India’s festive demand hits 5-year high: From cars and ACs to TVs, apparel and quick commerce, retailers expect a bumper Navratri-Diwali season

Consumer demand in India scaled a five-year high in the first phase of the festive season, lifting hopes of manufacturers across categories including home appliances, automobiles, apparel and footwear.

Sales growth during the period spanning Onam, Rakshabandhan and Ganesh Chaturthi came despite several price increases, reflecting underlying consumer optimism. Industry executives are hopeful the momentum will sustain till Navratri-Diwali, the country's largest consumption period.

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The latest demand upswing is broad-based across categories, according to executives. Online platforms, including quick commerce and food delivery services, also reported strong growth.

Volume sales of refrigerators, air-conditioners and washing machines rose 12-15% year-on-year during the first phase, led by Onam, while value sales grew faster at 18-23% thanks to the price hikes, according to manufacturers. Smaller towns in Maharashtra and Karnataka too reported robust sales growth since the weekend for Ganesh Chaturthi.

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"Onam gave us a very encouraging start, with good sell-out and healthy channel stocking. We are also seeing good growth around Ganesh Chaturthi, driven largely by volumes," said Sanjay Chitkara, director at LG Electronics, the country's largest white goods maker. Momentum is strong in large screen TVs, four-door refrigerators, large washing machines and ACs.

Automakers, too, clocked record festive sales. Maruti Suzuki posted a 61% on-year rise in retail sales during Onam, despite the festival season being spread over fewer days this year.

Festive Momentum Seen Continuing

Its rival, Hyundai Motor India, almost doubled sales. "Very rarely do you see such strong demand in the market," said Tarun Garg, managing director at Hyundai Motor India. The company is advancing the commissioning of the third shift at its plant in Talegaon, Maharashtra, to meet the strong demand.

Car dealers reported a 20% on-year rise in retail sales in the first phase of the festive season, said Sai Giridhar, president, Federation of Automobile Dealers Association. He expects the strong momentum to continue over the next 10 days driven by Ganesh Chaturthi.

"If Onam is any indicator, we are off to a fantastic start this festive season," said Partho Banerjee, senior executive officer, marketing and sales at Maruti Suzuki. "We do not see any headwinds why demand should not improve in the festive period." The carmaker has pending orders for about 180,000 vehicles, while inventory in the channel is around 16 days.

The buoyancy in demand has extended beyond automobiles and consumer durables. Departmental store chain Lifestyle recorded strong double-digit growth in both sales and average billing value since Onam with steady demand across categories, said Devarajan Iyer, chief executive officer.

In ecommerce, Flipkart said its quick commerce business clocked 2.5 times growth in sales compared to last year during Ganesh Chaturthi, including in the smaller markets. A recent CLSA report also showed record growth in weekly active users on Blinkit, Zomato and Swiggy during Rakshabandhan.

To be sure, demand has been improving month-on-month since January-February across most categories, with inflation due to the West Asia crisis having little impact on consumption so far. Even during Independence Day sales, companies had reported 5-7% volume growth.

Consumers on their part are increasingly turning to consumer finance to cushion the impact of price hikes. For instance, home appliance and TV prices have surged by 12-15% this calendar year, laptops and smartphones by an average of 35-40%, and cars by 3.5-5%.

However, Kamal Nandi, business head (appliances) at Godrej Enterprises Group, said overall market sentiment has improved across tier I-II-III markets. "While the mass segment is facing some challenges due to the inflationary trend, the premium segment is doing well with deeper penetration of retail chains and ecommerce," he said.