Discretionary spending on the rise since June
The uptick in demand that first became apparent in June has continued in July with companies expecting it to revive fully during the second half of the year
Discretionary spending, one of the primary drivers of the country’s economy is showing signs of revival since June, thanks to the tide of flash discounts and end-of-season sales that brands unleashed on tight-fisted consumers who shied away from spending between March and May, raising the hackles of most major marketers. The uptick in demand that first became apparent in June has continued in July with companies expecting it to revive fully during the second half of the year, The Economic Times has said in a report.
The rise in sales in June was both with respect to their previous quarters as well as in comparison to a similar period in the previous year, the report claimed, referring to the quarterly earnings call of several listed consumer companies.
The big relief for businesses was that July witnessed a continuation of the revival in sales in June which was kick-started by a barrage of sales promotion measures by big brands and retailers in the market.
Shoppers Stop CEO Venugopal Nair told analysts that July was witnessing continuation of the trend that was noticed in June. He admitted that the end-of-season sale unleashed in June attracted customers to the stores.
Havells India CMD Anil Rai Gupta had a similar story to tell. He said that demand was lukewarm in April and May but June saw demand rising in all product categories. He is also hopeful that the rising trend will continue both in the urban and rural markets in products such as switchgear, wires and refrigerator.
Jubilant Foodworks, the company that holds license for Domino’s Pizza, Dunkin’ and Popeyes restaurants and operates its own Hong’s Kitchen brand of eateries, has reportedly arrested a reduction in ticket sizes in the last quarter (April-June) on a sequential basis.
All these indicators point to the rise in consumer confidence to spend that was muted since Diwali last year, a trend economists attribute mainly to the grip of inflation and a string of job losses in industries such as IT. Demand was also muted across a number of products such as ACs, refrigerators, aerated drinks, ice-creams, cool milk products mainly due to unseasonal rains driving down temperatures for an extended period during the height of summer across a vast region in north India.
This demand will come handy as the Indian economy expects to weather the headwinds of global slowdown and recession in the developed economies to register growth well above 6%. On July 25, the IMF raised its earlier forecast of 5.9% growth of the Indian GDP to 6.1% in FY24.
Most indicators such as GST collections, credit offtake, purchasing managers index in manufacturing point to a healthy trend.