India's CPI inflation numbers for inflation have been like a reality check, especially leading up to a much anticipated Navratri to Diwali festive season. Interestingly, price pressures boiling up to a 23-month during a war in West Asia high do not seemed to have dampened the festive spirit both in the online and offline markets.
Strong festive demand is visible across physical markets, not just online channels, noted National Joint General Secretary, Confederation of All India Traders (CAIT) Sumit Agarwal. He added that traders across the country are reporting buoyant consumer sentiment and physical retail continues to dominate India's consumption landscape.
Agarwal projected that festive season sales are expected to cross Rs 7 lakh crore, compared with around Rs 6.05 lakh crore last year.
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"There is tremendous response on the ground. Traders across the country are reporting strong festive demand, and we expect festive season sales to exceed Rs 7 lakh crore this year," he said.
Inflation and higher prices haven't significantly hurt festive demand on e-commerce platform, said Redseer Associate Partner Nikhil Dalal, adding that Tier-II and smaller cities are emerging as the biggest demand drivers.
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"More than 60% of festive e-commerce orders are coming from Tier-II-plus cities, with growth exceeding 50% in many smaller markets," Dalal outlined.
He highlighted how beauty remains one of the fastest-growing categories, expanding at over 40% and Consumers continue spending on lifestyle upgrades, home décor and kitchen appliances.
Separately, Quick commerce's contribution has risen from roughly 1-2% last festive season to 10-15% this season.
Notably, while the splurge may not be slowing, consumers are beginning to be selective about their purchases.
"Consumers may postpone big-ticket purchases as prices rise and EMI costs increase, though demand for lower-value items remains healthy," outlined Keshav Lahoti, Research Analyst, Institutional Equities at HDFC Securities.
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