Festive retail growth down by half, Nomura notes strong online demand

While retail sales, both online and offline, saw some increase during the festive season, the overall growth was slower compared to prior years

The growth rate in festive consumption has significantly slowed, halving to 15 per cent this year, according to Nomura. Analysts at the Japanese brokerage noted that this figure is based on “rough estimates,” with festive consumption growth much higher in previous years — 32 per cent in 2023 and 88 per cent in 2022.

 

While retail sales, both online and offline, saw some increase during the festive season, overall growth was slower than in prior years. According to the analysts, rural areas and smaller cities (Tier-II and Tier-III) maintained steady demand, but sales in metropolitan areas and industrial sectors remained "weak," leading to mixed trends in festive consumption across the country.

   

The analysts pointed out that while urban demand had been weak, particularly in larger cities, festive sales could receive a boost from weddings in December. This is expected to positively impact the overall sales performance for the season.

 

In their analysis, the analysts noted two methods to assess festive demand: one through anecdotal evidence and the other using “hard” economic data over the September-December period. This longer-term data helps smooth out anomalies caused by specific dates, giving a clearer picture of overall growth trends.

 

Online sales see strong growth

 

Despite slower overall consumption growth, online retail sales experienced a surge, driven mainly by customers in Tier-II and Tier-III cities, which contributed over 60 per cent of total sales. According to ClickPost, a logistics intelligence platform, categories like electronics, fashion, and home decor saw the largest gains.

 

Electronics had an average order value (AOV) of Rs 38,000, driven by personal tech and smart home gadgets. In fashion, the AOV reached Rs 4,000 due to festive apparel, while in home decor, the AOV was around Rs 7,900, with customers opting for more durable items. Promotional offers, such as cashback and no-cost Equated Monthly Instalment (EMI) schemes, further fuelled this growth.

 

Industry data revealed that e-commerce platforms achieved total sales of nearly Rs 1 trillion (approximately $11.9 billion) during the month-long festive season that ended last week, marking a significant year-on-year (Y-o-Y) increase of over 20 per cent.