17 October 2019, 02:10 PM

Banking on festive mood to boost consumer spending

Banking on festive mood to boost consumer spending

India’s festival season is here. Diwali generates the biggest shopping stimulus. From neighbourhood sweet shops to white goods and jewellery retailers, everyone cashes in on the festive mood. Indian festivals, be faith-centric or secular in nature, involve exchange of gifts. This process supports economic growth in varying degrees.

Sectors such as auto, FMCG and white goods generate up to an estimated 35% of their annual sales during this time. Companies come out with new products and imaginative sales strategies to tempt buyers.

The festival season this time is somewhat different. The economic growth slowed down to a five-year low in April-June quarter of the current year and experts believe that it was primarily due to falling consumption expenditure. Higher household consumption expenditure in the festival season is expected to boost the economy and generate higher GDP numbers.

Dhana Trayodashi or Dhanteras is the first day of the Indian Diwali. The festival is known as "Dhanatrayodashi" or "Dhanvantari Trayodashi". It is celebrated on the thirteenth lunar day of Krishna Paksha (dark fortnight) in the Vikram Samvat Hindu Calendar month of Ashwin. Dhanvantari is worshipped on the occasion of Dhanvantari Trayodashi. Dhanvantari is considered to be the teacher of all physicians and the originator of Ayurveda.

Online trading, the big gainer

Shopping on Dhanteras is an essential part of Hindu tradition. On this day, people buy silver, gold or metal articles. Things have changed of late and due to busy schedules, many do not have the liberty of time to go to shops to buy their favourite items. Here the option of online shopping comes in handy.

This is reflected in the sharp rise in online sales volumes. Online shopping this time has surpassed all its past records. The combined sales of Walmart owned Flipkart and rival Amazon during the festival sales of early October were estimated at $3.5-3.7 billion – up by 33% over the previous year. IT industry body Nasscom estimates the Indian e-commerce market at $33 billion in 2017-18 and at $38.5 billion in 2018-19.

This comes as growth slows in Asia's third-largest economy, denting sales of everything from cars to cookies, and prompting the government to step in with tax cuts and a raft of other measures to revive growth.

Emboldened by this success, Amazon came out with another festival sale between October 13 and October 17 to coincide with Diwali. The e-commerce giant offered huge discounts on mobiles, electronic goods, laptops and household products. Amazon has successfully grabbed a large chunk of the Indian e-commerce space even though it entered seven years after Flipkart in 2014, winning over millions of customers with its ‘Prime’ loyalty programme, which gives users early access to deals during sales, free music and video streaming services. Offline traders at home, claim that Amazon’s sales policies are affecting their business and have asked the government to ban the festive sales, citing that the deep discounts were violating the country's foreign investment rules for online retail.