Diwali sparkle missing from garment sales as inflation affects discretionary spending
Diwali has a tradition of lighting up India’s retail landscape well before the actual festival and sales gallop across categories including garments. Diwali 2023 concluded on November 12. However, representatives of the garment sector are unhappy with the sales outcome. Business was mixed say many as expectations were not met.
Garment sales did not shine
As chief mentor of the Clothing Manufacturers Association of India (CMAI), Rahul Mehta opined, Diwali 2023 was not the happy place Indian garment retail had thought they would find themselves in. The big story in India’s financial media is also on this outcome, trending Diwali 2023 as an unsatisfactory one for garment retail. As Mehta says, Diwali 2023 performance was the weakest post Covid. Garment retail hasn’t yet figured out why sales didn’t pick up when FMCG products, domestic appliances, automobiles and personal devices did well. Could it be that this festive season, consumers prioritized the social and religious aspects of festivities by investing in upgrading homes, buying gold and silver and of course spending more on entertainment?
Or could it be that impulsive garment purchases throughout the year is seeing well-stocked wardrobes that don’t need more? The Bhivandi powerloom industry, which caters to the garment needs of domestic market, is taking a 20-day holiday this month due to the bearish trend that has affected the entire textile value chain including cotton farmers, ginners and spinning mills. In 2022, Diwali clothes and footwear sales increased almost 97 per cent compared to 2021. However, in 2023, Diwali sales are in single digits.
Is inflation to blame for dull Diwali?
Latest RBI inflation figures reveals 5.4 per cent level will continue in fiscal year 2023-24. This indicates a rise of 0.3 per cent from last year. As per YouGov India survey, 31 per cent of urban Indians planned to spend more during Diwali 2023, down from36 per cent in 2022. And 68 per cent of those who planned to spend more said they would spend more on new clothes but the post Diwali figures don’t seem to add up to this claim of spending more on clothes. The research also stated that the mood of Indians was to enjoy the festive season without incurring excessive expenses on non-essentials.
Although urban Indians appear to be in a better monetary position, the rising cost of living could have had an impact on their spending behavior this Diwali. In the report, Deepa Bhatia, General Manager, YouGov India, stated data shows, the rising cost of living is likely to have an unfavorable effect on discretionary spending this festive season and garments is high on the list of discretionary spends. Bhatia feels, brands and outlets should have recalibrated their price tags in response to purse strings tightening over discretionary spends.
CAIT’s stats contradicts
The Confederation of All India Traders (CAIT) has painted a somewhat different picture of Diwali 2023 compared to what the mainstream media is trending. In a statement, CAIT has confirmed retail markets across India registered a record trade of Rs 3.75 lakh crore during the entire festive season between Navratri, Durga Puja and Diwali. They also added major regional festivals like Goverdhan Pooja, Bhaiya Dooj, Chhath Pooja and Tulsi Vivah among others collectively will add another Rs 50,000 crore to the stash. CAIT Secretary General Praveen Khandelwal also says Chinese goods lost trade worth over Rs 1 lakh crore during the Diwali festive season as almost all festive-related goods sold were made in India.
The real picture however is business was mixed across sectors however, it’s the garment retail sector whose expectations were not met this festive season.
