Diwali sales bring festive cheer but retailers remain cautious on demand trends

AK Tyagi, Executive Director at Haldiram’s, reported a 5-15% sales growth across the company’s product range, with premium and mass-market snacks both performing well.

“Festival season of 2024 is better than 2023,” said Tyagi, noting that demand varied by product category, with certain offerings like sweets seeing double-digit growth.

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This uptick in sales is a positive sign for a sector that experienced a challenging July-September quarter marked by tepid consumption.

Echoing Tyagi’s optimism, Kumar Rajagopalan, CEO of the Retailers Association of India, confirmed that this year’s Diwali season was stronger than last year, with early estimates pointing to a 10-12% growth in categories such as jewellery and garments and across regions, compared to about 7-8% during the same period last year.

“Compared to the last four weeks leading up to Diwali in 2023, the initial impression is that businesses have done well.

While the food and grocery businesses may not have participated as much, with growth unlikely to be in the double digit, most other categories including the Consumer Durables and Information Technology (CDIT) products have done well.

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Premium segments continue to thrive, and there has been a resurgence in value-oriented sales, showing about 8% growth—an encouraging sign after a period of slow demand in lower-cost categories.

However, both Tyagi and Rajagopalan are cautious for the rest of the year.

Tyagi expects around 10% growth during the wedding season, but points out that rural demand, although growing, remains slower than urban consumption.

Rajagopalan observed that retailers are managing inventories conservatively ahead of the year-end wedding and holiday season.

“There is some inventory build-up expected as we enter winter and the wedding season,” he said, adding that a strong marriage season could provide a further lift to demand.

Rajagopalan expects discretionary spending to pick up, especially in value segments that had been lagging due to tight household budgets.

Tyagi said inflation has also pressured Haldiram’s margins as the company chose to absorb most of the rising costs rather than passing them on to consumers.

“We believe in affordable prices, so we passed most of the inflation impact to our margin,” Tyagi explained, adding that profitability would likely recover once food prices stabilise.