Still not fired up: Retail outlets miss the Diwali spark

This Diwali is turning out to be lacklustre for most retailers, including organised and traditional trade

The attendant at Sagar, a popular apparel retail store at Hill Road, Bandra, Mumbai, is looking wistfully at the sky. It is pouring outside on a cloudy Saturday and the attendant is well aware that this will hamper business during a crucial period for retail, namely, Diwali.

“I was counting on this weekend, which is the last before Diwali,” he says. “Business has been thin over the last few weeks and my bet was this weekend stretching over to the next. I am not happy how it has started out though,” he says.

Across the road at Reliance Trends, the fashion chain of Reliance Retail, the picture is no different. There are not many people milling around at the store, an oddity for a Saturday, which is otherwise considered a good day to shop. Sales executives admit they’ve been grappling with a lower shopper turnout through the festive period. They’re hoping the tide will turn during the Diwali week.

At Kolkata’s Burrabazar, the largest wholesale trading hub for consumer goods in the region, Shyamlal Goenka, a dealer, is also unhappy. A seller of garments and clothing material, Goenka says business is down 15-20 per cent over last year. “People are not buying as much. They are saving instead,” he says.

At Delhi’s Lajpat Nagar, Harminder Singh, owner of an electronics store, however, puts down the present lull to the rash of discounts offered by him and consumer durable retailers in the run-up to the goods and services tax (GST) in July. “People advanced their purchases in June. It made good business sense then, but it is hurting us now,” he says.

While pre-GST discounts across durables, fashion, and apparels have been a contributor to the sales pinch that many brick-and-mortar retailers are feeling now, there is a bigger problem looming large. This is of the lack of consumer sentiment and appetite at most durable, fashion and apparel retail outlets this festive, exacerbated to some extent by the demonetisation and the GST. Many retailers from organised to traditional trade, across cities such as Mumbai, Delhi, and Kolkata, admit they did not expect the mood to be so sombre this festive season. Business is down, they say, with sales growth in the run-up to Diwali likely to be in the region of 5-10 per cent. Last year, most retailers logged a growth rate of 15-20 per cent in the equivalent period.

Praveen Khandelwal, secretary general, Confederation of All India Traders, an apex body of brick-and-mortar retailers, says, “Consumers are only buying what they consider essential. Buying activity is clearly muted during the festive period.”

Since demonetisation, announced in November last year, consumers have been cautious with their expenditure, market research agency Nielsen noted recently. The introduction of the GST in July has led to a further tightening of purse strings, Nielsen said. 

Rural areas, on the other hand, have had to grapple with not only this stress, but also drought and flash floods. Discretionary categories predictably have felt the impact of the slowdown, experts say.

Vasanth Kumar, executive director, Max Fashion, says, “Sales are five to six per cent lower than the target set this year. This is because shoppers are buying on weekends and weekdays are dull. Closer to the festival, sales should pick up.”

A senior executive at Bestseller, which retails Jack & Jones, Vero Moda, and Only, popular apparel brands, says the slowdown is hurting retailers. “We are heading towards a tough period,” he says, adding that his sales numbers are not looking good this year.

Nilesh Gupta, managing partner, Vijay Sales, a consumer durables retailer operating in the west and north of India, says, “We have reported five to six per cent sales growth only so far. But we expect sentiment to improve as Diwali nears.”

A visit to the bustling Prabhadevi area in central Mumbai, for instance, which has stores of most known electronics retail chains, puts things in perspective. At one large store, sales executives were seen rushing to attend to the few people who were walking in on Friday and Saturday. They are hoping the trend will change on Sunday, a weekly off for most people.

At another popular electronics joint in the same area, people were seen largely inquiring about the prices of products, much to the chagrin of the sales staff there.

At the neighbouring High Street Phoenix Mall in Lower Parel, Mumbai, which is home to luxury brands, people have been largely window-shopping as job cuts and poor increments leave the salaried class, which aspires to own these brands, with limited budgets.

Some retailers say though all is not lost and there is still light at the end of the tunnel. While the Diwali week could see some end-moment shopping by consumers, retailers now are looking beyond at the wedding season, which follows the festival of lights. This two-to-three-month stretch, they hope, could bring some cheer in an otherwise dull market.