Some retail sectors are likely to be down by up to 60%, Indian industry figures said
Indian retailers are expecting a subdued festival shopping season in the run up to Diwali this year, with sales of several products, especially those falling under ‘discretionary spending’ expected to be down by up to 60 percent and gold buyers increasingly looking to Dubai for better bargains, according to trading and industry circles.
The product segments which are expected to see a significant dent in their sales in the forthcoming festival season include gold and diamond jewellery, white goods, electronic gadgets, paints and automobile.
“Sales of gold jewellery have been down by 50 to 60 percent in the last three to four months ever since gold prices crossed Rs 35,000/10 gm ($490 per 10 gm). The expectations on sales during the forthcoming marriage-festival season are very low,” Surendra Mehta, national secretary, Indian Bullion and Jewellers Association (IBJA), told Arabian Business.
Gold price hovered around $526 per 10 gm in markets across the country on Tuesday, after hitting a high of $544 early last week.
Traders said their sales are affected also due to diversion of business to Dubai due to significant price advantage for Indian buyers after hike of gold import duty by 2.5 percent in this year’s budget, and also the weakening of the Rupee against US dollar.
Jewellery traders said Indian buyers get a price advantage of $5.5 - $7 per gm in Dubai. Gold prices weakened slightly last week in Dubai due to strengthening of US dollar.
Though Mehta said it would be slightly early now to estimate the fall in sales in the current festival season, the current decline in sales could continue if prices do not settle at lower rates.
India’s economic growth has been facing serious slowdown in recent quarters, with the auto industry reporting a 23.3 percent fall in sales in April-June 2019 – a 15-year low for the industry, while the 2-wheeler industry registering a 11.7 percent fall in sales during the period.
Leading FMCG (fast moving consumer goods) companies such as Hindustan Lever, Britannia and Dabur have reported a contraction in their volume growth by 7 to 15 percent in the first quarter of 2019.
“The on-going economic slowdown, leading to job losses and fall in income have adversely impacted the ‘impulsive buying’ habit of consumers, with most of them either downgrading their purchases or postponing it all together,” a senior executive of Federation of Indian Chamber of Commerce and Industry, has said.
Diwali, a festival of light and sound, is a major shopping season in India, especially in the north, west and eastern parts of the country. The festival season also coincides with the marriage season in India as it is considered as an auspicious occasion. Diwali falls on October 27 this year.
Traditionally, people deck up their houses with a dash of new paint and exchange gifts during Diwali period.
This year, however, the paint industry – both decorative and auto paint industry – expect a significant fall in sales during this season.
“As against the usual trend of a 10-12 percent growth every year during Diwali season, sales this festival season is not expected to go beyond 7 percent,” R Guha, senior finance executive with Akzo Nobel India, a leading paint and specialty chemicals company, told Arabian Business.
With the auto industry witnessing a major demand fall for several months now, the auto paint industry is also majorly impacted, Guha said.
Absence of easy loans due to the current liquidity crunch among non-banking financial companies (NBFCs) and tightening of retail loans by banks is also expected to dampen festival shopping this year, industry circles said.