By The festive season in India, characterized by numerous festivals and weddings, typically marks the country’s peak spending period. However, the third quarter of 2023 presented a mixed bag for consumer businesses, with subdued growth observed across various sectors.
Slowdown in Discretionary Spending
Contrary to the spectacular celebrations witnessed in 2022, the festive fervor waned in 2023, contributing little to the growth of consumer companies. Apparel retailers, footwear manufacturers, consumer goods firms, e-commerce platforms, and quick-service restaurants are among those expected to report lackluster numbers, reflecting dampened discretionary spending during the winter months.
According to a report by Nuvama, initial optimism regarding demand revival and one-off factors such as a favorable base and festive shift tailwind did not translate into improved sentiment or performance during the quarter. This raises concerns about the timing and nature of the anticipated economic revival.
Impact on Apparel & Footwear Companies
Apparel and footwear companies bore the brunt of this trend, experiencing a notable absence of the anticipated festive push. Moreover, the increasing influx of new players in the value-retail segment further compounded revenue challenges across the market spectrum. While overall demand remained subdued, variations in performance were observed across players and category segments.
Digital Commerce Downturn
Despite the ongoing shift from online to offline channels, digital commerce platforms like Nykaa may witness slower-than-expected growth during their peak season. The prevailing slowdown has prompted a moderation of growth expectations, despite the traditionally robust demand during the festive and wedding seasons.
Impact on Big Ticket Purchases
The festive season’s subdued nature is expected to particularly impact consumer companies reliant on big-ticket purchases, with lower-than-expected sales observed in certain segments. For instance, while segments like washing machines and refrigerators experienced low-teen growth, others like air-conditioners saw strong performance, as per a Nomura report titled ‘India Consumption Outlook.’
Bright Spots: Jewellery and Travel
Amidst the overall slowdown, jewellery companies are anticipated to register double-digit growth, buoyed by Indians’ continued penchant for such purchases, especially amid double-digit returns in the bullion market. Similarly, the enduring love for travel among Indians is expected to drive strong sales growth for luggage companies, with most brokerages forecasting mid-twenties revenue growth.
Despite the mixed fortunes witnessed across different sectors, certain segments continue to exhibit resilience, highlighting the nuanced nature of consumer behavior during the festive season.
