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Retail’s Diwali rests on this weekend

Brick-and-mortar retailers and companies are hopeful that this weekend will see a jump in sales as the festive season kicks in. Retailers say the weeks of shopping spree ahead of the festival season has been trimmed down to one weekend.

, ET Bureau|
Updated: Oct 17, 2019, 07.42 AM IST
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This Diwali is turning out to be a litmus test for companies and retailers as consumers have so far curtailed spending.
NEW DELHI: Nervous brick-and-mortar retailers and companies have spotted some green shoots of consumer spending as Diwali approaches. But buying is still muted, they say, and hopes of better business in tough economic conditions rest on this weekend. A few, though, are saying sales figures so far are healthy.

“We are optimistic about the Diwali weekend,” said Devendra Chawla, chief executive of retail chain Spencer’s Retail, adding that festive shopping has also got compressed to just a couple of days compared with earlier, when it used to be staggered over a few weeks.

For most consumer-facing companies, the festive months from October to December account for close to 40% of annual sales. Spending on discretionary products such as consumer durables and mobiles also goes up during this period.

“So far we are seeing slowness in retail sales in traditional trade, though modern trade is looking stable. But now consumers buy in the last few days before Diwali, so we do expect sales to pick up in traditional trade as well. We saw a similar trend during Raksha Bandhan this year,” said a large distributor of premium chocolate brands, including Mondelez and Ferrero Rocher. He asked not to be named.

Mayank Shah, category head at Parle Products, the country’s biggest biscuits maker, echoed the same sentiments, saying there’s time for a sales pickup.

With slowing consumption, market researcher Nielsen has forecast FMCG to grow 9-10% in 2019, downgrading it from the previous 11-12% estimate.

Large retail chains said they are keeping their fingers crossed as the first two days of the week were sluggish for many of them.

Litmus Test

“Monday and Tuesday were a bit tough but we expect sales to pick up from today (Wednesday),” said J Suresh, MD of Arvind Brands, which sells a range of global brands including US Polo, Gap and Aeropostale.

This Diwali is turning out to be a litmus test for companies and retailers as consumers have so far curtailed spending on everything from mobile phones to automobiles. Sluggish demand persisted till September but retailers say they have seen some revival in October.

“Overall sales are somewhat better than previous weeks,” said the chief executive of a global fashion house who said the fashion and accessories market has grown by about 10% so far compared with last Diwali.

“Has the market swung completely? The answer is no.” He also said business on Monday and Tuesday was “really bad across the country.”Sahil Malik, CEO of midmarket seller of bags and accessories Da Milano, said: “Conversions are not happening on large-ticket items. So there is a need-based demand and not impulsive demand.” He said so far, impulsive shopping that used to happen during Diwali is largely missing.

Consumer electronics and smartphone makers have been offering steep margins to retailers to push sales during festive season. Reliance Digital CEO, Brian Bade, said it’s early days, but sales are clearly better than Diwali last year. “Half of the season is still left…as of now it’s good growth.” he said.

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