Diwali, the festival of lights, is celebrated with much enthusiasm and joy. Flush with the extra cash available in the form of a work bonus, consumers in India are eager to splurge on festive shopping. Globally, Indian migrant communities bring a slice of home with them by celebrating Diwali with the same festive cheer. What are the hottest products this year? How are consumers responding in these bleak economic times?
- The eternal currency is still the best;
- A season of spending;
- Diwali gifts going high-tech;
- All that glitters may not be gold;
- Diwali going global.
- The usual rush for new properties leading up to Diwali may be less prevalent this year due to the slowing global economy. Offer more than just price slashing to lure consumers this season. For example, Hyderabad-based property developer Shanta Sriram is offering free modular kitchens along with their sale flats;
- Corporate Diwali gifts are a growth area. Brands are keen to make an impression with quality corporate gifts taking in everything from crockery sets to winter breaks.
Each year, the major festive season in India begins in late August, and concludes in late October with the Hindu festival of lights, Diwali. Diwali is the most grandly celebrated festival for Indian consumers. It is a time for joy, giving and togetherness. Diwali is now a global festival, with its festive cheer spreading to far flung cities like Dubai, London, Toronto, Sydney and Singapore where there are large communities of Indian immigrants. Diwali is also a season for shopping. According to The Society for the Confluence of Festivals in India, Diwali is “the largest gift giving and shopping festival in India. People go out of their way to splurge themselves and their loved ones as it is associated with prosperity.” With tablets and smartphones flooding the market this year, younger consumers are opting for electronic gadgets over the traditional gold coins and trinkets when it comes to gifts for themselves and their family members. “The most popular gift is currently the Samsung Galaxy Tab. We have sold seven pieces since the festive season started and sales are likely to pick up till Diwali,” says Raja Dinesh, assistant store manager of Ramakrishna Teletronics in Hyderabad.
However, all things festive and joyous aside, this year’s Diwali may be tinged with an undertone of thrift and trepidation due to the weakening economy and rupee. "High-value purchases and purchases where borrowed money is involved could slow down," said Siddhartha Sanyal, chief India economist with Barclays Capital.
The eternal currency is still the best
Mumbai might soon join the growing number of cities such as China and Dubai in having ATMs that dispense bullion and gold coins. India’s remarkable interest in gold makes an odd contrast for a country where over 400 million people subsist on less than a US$1 a day. Even post offices have now taken to selling gold, alongside stamps and postcards. India Post aims to sell about one tonne of gold coins in the two months leading up to Diwali. “Consumers buy gold coins as a small purchase for maintaining tradition of gifting gold on auspicious occasions such as Diwali,” says Mehul Choksi, chairman and managing director of Mumbai-based Gitanjali Gems. “Gold coins are being chosen as the best form of corporate gifting, even above other popular consumer products like electronic items, because they hold immense traditional value for Indians, and have a long-term investment value as well.”
Real Market Size of Genuine Jewellery in India: 2005 – 2011
Source: Euromonitor International from trade sources/national statistics
Note: Data for 2011 is forecast. Historical and forecast data based on constant prices and fixed 2009 exchange rates. Market sizes based on retail value RSP.
A season of spending
The festive mood of Diwali is usually preceded by Durga Puja, a six-day festival in September that celebrates the Hindu goddess, Not unlike Diwali shopping, consumers get into a buying frenzy; from party lights to new clothes, food hampers and new furniture. Pranab Das, a government official shopping in Fancy Bazar, a shopping hub in Guwahati City, said: “Festivals are considered an auspicious time to buy something for the house or one’s family. I don’t have any major purchases to make on my list yet, but I am planning to buy a Blackberry for my dad.”
For those who prefer to avoid the crowds and chaotic traffic, it is an ideal time to go away for a holiday. Apart from the usual getaways in eastern India – Puri, Digha, Darjeeling and Sikkim – more people are opting for destinations a little further away like Kerala, Himachal Pradesh and Kashmir, with Bangkok and Singapore being popular destinations for those who have more to spend.
Diwali gifts going high-tech
For younger consumers, baubles, trinkets and collectibles are a thing of the past as tech-savvy shoppers go for the latest gadgets and gizmos this festive season. Tablets and smartphones top the must-haves list this year. “I recently bought an android phone for myself as it is the latest trend. Clothes and other accessories seem to have lost their appeal,” admits 25-year old Sudhil Aditya, who works for a corporate firm. In order to land better deals, many customers prefer to buy gifts online. On the lookout for a laptop for his daughter, Jala Mohan said he was browsing the stores only to arrive at a better decision as ordering the product online would cost him less and can be directly sent to her hostel in Chennai.
All that glitters may not be gold
Rising fears of recession, the hike in service tax on consumer durables, high gold prices and an uncertain job market are expected to dampen the festive mood, leading to what consumers call a ‘Budget Diwali’. “The usual festive mood is not prevailing,” said software professional Jaishankar. The IT sector witnessed major growth till 2008 but has seen some of the worst layoffs in recent times. The declining rupee is not helping either, especially for travellers. Housewife Sudha Shah got a shock when she went to make bookings for her Diwali family vacation to Dubai. “We are a big family of 20 planning to take our first trip together abroad. Flights and lodging alone will set us back one lakh rupees (US$2040) each, much more than what I was quoted just a week ago. We may stay in India instead,” said an upset Shah. Sanjeev Chajjed of Cox and Kings, a travel agency with offices across India, understands Shah’s woes. “Travel cost has risen by an average 8-10% due to the weakening of the rupee against the dollar. Since most festive travellers make payments just prior to their trips, they will have to bear the brunt this Diwali.”
Real GDP Growth in India: 2005 – 2011
Source: Euromonitor International from International Monetary Fund (IMF)/International Financial Statistics and World Economic Outlook/UN/national statistics
Note: Data for 2011 is forecast
Diwali going global
Diwali celebrations are not just limited to India. With a large population of Indians in Singapore and Malaysia, Diwali is declared a public holiday in these countries with celebrations and preparations starting weeks in advance. In an inner-city area in Singapore called Little India, the annual light-up is a big event drawing thousands of shoppers and street stalls throughout the month of October. It is the same story in Kuala Lumpur’s Little India, with all the shops selling gold and sarees (a traditional Indian costume for women) packed with shoppers every day and night weeks before Diwali. Spreading the festive cheer further south, there will be annual Diwali fireworks in Sydney and Auckland, with food stalls, traditional dance performances and competitions drawing in the crowds.
Although it appears that a recessionary climate may dampen Diwali consumption in India and internationally, spending on fast moving consumer goods (FMCG) is still expected to be strong. Rajakumar Chandra, a partner of Jothi Holdings which sells decorations and prayer kits in Little India, Singapore, said: “Recession or no recession, Diwali will remain an important festival for Indians and no one is going to cut back on their celebrations.” Yogesh Tiwari, vice-president of Blackberrys Clothing, a menswear chain in New Delhi, puts Diwali spending intentions in perspective: "While consumers may not go for big ticket items, it doesn't mean they won't spend on apparel and accessories.”