Consumer Sales Growth in 2023 Halves From Post-Pandemic Levels in Key Segments: Report

New Delhi: Huge ads and billboards offering heavy discounts and freebies with purchases do not seem to have had much of an impact on consumer sales, whose growth halved to just 9% (compared with 2022) in some key segments in 2023, even during the festival season.

In fact, discretionary retail sales came to a halt in 2023, says a report in The Economic Times, with the post-pandemic surge in sales halving in segments, such as garments, footwear, beauty and quick service restaurants.

The report, citing the Retailers Association of India (RAI) , said the “budget conscious” category was hit the hardest in the apparel and footwear segment, followed by cosmetics and fast food. This could be a reflection of the squeeze on purchasing power and household budgets to inflation.

Even the festival season in 2023 (October to December) failed to pep up sales, which grew by a “modest” 6%, a decline from the 2022  sales during the same period, said the report, citing RAI figures, arrived at after a survey of top 100 retailers in the country.

Expecting the slowdown in consumer sales to be “prolonged”, a top retail chain head told ET that they thought things would improve from January 2024 but that has not been the case so far.

Retailers feel that unless the Reserve Bank of India (RBI) lowers interest rates and companies give decent salary hikes, and there are no further job losses, they do not “see any recovery for another two-three quarters”.

 What propped up consumer sentiment after the pandemic-induced lockdown was what is called ‘revenge shopping’, but that was not sustainable following huge job losses, shutdown of many stores, and income stagnation.

Kumar Rajagopalan, chief executive officer, Rai, told ET that the only segments that are seeing sales are automobiles and some consumer goods due to available finance options, the hike in EMIs was eating into spending on discretionary products.

A recent AC Nielsen report has also flagged a slowdown in sales volume growth in consumer goods in urban areas, and the worst hit were smaller stores.

A Reuters report, citing the marketing research firm, said “sales volume in the sector increased 6.4% in the fourth quarter of calendar year 2023, slower than the 8.6% growth in the previous quarter, …as growth at smaller stores fell short of large supermarkets.”

However, sales in the rural market showed an uptick in the December quarter, especially in “habit forming” products, such as tea, biscuits and noodles, even as product prices slipped 0.4% across the country, “marking the first decline in more than two years” said NielsenIQ in the report.