What slowdown? Indians open to spending in festive season; 43% likely to splurge more than last year, 22% want to buy cars

Conventional wisdom suggests that the Indian economy is in the midst of a slowdown. Economic growth has been tepid for the past couple of quarters. Cars sales have fallen. Fast moving consumer goods are spending more time on the shelves.

However, Indians appear to be more open to loosening their purse strings during the festive season. According to a YouGov survey, 43 per cent of people polled said that they are likely to spend more come Diwali than they did last year. Roughly one in four people were planning a more austere Diwali, while 18 per cent said their spending will be comparable to last year.

The survey gauged consumer sentiment, focusing on whether the general economic situation impacts household spending during religious festivals. It found that men are likely to outspend women, as was the case last year. Millennials seem to be relatively unconcerned about the slowdown, with 49 per cent of those surveyed saying they expect to spend more than they did last year. Gen Z seemed to err on the side of caution, with only 35 per cent respondents looking to spend more than they did last year.

The two main categories that are expected to witness enhanced spending are clothes (42 per cent) and gadgets (31 per cent). Men were more enthusiastic than women about their new acquisitions come Diwali in both categories (45 percent vs 38 per cent for clothes, and 38 per cent vs 23 per cent for gadgets). With auto manufacturers, the festive season – considered an auspicious time for new purchases - could not come sooner.

One in four people said they are planning to buy a two-wheeler, and 22 per cent of respondents said they were looking to buy a four-wheeler in the next three months, raising hopes of carmakers who are banking on festive sales to stem the tide of lacklustre sales. However, people are holding on their money before making bigger purchases. Only one in seven people said they’re considering buying property this Diwali when compared to the year-ago period.

Retailers, on their part, are also looking to capitalise on festive sales with discounts and promotional offers. The YouGov survey found that half the respondents timed their purchases to coincide with seasonal discounts and promotions. Nine out of every ten people surveyed agreed with the statement ‘I love shopping during sales and discounts’. Millennials were more inclined to spend during Diwali (60 per cent) compared to GenZ (47 per cent). Impetuous buying has also not gone out of vogue despite the perceived slowdown. Nearly one in three people said they did not care about discounts and made big-ticket purchases whenever it suited them.

When considering the mode of transmission of discounts, it was found that consumers respond favourably to offers that translate into direct discounts or cash benefits as opposed to indirect offers. Absolute discounts on the entire product range, advertised at shopfronts, were also likelier to draw more footfalls than, say, offers such as ‘up to 50 per cent off’. It was found that people were not likely to respond positively to smaller quantum of discounts. Moreover, respondents were found to favour brands that offer regular stock clearance sales and promotional offers.