Rising fears of recession, hike in service tax on consumer durables, high gold prices and an uncertain job market are expected to play dampeners this festive season, leading to what customers call a 'Budget Diwali'.
Shoppers in Chennai are apprehensive of spending. Rising inflation and micro-management on short-term spending kept most shoppers away from stores for the aadi season, which might continue till Diwali, said Narayanan of a textile shop, speaking to City Express.
Reiterating that customers are, of late, in no mood to splurge, the director of a leading advertising agency said that textile sales during the month of aadi declined by 7 per cent in a year-on-year basis, while gold sale saw a 10 per cent dip.
This reluctance to spend has also been observed among established brands, who have cut down on advertising expenditure, he said, pointing to a 15 percent drop in ad-spending by big brands during the Aadi discount season.
Textile, gold and electronic items sales are considered the three main indicators of market performance during a season. According to Ramesh, supervisor in a leading textile store at T Nagar, said: There was a brief dip in footfalls during aadi initially, but it picked up later. Three weeks ahead of Diwali, the build-up to the festival in terms of sale volume even during weekends has not been as expected. Owing to delayed payment of bonuses and salary, walk-ins were less during weekends."
Change in buyer-attitude due to lower resale rates and fear of an economic slowdown is hampering sales, said Saravanan, an electronic shop owner. "This aadi season, sales took a hit and later showed signs of recovery due to Navarathri and Deepavali," he said.
The recent hike in service tax by 2 per cent on durable goods and free sale of fans, mixer- grinders by the State government have hampered sale of these products. The month of October has not witnessed the expected sales, said Nithyanandam of an electronic store.
People from the IT sector, once considered big spenders, are feeling the heat of price rise and fear of recession. The sector witnessed exorbitant growth till 2008 and saw some of the worst layoffs in recent times. IT employees are being cautious with their spending too, and tend to focus more on savings and investments. The usual festive mood is not prevailing, said software professional Jaishankar. Citing an example at his workplace he said, "My colleagues are still in a dilemma as to whether they should spend or not this season," he said.
Government employees too are not committed to large-scale buying, according to a government official in a PSU.
Working professionals are not considering gold coins or ornaments as a gift during Diwali citing high prices.
Some choose gift cheques and electronic durables mainly because of availability of EMIs.
The number of people availing personal loans during festive seasons has plunged by 10% due to prolonged uncertainty in the job market, said an executive of a private bank.