Retailers are paring down their festive season growth rate to single digits compared to earlier expectations of a double-digit growth as they witnessed a decrease in footfall during the week leading up to Dussehra.
“Sales during Dussehra were flat. However, all other days during the festive season were good. As the sales during Dussehra were flat we expect a 5 to 7 per cent growth this festive season year-on-year. It is difficult to point out the reason for the flat sales, it could be because of a long weekend or consumers opting to defer their purchases,” said Nilesh Gupta, Director, of Vijay Sales told businessline.
The decrease in slowdown is also witnessed in semi-urban and rural areas.
“We understand that electronics are available at everyday low prices and have become a necessity. People are purchasing at a constant pace throughout the year. The rural consumer footfall is interconnected, as we see consumers coming to purchase products from small towns. However, that is also not happening,” Gaurav Pahwa, Director, Lotus Electronics told businessline.
Soft landing
Global finance group Nomura has stated that they anticipate the growth momentum to remain soft due to fading urban pent-up demand, tight monetary policy, negative rural wage growth and sluggish private capex.
“Even as the pace of government spending picks up in coming months and base effects become more favourable, we expect growth momentum to remain soft, due to fading urban pent-up demand, tight monetary policy, a moderation in credit growth, negative real rural wage growth, sluggish private capex and soft external demand. With headline inflation likely to rise in October due to higher vegetable prices and GDP growth headed lower, monetary policy has its work cut out and will need to activate ‘flexible ’inflation targeting to balance trade-offs. We see rising downside risks to our GDP growth forecasts, both for FY25 (6.7 per cent year-on-year) And FY26 (6.8 per cent ),” mentions a Nomura report.
In the auto segment, Pune-based two-wheeler maker Bajaj Auto also highlighted a decrease in sales.
“The festive season has failed to meet expectations and the response, overall, has been muted. The south and east markets have declined, while Uttar Pradesh and a few north markets have done well. Growth of between 6 to 8 per cent was anticipated for Dussehra, but it is only between 1 to 2 per cent of the same time last year. The industry will see 3 to 5 per cent growth this festive season,” said Rakesh Sharma, Executive Director of Bajaj Auto during the company’s earrings call.
Retailers are, however hoping for a pick-up in sales during Diwali “The impact we have seen across categories. We were expecting for a better Dussehra which did not happen. However, the seven days of Diwali could turn the table again” added Nilesh Gupta.