The consumer confidence index for India has moved up in September.
Chennai: It is that time of the year when customers keep all their worries aside and enjoy some retail therapy, joy of gifting and engage in bargain hunting.
Despite rising inflation and fuel prices, subdued job scenario and volatility in the equity market, the country is gearing up for festive season. Home developers, automobile firms, consumer durable makers and both offline and online retailers expect it to be the biggest festive season ever.
By restraining duty hike on gold and pausing the interest rate hikes, the government and the Reserve Bank of India (RBI) too have acknowledged that festive season is time for some cheer.
The sentiments among consumers are positive, says Ipsos primary consumer sentiment (consumer confidence) index (PCSI). The consumer confidence index for India has moved up in September by 0.6 points over the previous June quarter. India has highest level of consumer confidence, highest level of expectations as well as investment. Improvement in the September quarter indices shows Indians have already got into festive mood.
“Despite global and domestic macro-economic headwinds of rising interest rates in the US, rising crude prices, threat of crude oil-fuelled inflation, weaker currency and foreign institutional investor outflows, RBI has paused rate hikes for now.
While we are in a rising interest rate cycle now, the pause will provide a temporary relief to the homebuyer sentiment and support the festive season demand,” said Shishir Baijal, chairman & managing director, Knight Frank India.
The pause in interest rate hike is a big opportunity for housing property developers, automobile firms and consumer durables and even for e-commerce firms who offer products on equated monthly installment (EMI).
“The festive season is considered to be an auspicious time by many Indian homebuyers, which developers and builders look to capitalise upon. This period is usually marked by project launches with developers doling out attractive offers, schemes, freebies, flexible financing options etc. The offers in this period are unique, competitive and many-a-times customised to suit the target market. From a homebuyer’s perspective, this is one of the best periods to scout for their ideal homes, as most of the developers would be vying for their attention through these offers,” said Sankey Prasad, founder chairman and managing director, Synergy Property Development Services.
“With the unveiling of the Real Estate Regulatory Authority (RERA) and GST rate cut on the real estate sector, the market sentiment looks positive and there is no doubt that it will further boost the confidence of consumers ,” Prasad said.
In case of automobiles, the incentives try to address the concerns regarding long-term insurance and fuel hike. Bajaj Auto is providing five-year free-own-damage-insurance cover, five free services and five years of free warranty on select motorcycles.
“Motorcycles’ on-road prices have gone up by at least Rs 6,000 due to the increase in the insurance cost. We wanted to cushion this cost for our customers by absorbing the expense of ‘own damage insurance’ for first year and extending this benefit by covering him for the next four years,” said Eric Vas, president, Bajaj Auto (motorcycle business).
Consumer durable companies are providing fixed EMI offer in a rising interest rate regime. “Fixed EMI offer with Bajaj Allianz will help bring home any product from its premium range at Rs 2,018. Haier is also offering unique warranties on its range of products. Following a 360 degree approach this festive season, we will run our marketing initiatives via various platforms such as electronic, print, digital and in-store branding etc.” said Eric Braganza, president, Haier Appliances (India).
Coming out with better and bigger offers has become a norm with e-commerce companies as the festive season is growing larger every year. E-commerce players are expected to achieve $2.5-3 billion gross merchandise value (GMV) during the 5-day festive season sales in October, finds RedSeer Consulting. The total GMV will be double that of last year’s $1.5 billion.
Daily GMV of $527 million during the festive season will be 8.5 times higher than $6.2 million on a regular day. Twenty million customers are expected to shop during the five-day sales against 13 million shoppers last year. Cashback offers too are expected to rise this year. CashKaro expects transactions to rise by 300 per cent against regular days.
All the e-commerce firms are gearing up for the festive season with bigger offers than last year. Flipkart is offering EMI on debit cards as a payment option to its customers. This is expected to be a popular payment method as more debit cards are in circulation than credit cards. Last year banks issued 944 million debit cards against 39 million credit cards. Flipkart launched its private label ‘Perfect homes” earlier this year and it is expected to contribute 30-40 per cent of the category’s revenue by the end of 2018.
Amazon too is showcasing its first ‘Amazon Festive Home’ in New Delhi as a complete single shopping destination for products ranging from large appliances, home décor and kitchen items to occasion wardrobe, festive items, household groceries and more. Amazon also has launched Hindi interface for its website and mobile apps in order to grab a larger slice from tier I and II cities. It has invested in building an extensive supply chain network in India for faster deliveries across tier I and II cities.
Almost all e-commerce firms are innovating terms of offers. In the run-up to Diwali, Paytm Mall has partnered with top jewellers like Jpearls, Om Gold and RSBL and is offering up to Rs 10,000 cash-back on their 50 gm gold coin purchases.
ShopClues is coming up with MahaBharat Diwali Sale offering a wide range of products at a flat 50-80 per cent discount across the fashion and lifestyle, home and kitchen and electronics and accessories.
The festive season is also expected to create demand for 50,000 temporary jobs this year, according to the projections by the Indian Staffing Federation. E-commerce will continue to be the largest employment provider, accounting for about 24,000 jobs. The second largest hirer will be logistics companies with 12,000 jobs, followed by retail 8,500 jobs and warehousing 5,500 jobs.