X’mas cheer for retailers

26 Dec 2008
Some of India’s biggest retailers have reasons to smile. Sales this Christmas season have topped their expectations, raising hopes of a
revival in consumer sentiment after disappointing shopping numbers during Diwali some two months ago. Falling inflation and interest rates, along with aggressive promotions and discounts, are expected to result in sales growth of 10-15% during the Christmas shopping season, which begins in earnest in the first week of December and runs till New Year, according to the Retailers Association of India. Gibson Vedamani, CEO of the group representing India’s organised retail trade, said the middle class, which accounts for 60-70% of retail spending, has not shown any big change in its expenditure pattern. A recent Assocham study estimated the size of India’s retail market at $343 billion (Rs 17 lakh crore) and forecast that it would grow up to $416 billion by 2010. “The strong spending class is still spending. Indian retailers are in a far better position than their global counterparts, who have been badly hit this Christmas,” Mr Vedamani said. The National Retail Federation of the US has predicted a near 50% decline in holiday sales growth this year while in the UK retailers such as Marks & Spencer and Debenhams are seen posting their worst Christmas sales in years. Landmark, the Tata Group’s books and music retail chain, has seen sales grow by 15% despite an indifferent start to the season. “Unlike previous years, when sales start picking up from November-end, this year it has been from mid-December. Our average bill sizes have remained intact, at around Rs 900-1,000 per consumer,” said chief operating officer Himanshu Chakrawarti. Although retailers were expecting a better consumer sentiment after a depressing November, when sales fell by 20-30%, the extent of improvement has come as a surprise. Mr Vedamani even thinks that “things are back on track” in India’s small cities. “Thanks to Christmas, sales have been better in December compared to last month. We are also running some consumer promotions this month,” said ITC’s Lifestyle retailing business vice-president (marketing), S Ray. The Future Group’s Pantaloon Retail, which launched a 23-day ‘shopping festival’ on December 13 at its over 1,000 stores, expects to generate sales of Rs 700 crore during the period by luring shoppers with discounts and special offers. If everything goes according to plan, sales from the year-end shopping festival should account for about a tenth of the annual revenue of India’s biggest retailer. Pantaloon’s retail brands include the Big Bazaar hypermarket chain, e-zone consumer electronics stores and the Pantaloons chain of fashion outlets. “Christmas sales have been fantastic. On same store-to-store basis, we are seeing double-digit sales growth,” said Pantaloon’s CEO Sanjeev Agrawal.