All over the world, festivals are usually boom time for consumption. People know they have to spend, and they want to spend. All this makes them plan for this expenditure, as a result making these seasons as perfect barometers for measuring product likeability in the market. If spending doesn’t happen even at festival time, it is pretty bad news and a quite precise measure of how good or bad the consumer economy is, the same manner in which the prices of bellwether stocks tell a story.
Last year, the retail sales in America closely reflected the consumer sentiments and indicated what may be coming. If people decided to economize on that most sacred ritual that happens just once a year, of buying Christmas presents for family and friends, they were obviously really too broke or too miserable to spend or probably did not feel confident about the future to part with their money they had. That spelled trouble for all those economies around the world that exported to America.
As we ease towards Diwali this year, our export-oriented companies and stockmarkets are shaken up by the events in the world outside that they are directly connected to and “recession” is everybody’s favourite topic of conversation. The media also magnifies every bit of the uncomfortable news. The “is Indian economy coupled or decoupled with the world economy?” debate keeps getting intensified. The “coupled” school predicts unavoidable doom and the “not-so coupled” school says farmers weren’t globally connected yet and most of India didn’t invest in stokmarket directly or through mutual funds or pension funds.
Most consumers do not have regular jobs – they have livelihoods, so it is not merely a question of counting how many job layoffs there have been or how many companies might not handle out salaries in time. The concern would be the affect it would have onto the whole value chain. If the sales get affected, transport would decrease. This would affect the truck drivers and people accompanying them, and the dhabas in return too.
Thus we find that this is the essential nature of more than half of India’s consumption economy. Lots of people earning a little each adds up to a lot. Lots of people spending a little each that adds up to a lot. The other half of the consumption economy is a smaller number of people who earn a reasonable amount of money and spend a reasonable amount of money. Then there is a relative handful that is really rich and big-spending. Ironically, the latter are the one’s which are the most hurt in a recession like scenario.
So in the midst of all this swirling fog of speculation and uncertainty, nobody quite knows how bad the situation is. Unsure about how consumer income was being affected or how consumers felt about spending, one can only rely on the fact that in India everything and its opposite are all true. Many sales managers get spooked and try to negotiate sales targets downwards. All this makes the Diwali sales all the more important which would be the best test to gauge the market sentiments.
It has been seen in the past that the Diwali season is always good for sales except for those who follow the stock markets religiously. For marketers, Dussera and Diwali are especially important. Unlike the other more regional festivals like Pongal or Ganesh Chaturthi, which are celebrated with varying degrees of importance and enthusiasm in different parts of the country, Dussera and Diwali are more or less pan-India. While they may have different stories and rituals around them, they still have some standard features: ten days of Dussera festivities and praying to Lakshmi for prosperity at Diwali. The entire social nature of these festivals is nearly standard right across the country. Juxtapose it with the already in place expansive mindset, and you have the perfect recipe for sale. And if at that time, consumers aren’t spending, it’s a direct indicator of how bad things actually are. In good years this is when one makes the upside on his sales.
Companies and retailers reinforce this scheme of things. It takes two to tango as far as shaping consumption behaviour is concerned. Brightly lit seductive displays, lots of festival offers and discounts, heavy advertising – all work together with the consumer’s with desire and habitual plan to spend at this time and reinforce each other. It’s hard not to feel the electricity in the air, and it’s hard not to give into a little bit of indulgence, whichever way we may choose to define it. Even soap and shampoo companies will tell that people upgrade to a higher priced set of brands during this season. Colour cosmetics sell more, even Rs. 5 nail enamel.
Lazy marketers may well see this season as the mainstay of sales, but the more enlightened ones have steady sales throughout the year with the “third quarter” spike being the difference between a good year and a great one. As modern retailers increase in number and as television soaps show us many different ways in which to celebrate festivals, there will be an even greater consumption push at festival times. There will be remixes, retro and rediscovered festivals – because we have so many of them, and they have been historically planned in such perfect way as far as cash-flow planning goes, the festival-linked consumption ride has just begun!
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