our HoReCa business grows by 15-20 percent. This year, we are registering a de-growth of 15-20 percent, largely in terms of volumes of supplies,” said Nadeem Jafri, founder and chairman of Hearty Mart Enterprises,
Real estate players report weak demand blaming the rising cost of construction materials and fewer increments. Though here, again, luxury developments are attracting buyers.