Festive season fuels growth in retail and two-wheeler sales after challenging period
The retail market, which had struggled with single-digit growth or even negative figures in recent months, is now buoyed by the festive demand across various segments, especially discretionary products.
Kumar Rajagopalan, CEO of the Retailers Association of India (RAI), expressed optimism regarding the current festive sentiment. “Since Dussehra, the festive season cheer seems to be there. Many retailers are now saying that they are seeing double-digit growth. Most of the retailers were in the single-digit growth or some of them were actually seeing negative figures up to September, but things seem to have risen. And there is a bit of a cheer in the market because customers are coming into the store,” he said. Rajagopalan further highlighted that the earlier timing of Diwali this year has contributed to the surge, along with a boost in sales of garments, jewellery, and other festive-related items.
However, the bottom of the pyramid consumption remains a crucial indicator for the overall market. Rajagopalan noted that this value segment, which had been a concern, is now also showing signs of recovery.
On the other hand, the outlook for the two-wheeler segment within the automotive industry presents a more nuanced picture. While Bajaj Auto has voiced concerns about muted demand, stating that motorcycle sales during the festive season are below expectations, the Federation of Automobile Dealers Association of India (FADA) is more upbeat. Sai Giridhar, Vice-President at FADA, stated that there has been a 12% increase in two-wheeler sales during the first 10 days of Navratri compared to the same period last year. “If you compare the data with last year, there is a good double digit growth,” said Giridhar, adding that the segment is still on track to achieve its target of 20% growth by the end of the festive season.
When comparing rural versus urban sentiment, Rajagopalan indicated that both markets are performing well, though he noted that it is too early to provide a definitive assessment. “Sentiment seems to be nice and bullish. It seems to be similar, there is not much of a difference so far,” he said.
Below are the excerpts of the discussion.
Q: How do you read the festive sentiment? Have things started looking up since Dussehra? The time the April to September period had been very flat in terms of growth. Are things finally looking up?
Rajagopalan: The festive sentiment does look good now. Since Dussehra, the festive season cheer seems to be there. Many of the retailers are now saying that they are seeing double-digit growth. Most of the retailers were in the single-digit growth or some of them are actually seeing negative figures up to September, but things seem to have risen. And there is a bit of a cheer in the market because customers are coming into the store.
Two, three things to keep in mind. One is that this time Diwali is earlier than last year because last year Diwali was in mid-November and this time it’s earlier. The second thing is that we always look at cheer from the point of view of how discretionary products get sold, we are seeing that garments and things that are related to the occasion are getting sold well.
Jewellery sector is also showing some growth. So those are good indications. Most importantly, I think we were seeing a big worry in the bottom of the pyramid consumption. Consumption in the value segment and that is also showing some growth now.
Q: What do you think is going wrong with the two wheelers? This was supposed to be a good festive season. Companies were preparing with big discount schemes, high inventory. What’s been going wrong?
Giridhar: I don’t think anything is going wrong with two wheelers. We have the data with us for the first 10 days of Navratri festival and if you compare it with last year there is a good double digit growth. If you want to be specific to two wheeler industry, it is 12% growth when you compare it with last year. Overall segment there is a double digit growth.
The only segment wherein we’ve seen some headwinds is tractor segment, wherein we’re seeing a negative growth. Rest, all the segments are in green. So the walk-ins are there, the customers are there. In fact, we had anticipated this demand this festival season, and we’re still bullish. By end of this 42 days of festivity, we’ll be able to achieve the required number. We’re targeting 20% growth over the last year, which translates into 45 lakh vehicles, compared to last year where it was 39 lakh vehicles. So we’re still bullish that we’ll be able to achieve the numbers.
Q: Two wheelers specifically, how much are you expecting?
Giridhar: Overall for the industry, if you talk about first 10 days of the festivities, approximately 8.5 lakh vehicles have already been registered in India. Last year during the same period, it was approximately 7.6 lakh.
Q: If I were to compare sentiments in rural versus urban right now, how does the sentiment look? Is it the same across the board?
Rajagopalan: Currently that’s the impression that we are getting it’s too early to commit because it’s only about 10-15 days of this season yet. So far sentiment seems to be nice and bullish. It seems to be similar, there is not much of a difference so far. We will have to see as the days go where this would lead.
Q: I would also like to ask you about the premium segment. The premium segment has been consistently doing well this year. When you speak about gifting and when you speak about luxury purchases, what are some of the trends? What are some of the product lines where you expect the highest sales?
Rajagopalan: The good thing about the premium segment has been it’s always been doing well for the last two years or so. People have been buying for themselves. I guess, the feeling that I need to spend on myself was always there. But we are also seeing gifts getting picked up now. I think people are picking up items which can be very good as gifting.
Watch accompanying video for entire discussion.
