Consumer spending booms in festive season, but demand revival uncertain

After months of pessimism, consumer spending seemed to have picked during the festival season. Leading two-wheeler manufacturer Hero MotoCorp and jewellery brand Titan have witnessed a good traction in their business in the festive season. Hero MotoCorp announced that it sold more than 14 lakh units of motorcycles and scooters during 32 days of the festive period between the first day of Navratra and the concluding day after Bhai Duj. "Despite severe disruptions on account of the COVID-19 this year, the good retail off-take during the period was 98 per cent of the festive season volumes sold by the company in the previous year (2019) and 103 per cent compared to the same period in 2018," it said.

Titan's jewellery business witnessed around 15 per cent growth for the 30-day festive season starting from Dussehra till Diwali over the corresponding period last year, with a decent recovery in studded jewellery sales.  "The watches and wearables business also did quite well in the festive season with recovery close to last year levels. Eyewear business has also witnessed good traction," it said.

The big question, however, remains. Is it a temporary blip or a sustainable trend? The industrial recovery gathered some momentum, turning around after six months of contraction in September, albeit low at 0.2 per cent. For the first time since the start of the pandemic, all categories under industry, with the exception of manufacturing, recorded positive growth during September 2020. "Gradual normalisation of industrial activity as lockdown restrictions were withdrawn is playing a huge role in the industrial recovery. Increased buying due to the festival season seems to be another major factor in the rebound," highlighted an Anand Rathi note.

The optimism around rapid development of COVID-19 vaccines and a slew of recent measures announced by the government should help accelerate recovery, but how fast that happens remains to be seen.

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