NEW DELHI/BENGALURU: Higher prices, lending curbs and a move to online shopping are denting the cheer for Indian retailers at this year’s Diwali Hindu festival, with lackluster sales for high-end items ranging from iPhones to cars and even gold.
A weak rupee has pushed prices on Apple Inc’s costly iPhones even higher in India, while surging fuel costs and a liquidity crunch in India’s shadow banking sector have taken a bite out of growth in carmakers’ sales during the country’s heaviest shopping weeks.
Demand for gold, which typically surges during the season that started in mid-October and ends on Friday, is also weak despite dealers offering discounts on the precious metal for the first time in three years.
The tepid sales may prompt the government of Prime Minister Narendra Modi to find additional ways to stimulate the economy, especially given there is an election due by May. The government has already reduced fuel excise taxes, pushed the Reserve Bank of India to ease curbs on bank lending, and provided support for weak crop prices in recent weeks.
Expecting the usual spike in demand during Diwali, when people traditionally buy gifts for family and friends, Sanjay Mahadik, owner of an apparel shop in Satara in the western state of Maharashtra stocked up. But demand is weak, he says.
“Only a few customers are turning up. During Diwali week normally the shop gets so crowded that customers struggle to find space to stand,” said Mahadik.
However, online retailers like Amazon and Walmart-owned Flipkart reported robust sales thanks to major promotional events this season.
Just days ahead of Diwali, some wholesale and retail markets in cities like Mumbai saw lower customer numbers as consumers shifted to buying online to take advantage of greater discounts.
Sales of large appliances grew 2.5 times during Amazon’s Great Indian Festival, with smart TVs accounting for more than 50 per cent of total TV sales, the online retailer said in an email. Amazon also said there was an increase in sales of air purifiers, furniture and clothes. — Reuters
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