There has been a surge in spending triggered by the GST rate cuts with durable, fashion and footwear seeing a sales growth of 20-40% in the last ten days including Dussehra, companies and retailers have told FE. The momentum, they say, is likely to last till Diwali, which will be celebrated mid-October. Dussehra and Gandhi Jayanti were celebrated on Thursday.
While many consumers in cities have taken an additional day’s off on Friday to make it a long weekend and organise travel plans, it did not take away from the festive fervour which was visible on Thursday, retailers and firms said.
Durables and white goods lead the 35-40% sales jump
Consumer durable companies such as LG, Samsung, Haier and Godrej Appliances are seeing sales growth rates of 35-40% (versus last year) in categories such as large-panel TVs, dishwashers and air conditioners, top executives said, as a combination of pent-up demand along with GST rate reduction pushes up sales. The above-mentioned categories have seen GST rationalised to 18% from 28% earlier, bringing it at par with white goods such as refrigerators and washing machines.
“The last ten days have been good from a business perspective. We are seeing huge growth in categories such as large panel TVs, ACs and even dishwashers, as consumers feel encouraged to buy after holding back during Shraadh. The GST cuts have certainly helped in improving buying sentiment. And the impetus will last into Diwali,” Ashish Agrawal, COO, LG Electronics India, said.
Apparel and retail formats ride the wave to Diwali
In apparel and footwear, retailers such as Lifestyle India, which is the country’s largest departmental store chain, are reporting a sales growth of 15-20%, since the GST rate cuts were implemented on September 22. The momentum stayed high on Dussehra, considered an auspicious day for Hindus, said Devarajan Iyer, CEO & ED, Lifestyle India, with the retailer reporting strong footfall and sales conversions across its stores. This is despite rainfall in some parts of India including Maharashtra and Odisha, he said.
“There is a buoyancy in the market and the mood is upbeat. While the GST rate cuts in apparel and footwear have been announced in the value segment, it has given a reason for consumers to come out and shop,” Iyer said.
The trend is no different across retail formats such as malls and high streets. Mukesh Kumar, CEO of Infiniti Malls, part of K Raheja Realty, which has two properties in Mumbai, one in Andheri and the other in Malad, said that the last one week had seen at least a 15-20% increase in footfalls, with a sales growth of around 30% versus last year reported in categories such as durables, apparels and footwear, where there have been price drops of 7-10%.
“The GST cuts have acted as a sweetener during the festive season. There is enthusiasm and curiosity as consumers were waiting for the price cuts to reflect in stores,” Kumar said.
Consumer durable retailers such as Vijay Sales say that the growth this year is also coming on a lower base as sales during the festive season last year were muted on account of an urban slowdown and inflationary concerns. Consumers are also lapping up products across categories despite GST cuts announced in a few segments only, said Nilesh Gupta, director at Vijay Sales.
“Consumers are using this occasion to upgrade their products. We are seeing this trend across categories, which is a clear sign that pent-up demand is high. However, we do realise that there could be a drop post Diwali as the festive season will conclude and consumers will make their purchases by then,” he said.