THE SUNDAY STORY This season, shopping will most likely be based on necessity rather than a display of exuberant festivity. The bearish sentiment is expected to continue till Christmas.

The steep rise in the prices of essential commodities and uncertainty dogging the economy could be a spoiler this festival shopping season. Inflation has played such havoc on household budgets that there is little headroom left to spend on festivity.

This season, shopping will most likely be based on necessity rather than a display of exuberant festivity. The bearish sentiment is expected to continue till Christmas.

Airline executive Radhika R says she is in no mood for shopping as prices of everything have hit the roof, leaving the middle class in the lurch. “I will buy some gifts, and there is no money left to spend. Today, it is more of necessity purchases — festivity has lost its charm,” she says.

The prices of food items have skyrocketed, and transport costs have gone up by 40 per cent. The spike in fuel prices and uncertainty in the employment scenario has come as a dampener.

Independent stock analyst Ambarish Baliga, who recently quit as Chief Operating Officer of a leading financial services and broking firm, will not loosen his wallet.

“I am worried about the future. I am not sure whether this government will continue. I have to be secure [financially]. I am not going to buy anything,” Mr Baliga says.

Stock broker Devan Choksey, who owns brokerage firm KR Choksey Securities, also has no plans to spend big money. “In general, consumers are not that aggressive. It will be need-based buying only. We will buy some jewellery as required for religious purposes and we will buy some clothes,” he says. He is not buying a new car or house as is normally done during the season that continues till Christmas.

But entrepreneur Dharti Desai, who deals in imported wines, will be celebrating as usual.

“We are Gujaratis, and I will buy gold [not jewellery] on Dhanterash as mandated. I will buy some gifts and spend on travel,” Ms Desai says, keeping her festive spirits intact.

Consumer sentiment

The general mood may not be upbeat but as per the shopping trend people are buying lightweight gold and diamond jewellery, smartphones and tablet computers. Car sales might have gone up but they are not based on impulse buying. People had booked the cars in advance and may be taking delivery now.

“People are reluctant. Our Consumer Confidence Index (CCI) says there is pessimism everywhere. But there has been a slight uptick in demand due to the festival season. They will not buy high-value items and purchases will be based on necessity,” says Rashid Bilimoria, CEO, BluFin, a financial information and content company that tracks consumer spending and employment trends.

With a score of 38.2, the BluFin 18 cities CCI for October improved slightly after declining consistently in the last two months. It was earlier at 25 out of 100.

“The figure indicates that while consumers remain pessimistic, improved sentiment is driven by a decline in pessimism regarding spending on discretionary goods like durables and vehicles,” says Mr Bilimoria.

He said the BluFin Employment Sentiment Index continues its decline from 47.1 in July to 42.2 in October — a more troubling sign. “This indicates that urban Indians are increasingly more concerned about their employment situations,” he says.

Notwithstanding the gloomy scenario, marketers have lined up products to entice consumers and the advertising blitz is testing the consumer’s patience.

Kumar Rajgopalan, the Chief Executive Officer of Retailers Association of India, the apex body of organised retailers says that the sale of low-value goods and gift articles is gaining momentum.

“There is demand for jewellery, personal electronics such as mobile phones and tablets, perfumes and special sweets. But given the high interest rate regime, high value products such as capital goods and furniture where EMI is involved will be avoided,” Mr. Rajgopal says.

As per BluFins’ Index the southern region contributes the highest amount of spending, followed by the west.

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