Spooked by slowing economic growth, Indians have been saving every penny in the last couple of months. But looks like this conservative mindset will be forgotten once the festive season kicks in.
Around 15% of the respondents in a recent survey said they have not been spending on discretionary items like shopping, meals, movies, services, and more in August and September, wanting to hold on to the cash in case matters worsen, LocalCircles’ annual Mood of the Consumer survey found. The survey received more than 49,000 votes from around 22,000 unique consumers.
But this trend is set to change in the coming months. “The Mood of the Consumer survey indicates that while the cutback in spending is quite real, the consumer is likely to be back in the market, come October,” LocalCircles noted.
Over 40% of the respondents in the LocalCircles survey said they would spend up to Rs 10,000 in the next 60 days – September and October – during the festive season.
“With all the slowdown news around, these numbers seem to be the silver lining suggesting that many consumers may be back in the market in October,” LocalCircles noted.
Of the people planning to spend over Rs 50,000 this festive season, home renovation topped the list. This time of year is often considered India’s spring cleaning period when people spend a lot of time cleaning, renovating and decorating homes before the celebrations commence.
Buying white goods – TV, fridge, washing machines – was next on the list, followed by cars and jewellery.
“Indian automobile and consumer durable companies are bullish on the consumer demand during the upcoming festive season,” LocalCircles said. “They are hopeful that the season will bring in good sales numbers but are cautious at the same time and are maintaining low inventories.”
Although mobile phones and apparel sell like hot cakes online, consumers are yet to trust the web to make other purchases. Even now more than six in 10 people will shop for white goods the traditional way – from a retail store.
However, nearly three in 10 intend to buy white goods from e-commerce sites this year.
This is a sizeable share, LocalCircles notes. “…with the slowdown, increased number of consumers feel that they may get a better bargain online as compared to retail stores,” the organisation explained. And for good reason. Discounts are exceptional during this time. Amazon’s Great Indian Festival Sale and Flipkart’s Big Billion Days sale will both run from September 29 to October 4.
More than a third of smartphones sell online but big-ticket white goods weren’t as sought-after. But a shift in consumer confidence started coming to the fore last year, when remarkable online sales offset the decline in offline white good sales. Twenty percent of flat panel television sales volume last year, 30% convection microwave ovens, 10% of washing machines and 9% air-conditioners, and 5% of refrigerators came from online purchases, data from German market research institute Growth from Knowledge show.
As shoppers grow the categories they shop from and rack up bigger bills, India’s online retail landscape is set to expand. Share of online sales in the overall retail market is expected to jump from 25% currently to 37% by 2030. India’s e-commerce industry will be worth over $170 billion then. Online shoppers will also double their spending from Rs 12,800 per shopper per year today, to Rs 25,138 in just over a decade.
This article first appeared on Quartz.