Diwali sales show consumers still slow on spends
Festival buying, which begins around the start of Navratri and ends soon after Diwali, was seen as a litmus test of whether the consumer was back and if retail sales were on the upswing. The signals have been mixed, but overall the mass consumer still seems to be holding back. The Confederation of All India Traders sounded an optimistic note claiming retail buying during the festive season has exceeded `1.25 lakh crore. But individual consumer sectors had a different story to tell. Godrej Appliances said the bounce-back from last Diwali was 14% higher sales, but still below Covid times. Maruti Suzuki, the largest seller, reported it sold about 1.5 lakh units, when in previous years the average was around 1.8 lakh units. E-commerce players like Amazon and Flipkart however bucked the trend with a robust 23% growth.
Anecdotal reporting meanwhile showed the driver behind the festival sales were the bottled-up rich and elite, who loosened their purse strings. They had the liquidity to buy high-end gadgets and jewellery. However, big retailers like Vijay Sales said they earned good value from expensive products like frost-free refrigerators. But they conceded their volumes were flat in the mass category of ordinary kitchenware and basic electricals.
Various micro and macro reasons can be ascribed to the less-than-expected Diwali boom. In Mumbai, on the auspicious buying day of Dhanteras, passenger car sales fell 12% and two-wheelers 32% compared to last year. Buyers said the damper was the continuous rise in fuel prices over the last two-three months. On the other hand, Hyundai and other carmakers said though they had a big backlog of demand for Diwali-time delivery, they could not meet it mainly due to shortage of microchips and other components. Another speed breaker has been the high inflationary pressure of rising component and transport costs. A report by private consultancy IHS Markit said Indian firms have been worried about rising input costs, which has led to subdued business confidence. While some sectors have opened up, the average consumer is still wary, and much more will have to be done to restore confidence to boost sales.