Festive sales slump: Muted demand for consumer goods hurt retailers in 2024

Muted demand for consumer goods items — from daily essentials like toothpaste and shampoo to discretionary items like smartphones — has been impacting the manufacturers of these goods for quite some time. But it is not just the manufactures who are at the receiving end of the poor consumer sentiment in the country. Retailers are feeling the pinch too.

Despite entering the festive season with high hopes of a revival in demand, the country’s retailers are left high and dry. As demand continued to falter in urban centers, retailers are now left with lower than expected growth in their festive sales this year — spoiling their year-end party.

Per a latest survey by Retailers Association of India (RAI), sales growth during the festive period remained weak. As consumers tightened their purse strings, sales growth fell well below the anticipated 10% levels — to 7% over the same period last year. Data shows, sales of discretionary items like furniture and sports goods suffered the most — growing 2% and 3% year-on-year, respectively. 

According to Kumar Rajagopalan, CEO of RAI, the survey indicates a moderate growth of 7% during the October-November festive season, falling short of the anticipated 10%. “Consumption growth has been subdued throughout the year, prompting retailers to boost business through promotional offers and encouraging festive purchases. Inflation, intensified competition, and limited spending, particularly by the lower middle-class population, remain significant challenges,” he says.

Among the four major regions of India, West reported higher sales growth at 8%, while North, South, and East India each recorded a 7% YoY increase. In terms of categories, food and grocery registered the highest growth at 14%. Rising food prices, however, played a role in the double digit rise in sales, say market experts. In 2024, Quick Service Restaurants business (10%) and jewellery (9%) recorded healthy growth over the festive time period in 2023.

With 2024 ending on a subdued environment, retailers are pinning their hopes on a demand revival next year. As per top executive from leading fast moving consumer goods companies, demand for consumer good items is expected to be back on track by mid-2025. “We are hopeful for stronger growth in 2025, as rising operational costs require a sustained growth trajectory to maintain profitability,” says Rajagopalan.