Retailers stare at a dismal future after bumper Diwali

Tags: News

Companies expect boom to fizzle out once discounts are stopped

Deep discounts by the leading retailers across the key food and grocery segments have lured inflation-hit shoppers back to big box stores this Diwali. However, the question remains whether the boom will continue when the discounts are withdrawn and prices return to normal levels.

Arvind Singhal, chairman of Technopak Advisors said that with inflation running at 7.45 per cent and consumer income not growing, spending might suffer post Diwali. “With the households facing so many headwinds, it is unlikely that consumer spending will revive for some time,” he added.

The economic uncertainty has knocked spending and Indian retailers have been slashing prices to keep up sales. “Though this Diwali seems to be good for the retailers, the pressures on purse strings continue. However, we are not sure whether the sales in the last week can also be attributed to the wedding season,” said Anand Mour, consumer analyst of ICICI Securities.

Rakesh Biyani, joint MD of Future group said, “Diwali sales have been very good and in line with expectations. We have succeeded in meeting our targets. Going forward, we expect consumer sentiment to remain buoyant.” Future group is doling out attractive discounts during the festive week to beat slowdown blues.

Retail giants such as Future group, Shoppers Stop, and Lifestyle are upbeat about Diwali sales with around 20-30 per cent sales growth over last year, according to Mour.

Govind Shrikhande, MD of Shoppers Stop said, “The economic climate has improved, thanks to reforms which seem to have done the trick to mitigate the negativity in the market. It’s definitely going to be a more buoyant Diwali than last year as consumer sentiments are much more positive.”

Lifestyle International, part of Dubai-based Landmark group has seen robust growth across all categories during Diwali week, according to Kabir Lumba, managing director of Lifestyle International (India). The retailers attribute the revival in consumer sentiment to reallocation of spends by households away from large ticket items to the basis food and grocery categories to enjoy the festive season and host friends and family and also gift near and dear ones.

“Generally the east sparks off the festive shopping season with Durga Puja. This year, the east has shown good growth; followed by October which has also been a good month. This indicates that the festive season would move us towards an eight to 10 per cent like-to-like growth,” added Shrikhande.

“However, corporate gifting has taken a hit. There is decline in corporates sales of gifting items such as chocolates, crockery’s among others,” said CEO of a leading Mumbai-based retailer.


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