Festive sales slump: Muted demand for consumer goods hurt retailers in 2024

Muted demand for consumer goods, from everyday essentials like toothpaste and shampoo, to consumer goods like smartphones has been affecting manufacturers for quite some time also feel contractions.

Despite entering the festive season with high hopes of a revival in demand, the country’s retailers have been left high and dry.As demand continued to weaken in urban centres, retailers are now left with lower-than-expected growth in their holiday sales this year, spoiling their end-of-year party.

According to the latest survey by the Retailers Association of India (RAI), sales growth remained weak during the festive period, as consumers tightened their wallets, with sales growth falling well short of expectations of 10% year-on-year shows that sales of discretionary goods such as furniture and sporting goods were the hardest hit, growing 2% and 3% year-over-year respectively.

According to RAI CEO Kumar Rajagopalan, the survey showed moderate growth of 7% during the October-November festive season, falling short of expectations of 10% is for retailers to boost business through promotional offers and holiday shopping incentives.Inflation, increased competition and limited costs, especially low by the middle class population, significant challenges remain,” he says.

Among the four major regions of India, the West recorded the highest sales growth of 8%, while North, South and East India recorded 7% year-on-year growth.In terms of categories, food and grocery products recorded the highest growth at 14%. The rise in food prices, however, played a role in the double-digit growth in sales, market experts say. In 2024, the Quick Service Restaurants business (10%) and Jewelry (9%) saw healthy growth through the 2023 holiday period.

As 2024 ends in a subdued environment, retailers are pinning their hopes on a recovery in demand next year, with consumer goods demand expected to return to track by mid-2025, according to a top FMCG executive Stronger growth in 2025 as rising operating costs demand a sustainable growth trajectory: to maintain profitability,” says Rajagopalan.