IADS Exclusive: What do retailers need to know about the Indian Festival Economy?
The fastest growing major economy in the worldi, India has an unconventional approach to spending. Generally a saving economy, consumer spending around festivals in India is significantly boosted across categories like clothing, jewellery, groceries and confectionery, and luxury goods. The festival season in India refers to an approximately 45-day period starting in September with pre-festival sales and ending with Diwali, occurring usually at the end of October or the start of November. With a population of over a billion people, the consumer expenditure over this festival period is a key economic driver for the country.
Parallelly, the Indian retail industry is a major component of its economy (see our report following the Retailers Association of India presentation during the FIRA meeting in 2023 here). It contributes over 10% of the GDP and accounts for around 8% of employmentii. Combining a substantial middle class with increasing purchasing power and a largely unexplored retail market, India is a new favourite for global retail giants. This is evident with behemoths like IKEA, Decathlon and Sephora to name a few. Luxury brands have also garnered traction in the Indian market with the propensity of consumption for luxury goods in India rising with the expansion of the middle class. The advent of the Unified Payments Interface (UPI) transformed the Indian retail industry. UPI is a real-time digital payment system developed by the National Payments Corporation of India (NPCI) and regulated by the Reserve Bank of India (RBI). According to a PwC India report, UPI accounted for over 78% of total retail digital payments in India and expects that it will contribute 90% of total retail digital payments by 2026iii.
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