Diwali is one festival that retailers wait anxiously thorough out the year. But this time things are not going as usual. This year Diwali seems to be failed in bringing the cheer to retail sales. Footfalls are low and sales have gone down like never before. This time Diwali has come under the shadow of goods and service tax (GST) which was announced this year in month of July. Though there was a huge turnaround during Pre-GST sale but now things are not all rosy. So, can we blame GST for this slow down or there could be other reasons. Why retailers are not able to leverage the biggest festivity of the year? Let’s try to understand..
E-commerce effecting brick and mortar
GST could not be the sole reason hefty discounting via e-commerce players too have started eating the share of brick and mortar retailers and this festive season the impact is very visible. Speaking on same, Pooja Sood, AVP – Multi-brand Business, SSIPL Group said,” For the Diwali month, we expected sales to be up by 20%-25% against September. However, the upside so far is just 10%. The footfalls also seem to be week. The impact may not necessarily be because of GST, but could also be because of heavy discounting by e-retailers. “
Prolonged discount period
These yeas many retailers were forced to have Pre- GST sale in order to clear up the old stock which was followed by end of season sale. The combined effect of that long and multiple sale periods might be the reason this festive season is not able to fetch the traction alike to earlier Diwali seasons. Speaking on same, Vasanth Kumar, Executive Director at Lifestyle International-Max Retail Division, said,” This time there was prolonged discounting season before the Diwali due to Pre GST sale and end of the season sale. Also all major e-commerce companies tend to announce huge sales from time and again which ultimately effects in –store sales. This time we have achieved the 92% of set target as far as Diwali sales are concerned; however, we are not seeing any big surge in week days, though, week-ends are fine.”
GST is culprit
After the GST was announced, it was expected that most of retailers will do MRP revisions which might trigger a dip in sale. However, contrary to that, there no major change has been done by any retailer. Still, they have failed in catching the eye-balls. Speaking on same, Vishal Gupta, Director- Retail, Puma Sports India Pvt Ltd said,” This time Diwali is not turning as expected, consumers’ sentiments are weak this time. Through, we have not done any MRP revision due to GST but it has started effected certain set of consumers who comes under the ambit of GST. May be such consumers are not willing to spend much in this festive season. “Gupta also informs that this time the brand is seeing 10%-15% dip in sales as compared to earlier Diwali seasons.
Taking this further, Rajesh Jain,Managing Director & Chief Executive Officer, Lacoste India said, “The response is decent, though when the GST was announced in July we had seen a slight dip in that month; however, it was picked up in the following month. This season footfall might be bit low but the conversions are high because only serious buyers are coming to store. In fact, we have registered 10% same store growth from last year.”
Moreover, Government's decision to impose 28% (GST) on handbags has caused a massive evasion and we can clearly see in this festive season. The prices of handbags, luggages were slated to be raise by 10%-15% after GST was announced. Sahil Malik, CEO of Da Milano said, “This Diwali season we are seeing a 20% decrease in sales as compared to earlier even footfalls are not very encouraging.”
Hopes are high with upcoming wedding season
Clearly, this Diwali has failed in brightening up retailers’ sales the reason could be many right from GST to e-commerce or any other. May be upcoming wedding season will bring some cheer that every retailer is hoping now. Speaking on same, Yogeshwar Sharma, Executive Director at Select CITYWALK said.” No, doubt, this time it was slow start due to many reasons but we are hopeful sales will pick-up in coming weekend. We had seen a tremendous response during GST sale may be the present slump is the effect of that sale. This Diwali, the biggest impact we are seeing is on expensive goods. However, we are hopeful with upcoming wedding season things we go on track.” Sharma also informed that there is no big impact on footfalls it is more or less similar to every year.