Festive sales decline: Subdued consumer demand hurts retailers in 2024

Subdued demand for consumer goods items — from daily essentials like toothpaste and shampoo to discretionary items like smartphones — has been impacting manufacturers of these goods for some time. But manufacturers are not the only ones on the receiving end of weak consumer sentiment in the country. Retailers are feeling the pinch, too.

Despite entering the festive season with high hopes of a recovery in demand, retailers in the country are still in a difficult situation. With demand continuing to falter in urban centres, retailers now have lower-than-expected growth in their festive sales this year – spoiling the end-of-year party.

According to the latest survey by the Retailers Association of India (RAI), sales growth during the festive period remained weak. As consumers tightened their wallets, sales growth fell well below expected levels of 10% – to 7% compared to the same period last year. Sales of discretionary items such as furniture and sporting goods were hit the hardest, growing by 2% and 3% year-on-year, respectively, data shows.

According to Kumar Rajagopalan, CEO of RAI, the survey indicates a moderate growth of 7% during the festive season from October to November, which is lower than the expected 10%. “Consumption growth has been weak throughout the year, prompting retailers to boost their business with promotions and encourage festive purchases. Inflation, intense competition and limited spending, especially by the lower middle class of the population, continue to present challenges,” he adds. “Big.”

Among the four major regions in India, the Western region recorded the highest sales growth at 8%, while North, South and East India recorded a 7% increase year-on-year. In terms of categories, food and grocery recorded the highest growth at 14%. However, the rise in food prices played a role in the 10% increase in sales, market experts say. In 2024, the QSR (10%) and jewelry (9%) businesses reported healthy growth over the holiday period in 2023.

With 2024 ending in a weak environment, retailers are pinning their hopes on a recovery in demand next year. According to senior executives from leading FMCG companies, FMCG demand is expected to be back on track by mid-2025. “We hope for stronger growth in 2025, as rising operating costs require a sustainable growth trajectory to maintain On profitability.”