India’s festive season, traditionally a period of heightened consumption, has exhibited slower growth in 2024 compared to recent years. Retail and online sales have risen, though at a more subdued pace, reflecting varying consumer demand across rural, urban, and online platforms. According to a report by Nomura, the country’s overall festive sales growth reached approximately 15% year-on-year (y-o-y), down from 32% in 2023 and 88% in 2022, suggesting a tapering off from the post-pandemic consumption surge.
“Within this, festive retail sales growth is slower for offline stores, and higher for online e-commerce platforms, with the latter driven primarily by tier-2 and tier-3 cities. Demand for gold in volume terms has been lower due to higher gold prices, and spot airfares have dropped due to subdued demand. Hard data for October show stronger growth in two-wheeler sales, while passenger vehicle sales have been soft amid heavy discounting, and sales growth for medium and heavy commercial vehicles contracted,” Nomura said in a note.
Retail sales
Retail sales, estimated by the Confederation of All India Traders (CAIT), hit Rs 4.25 trillion, representing a 13.3% growth, which remains strong but is markedly slower than the 36.4% growth recorded in 2023. E-commerce, however, showed more resilience, driven by tier-2 and tier-3 cities. An e-commerce consultancy firm, Datum Intelligence, reported a 23.5% rise in online sales, with Amazon recording a 26% increase in sales during its “Great Indian Festival,” primarily from non-metro regions. Consumer loans for online purchases surged, with Amazon Pay ICICI Bank credit card usage rising 50% year-on-year, indicating a growing reliance on credit for festive purchases.
Demand for gold, however, has been dampened by higher prices, causing a shift toward lightweight jewelry, coins, and an increased interest in silver. Additionally, two-wheeler sales displayed strong growth, while passenger vehicle sales remained tepid despite widespread discounting.
Nomura’s report highlights a mixed picture for India’s consumption landscape, with urban metro and industrial demand lagging, and rural and smaller cities showing comparatively stable demand. The report also points to potential downside risks to GDP growth estimates, suggesting that India’s economy may be experiencing a cyclical slowdown, with growth projections for FY25 and FY26 anticipated to remain below Reserve Bank of India estimates.
