Upbeat retail sector looks at festive windfall this year

Despite growing inflation and an overall price rise, this festive season is turning out to be bountiful for most industries. India’s retail sector is finally shrugging off the Covid effects and is seeing increasing footfalls and sales during the festive season this year.

As per Kearney Research, India’s retail industry is projected to grow at 9% over 2019-2030, from US$ 779 billion in 2019 to US$ 1,407 billion by 2026 and more than US$ 1.8 trillion by 2030. In terms of size, the Indian retail industry ranks 4th in the world, and accounts for 10% of the overall GDP of the country. The industry’s market size in 2020 was approximately Rs 65.50 trillion and is expected to reach Rs 96.43 trillion by 2024. The retail industry is estimated to grow at a CAGR of 10.15%. India is expected to be the third- largest consumer market by 2030.

While the retail industry saw a sharp decline of 8.5% in 2021, it recovered in 2022 to reach $836 billion, with 81.5% contribution from traditional retail. As per industry data, nearly 60 shopping malls encompassing a total retail space of 23.25 million sq. ft are expected to become operational during 2023-25.

Festive bonanza

The synergy between the festive spirit and irresistible deals has historically been a driving force behind the increased footfall during the festive season. This surge in footfalls is not merely a reflection of pent-up demand, but also indicative of the shifting tide towards economic revival.

According to Wright Research, consumer sentiment is expected to pick up this festive season, with retailers expecting at least 10-12 per cent growth over last year’s sales.

Commenting on the surge in footfalls in 2023, Sunil Kataria, CEO - Lifestyle Business, Raymond Ltd, said, “We are seeing a positive pick-up in retail sales in the last fortnight. With the onset of festival season and strong wedding season ahead, we are optimistic about the momentum further building up and it being a strong season.”

Reflecting similar sentiments, Lokesh Kataria, Chief Marketing Officer – Fashion, Ace Turtle, said, “The festive season has given a strong push to the retail sector in India across categories such as fashion, consumer durables among others.”

Prashant Parameswaran, MD & CEO, Tata Consumer Soulfull, added here, “The festive season undeniably has a significant impact on the retail sector. It is a time when consumers are more willing to spend, making it a critical period for retailers. The increased demand for products and gifts during holidays like Diwali or Christmas presents a lucrative opportunity for businesses to boost their sales and profits. In essence, the effect of the festive season on the retail sector is substantial, and its success largely depends on how well retailers adapt to the changing consumer demands and preferences during these special occasions. Over the past couple of years, we have been witnessing a surge in consumer interest in wholesome and innovative food gifting options. We, at Tata Soulfull, believe that our responsibility is to seize this opportunity by offering unique millet-based treats aligned with the festivities.”

Rajiv Chandrashekhar Menon, National Head – Sales and Retail Operation, Mia by Tanishq, noted, “Embracing the festive season, the Retail sector witnesses a surge in consumer spending, shaping the year’s performance. At Mia by Tanishq, we have seen a remarkable upswing in demand, underscoring the enduring cultural significance of jewellery in celebrations.”

The changing landscape of retail

The retail sector has undergone a remarkable transformation in the last couple of years. The rapid evolution can be attributed to several key factors. First and foremost, the accelerated adoption of e-commerce and digital platforms has reshaped consumer behaviour. The COVID-19 pandemic further accelerated this shift, with more consumers preferring online shopping for convenience and safety.

While stating that the concept of ‘phygital’ retail has gained prominence, Prashant Parameswaran noted that this was blurring the lines between physical and digital shopping experiences. He added, “Retailers are investing in technologies like augmented reality, virtual reality, and contactless payment methods to enhance in-store and online shopping experiences. Sustainability has also become a driving force, with consumers seeking eco-friendly products and brands that prioritise ethical practices. Retailers are adjusting their strategies to meet these demands. Adaptability and innovation have become crucial for success in this changing landscape.”

Rajiv Chandrashekhar Menon, sharing his views on the changing landscape said: “

“Over the last few years, the retail sector has experienced a transformative journey, with evolving consumer preferences and technological advancements redefining the landscape. While challenging, the pandemic spurred resilience and innovation. Mia by Tanishq swiftly adapted, leveraging both our online and offline channels to engage customers, reflecting the sector’s remarkable agility in navigating through turbulent times. Mia grew from having around 30 stores in 2020 to more than 150 exclusive Mia stores across 55 cities today,” informed Rajiv Chandrashekhar Menon.

Sectoral expectations this festive season

According to Wright Research, there is a 9% increase in demand for retail staff, thus indicating a broadening in the types of roles suited for workers, extending beyond just e-commerce. Festivals play a pivotal role in stimulating economic activities, reflecting deeply in India’s GDP growth. The festive season, particularly Durga Puja and Diwali, traditionally spurs heightened consumption and investment, contributing up to 40 per cent for annual sales in sectors like home decor, apparel, electronics, and confectionary goods. Automobile manufacturers are stepping up production for the festive season by 10 per cent to 20 per cent from last year’s levels.

According to the report, consumer electronics and FMCG sectors saw a surge of 25-30 per cent YoY during Independence Day sales in 2023. Demand for FMCG, especially sweets, electronics and luxury items, soar around the festival season.

Lokesh Kataria observed, “With the consumer wallet tilting towards out-of-home categories, offline retail has fared better than online. Notably, sectors like F&B, hotels, and airlines performed well last year, and this trend is expected to continue this year as well. However, the ongoing Cricket World Cup is driving online platform engagement as people spend more time at home. We are actively collaborating with online platform partners to capitalise on this opportunity. The festive season is expected to boost shopping, especially in fashion and lifestyle categories. Mega sale events by online marketplaces with attractive deals will encourage consumers to maximise their shopping during this period.”

He further noted that Indian consumers are favouring spending on fashion, consumer electronics, and household consumables, among other discretionary categories. Emerging fashion trends, including oversized T-shirts, shackets, and printed T-shirts, are gaining popularity. “Moreover, there is a rising demand for a ‘vacay look’ due to increased vacation planning. This includes resort shirts, traveler jeans, beanies, and camouflage looks,” he added.

Commenting on Ace Turtle brands, he said, “Our brands, Lee and Wrangler, have witnessed an increase in the average order value due to more units per transaction, driven by additional categories such as accessories and women’s wear. Both the footfall at our offline stores and traffic on the online stores of Lee and Wrangler have grown this year compared to last year. In the last financial year ending in March 2023, both Lee and Wrangler achieved their highest-ever sales in India. Our innovative omnichannel approach, powered by the tech platform Rubicon, played a key role in this success. We aim to continue our growth with a 100% rise in ARR in the current fiscal year.”

“Compared to last year, the retail sector has seen notable shifts,” said Prashant Parameswaran, adding, “Revenue trends have displayed resilience, with increased online sales. Newer trends include the continued growth of e-commerce, an emphasis on contactless shopping, and the rise of sustainability as a significant consumer concern. Retailers are adapting by investing in digital strategies, optimising the in-store experience, and focusing on ethical and eco-friendly practices to align with evolving consumer preferences and market dynamics.”

Rajiv Chandrashekhar Menon remarked, “The future of the offline retail sector is promising. While digital channels play a vital role, the significance of physical stores remains intact. Striking the right balance and providing consumers with a seamless omnichannel journey is paramount.”