Burdened by high fuel prices and inflation, Indians are being more tightfisted than usual this festive season.
While offers and discounts may help make a difference, according to a survey by market research firm Ipsos and news app Inshorts, even that could have limited effect overall.
Only 15% of the 113,469 respondents to the poll said they would go for no-holds-barred spending this Diwali. Some 20% said they will avoid splurging completely. Over 30% planned to spend in moderation. More than half were willing to shop if offered great deals.
This is unusual for a festive season when big-ticket spends don’t require much prodding.
Indians are given to splurging during this period which begins around August every year and extends to the year-end. Brands usually see a spurt in high-value purchases such as cars, gold, and electronics. For some companies, this season could contribute up to 30% of overall annual sales.
Not this year, though. Marketing campaigns, discounts, celebrity promotions, and refreshed shelves haven’t really helped spark demand.
In October, automakers reported the most sluggish sales in over six years amid rising fuel costs. Offline mobile phone and consumer durable retailers, too, complained of sluggish sales over the last few weeks.
And all this is mostly because Indian households are already beset with higher daily expenses.
India’s monthly consumer price index (CPI) has been on the rise, too. The September CPI stood at 3.77%, up from the previous month’s 3.69%. Retail fuel prices, on the other hand, skyrocketed to even hit the Rs90 mark in some places. The prices have since cooled off, though.
In October, Ipsos, along with Thomson Reuters, released a monthly consumer confidence survey, which said that households are “worried about personal finances for day-to-day running of the household, savings and investments, there is a concern for job opportunities and performance of the economy.” Consumer confidence was down 6.6% in October from the previous month, Ipsos noted.
These findings are in line with what the Reserve Bank of India (pdf) reported for September.
Amid this gloom, some segments—online retailing, departmental stores and gold—have managed to record growth.
In October, online retailer giants Amazon and Flipkart’s annual festive sales reportedly saw their combined sales cross $3 billion.
Not wanting to be outclassed, some brick-and-mortar players, too, are going all out to woo shoppers.
Mumbai-based hypermarket chain Big Bazaar has roped in celebrities and organised on-ground activities in over 100 cities. ”We have seen good positive momentum in the last 16 months, we have ambitious targets this festive season,” Jishnu Sen, chief marketing officer of Big Bazaar, told Quartz. The retailer expects sales to go up in strong double-digits this year, Sen said.
Meanwhile, gold remains one of the few commodities that shoppers are still keen on this Diwali.
“The indications are clear that there seems to be some confidence, some cash that they (shoppers) have with them, so the intention seems to be that they would like to invest in the jewellery category this year,” said Sandeep Kulhalli, senior vice-president for retail and marketing with the jewellery division of Titan Company. ”There’s enough confidence to say that it will be a positive Diwali for us.”