The Feel Good Factor

Indian shoppers seem to have returned to the high street, buoyed by a slew of big-bang reforms and the surge in stock markets, prompting retailers and marketers to increase their sales targets for the festive season and build up inventories. Retailers say their footfalls improved up to 25% and sales rose almost 10% sequentially in the two weeks ended October 6 despite the start of the Shradh period, a time many people in north India consider inauspicious for making big purchases. Encouraged by the revival in consumer sentiment, companies such as Samsung, Panasonic, Woodland, Maruti Suzuki, Toyota Kirloskar, General Motors, Bajaj Auto, Shoppers Stop, The Mobile Store and Style Spa are now increasing their inventories for the festive season, which traditionally accounts for up to 40% of their annual sales. The government, long accused of policy paralysis, started an aggressive reforms drive a fortnight ago by allowing FDI in multi-brand retail and aviation and followed it up by increasing the FDI cap on pension and insurance sectors last week. The stock market responded by helping the BSE Sensex cross the 19,000-mark after 15 months last Thursday. The rupee has also started to rise while the monsoon improved last month to reduce rain deficit.
All this has revived consumer sentiment, and retailers are now bullish about the coming months.
Almost all big consumer goods firms, carmakers and retailers had dull sales this year, except during occasional spikes led by massive end-of-season discounts and promotions. These firms are now betting big on the festive season, which starts with Durga Puja this month and goes on till Diwali next month.
The auto industry expects 15-20% growth this festive season on the back of half-a-dozen new car launches, including Alto 800, Chevrolet Spark facelift and Sail UVA, Ford Figo facelift, Tata Motors new Safari Storme and Mahindra Ssangyong’s Rexton over the next one month. Many carmakers have also tied up with banks to offer attractive interest rate schemes and zero processing fees.
Electronic firms Samsung and Panasonic expect demand for mid-to-premium products to increase.