Retailers in X’mas spirit as shoppers binge

In the
run-up to Christmas, retailers across the country are seeing an uptick in sales
as shoppers, buoyed by the festive sentiment and rising confidence levels in a
fast-recovering economy, feel emboldened to loosen their purse
strings.

Several major retailers are seeing significantly higher
sales year-on-year, with the increase more pronounced in categories such as
perfumes and jewellery, garments and apparel, toys and gifts, Christmas
decorations and items such as confectionery, wine, liquor, cookies and imported
foods.

In December, large retailers are on an average experiencing
overall sales growth of around 22% year-on-year, with some categories seeing up
to 60% higher sales, flattered by the so-called “base effect”.
Christmas sales were subdued last year after consumer sentiment took a hit in
the wake of the economic slowdown triggered by the recession in the developed
West and the terror attacks on Mumbai.

Reliable data on retail sales
are hard to come by in India, unlike developed markets. Organised retailers
enjoy a tiny market share and even in that sector, there are no industry-wide
data sources. Figures in this story are averages from respondents to a dipstick
survey by ET.

Retailers say sales figures this year are likely to be
around 15% on average, higher than even the boom levels of December 2007,
further proof of momentum returning to the economy. India’s GDP growth
slowed to 6.7% last fiscal after averaging more than 9% in three straight
years, although for the quarter to end-September, the growth figure recovered to
a respectable 7.9%. The results are showing, and retailers expect the upward
momentum in sales, which started during the Diwali season, to last through early
January.

“We are expecting a 35% rise in demand for diamond
jewellery during the year-end festivity,” said Mehul Choksi, group MD of
Gitanjali Group, which owns diamond brands such as Nakshatra, Gili and
D’Damas. For Gitanjali, it’s not all about Christmas. The company is
a beneficiary of the high price of gold, which has dimmed its allure among
shoppers and encouraged them to buy diamonds instead.

In Kolkata,
Starmark, the Emami group’s books-music-gifts retail venture, has seen a
30-35% jump in sales since last Friday and the retailer expects this to pick up
further on Christmas Eve.

“This year, sales have been extremely
good after near flat sales last Christmas. Products like Christmas trees and
decor, toys and gifts are moving off the shelves fast,” said Starmark CEO
Gautam Jatia. Starmark, which has four stores in Kolkata, has seen sales in the
past two weeks grow more than 15%, with lifestyle products such as apparel,
gifts, jewellery and perfumes recording more than 20% growth.

Jatia
has noticed a changing pattern in Christmas shopping. “Earlier we used to
see Christmas shopping picking up at least two weeks in advance. Now, it
typically starts from the weekend before,” he said.

Unlike in
the West, Christmas is not a big sales season across much of India compared with
festivals such as Diwali. However, together with the wedding season in north
India and the rising spending over New Year celebrations, retailers are ending
well what has otherwise been a muted year.