No slowdown in shopping! Retail sales up 50% with Puja and Dassera

04 Oct,2011

By PRAMUGDHA MAMGAIN & SARAH JACOB

 

Ms Shreya Gambhir, a 20-year-old architecture student in Bangalore, went into the Garuda mall last weekend to buy a watch, but walked out with much more. “While window shopping, I got tempted to buy a handbag worth Rs 1,975 from Accessorize,” she said.

 

Shreya was among thousands of shoppers who braved rains, traffic jams and rising prices to flock to the high street and malls across metros and smaller cities, pushing sales of clothes and electronics goods in the first weekend after shradh by up to 50% more than last year.

 

The consumer mood has reassured marketers who feared a slowdown in demand this season because of macro-economic concerns of rising prices and interest rates. “Robust sales during Onam and Durga Puja is an indicator of good uptake even in the forthcoming festivities,” Mr J Suresh, MD and CEO of Arvind Lifestyle Brands and Arvind Retail, said.

 

The weekend sale was important because it was the first one after shradh – a 15-day period most people in the northern part of the country consider inauspicious for shopping – and preceded the beginning of Durga Puja, a mega festival in West Bengal.

 

Consumer brands and retailers traditionally do 25-30% of their annual sales during the festival season, from September to early November. This time they were apprehensive due to signs of a slowdown. Headline inflation has been hovering at 10% despite the central bank’s aggressive monetary tightening through interest rate increases.

 

It has pushed loan rates 3.5% in 18 months. Fuel prices have also been rising. Also, sales of cars had fallen for two consecutive months in July and August, after rising 25-30% for two years.

 

So, overall, retailers had a lot to worry about, heading into the season. But the jump in sales during Onam comforted them and set the mood for Dusshera, Dhanteras and Diwali. And last weekend’s sales confirmed that inflation won’t impact festivities much. “We are a little surprised,” said Mr Sooraj Bhat, brand head of Allen Solly, a casual wear brand of Madura Fashion & Lifestyle.

 

Incentives Galore

 

The company had planned for 15-30% same-store growth in the festive season for its different brands, and it has already exceeded it. Allen Solly sales have increased 25-45%, he said.

 

Mr Suresh of Arvind Brands, which posted over 50% sales growth during Onam, expects high demand to sustain in the North even after festivities due to winter shopping, while other parts of the country may witness a slowdown if economic environment remains bleak. Mr Kabir Lumba, MD of Lifestyle International, which operates chains Lifestyle, Max and Home Centre, and owns brands such as Splash and Bossini, said festival sales will be strong but the period after could be uncertain.

 

Companies and retailers are offering incentives such as discounts, free gifts and interest-free finance schemes to enthuse buyers hurt by rising cost of food, fuel and loans, and they are backing it up with aggressive advertising campaigns.

 

“We bought a lot of stuff during the end of season sale. Yet, we have come to see if we may find a good bargain in terms of festive discounts and free gifts,” said Mr Vishal Thakkar, who bought a mobile phone at 10% discount from retailer Vijay Sales at Atrium Mall in Mumbai.

 

In Delhi, parking lots at malls such as DLF Promenade and Ambience Mall at Vasant Kunj ran out of space and there were long traffic jams at shopping centres where eating joints such as Mocha, Market Cafe and Smokehouse Deli were packed and retailers reported heavy walk-ins.

 

“Of course, we are stung by high prices. But this is the festive season and we don’t mind spending during this period,” said Mr Abhishek Khanna, an IT professional, who was shopping at Delhi’s Khan Market. He wanted to buy clothes and home decor items.

 

A sales executive at a Big Bazaar outlet at Rajouri Garden in Delhi says gift items including home furnishings, gifting and electronic items are driving sales at the store.

 

One of the Lifestyle stores in Delhi reported up to 40% conversion rate, or percentage of visitors who buy from the shop. Retailers say walkins have increased 10-15% each day after Shradh. The action in Kolkata has peaked in the last two weekends with popular malls such as Forum, City Centre and South City reported up to 20% growth in footfalls and businesses over last year.

 

Leading retail stores like Shoppers Stop, Fab India and Westside, and the old shopping areas like New Market and the hi-street stores in Gariahat were packed with shoppers. The average bill size of India’s largest retailer Future Group went up 20%.

 

“While fashion always takes the lead during Durga Puja sales, this year a surprise growth driver has been the home segment,” Mr Manish Agarwal, business head (East), Future Group, said. Sales of furniture, curtains, home decor, bed sheets and carpets have grown by more than 50%, he said.

 

Durable makers such as LG, Samsung and Godrej grew at a higher pace than last year as consumers splurged on flat panel televisions, digital cameras and hi-end home appliances.

 

“We have already exhausted our inventory for 3D televisions, frostfree refrigerator and microwave oven. We expect similar rush for Diwali,” LG Electronics India Regional Head (East) Mr Ranjit Kumar said. Kolkata’s largest durable retailer Great Eastern witnessed 22% sales growth this year and did around 700 consumer finance deals a day in the last one month. While rain tempered footfalls across retail stores in Bangalore for a few hours on Saturday and Sunday evening, most families walked out with at least two shopping bags in hands.

 

“We have had a steady flow of customers and expect it to continue with holidays over the next week,” a sales staff of Joyalukkas Jewellery store said.

 

(With inputs from Neha Dewan in New Delhi, Writankar Mukherjee in Kolkata & Sagar Malviya in Mumbai)

 

Source:The Economic Times

Copyright © 2011, Bennett, Coleman & Co. Ltd. All Rights Reserved

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