From jeans to jewels, GST relief lights up Diwali sales

MUMBAI: It has been a cracker of a Diwali for retailers this year as GST rate cuts has boosted consumption, enabling the middle class to add more items to their shopping bags this festive season.

From lab-grown diamonds to casual wear and products to adorn their homes, both mass and premium segments of the market picked up.Raymonds has seen demand reviving for the mid-market segment (Rs 1,000-2,500 price points) after a sluggish Sept while Swedish retailer Ikea recorded healthy traction across mass and premium products as shoppers sought both design and value.High inflation for most part of the previous year along side stagnant wages and a subdued job market had prompted low income households to curb discretionary spending, hurting broader demand.

Apart from GST cuts, govt also provided income tax relief this year to spur consumption while lower interest rates and falling inflation also helped.

“The recent GST rationalisation has created positive consumer sentiment. While its primary impact was felt in categories such as electronics and automobiles, the lower tax burden has also impacted some part of our range and contributed to greater purchase consideration in home furnishings, enabling us to pass on the benefit to our customers,” Ankit Ghai, country selling manager at Ikea India told TOI.

For Ikea, select portion of their portfolio has been covered under the rejigged rates. Tax on eco-friendly furniture, wholly made of bamboo, cane or rattan, has been reduced to 5% from 12%.Under the new GST regime which kicked in from Sept 22, a host of items ranging from daily essentials, budget apparel and footwear, ACs, dishwashers to small cars have become cheaper. Besides, with more savings, consumers have also been able to upgrade and splurge on premium products across categories (including those that haven’t seen tax cuts).Biba has seen a double-digit growth over last year; MD Siddharth Bindra attributed it to the brand’s innovations. It’s ‘Red’ collection, Bindra said have been “falling short of stocks”.Pooja Sheth Madhavan, founder and MD at Limelight Lab Grown Diamonds said that this year has been one of the ‘strongest’ festive seasons for the brand with sales posting a 40% growth compared to the previous Diwali season. “Consumers gravitated towards solitaire-based everyday luxury pieces, rings, pendants and earrings that blend occasion wear with daily elegance,” Madhavan said, adding that premium segment between Rs 75,000- 2 lakh performed “exceptionally well”.Casual wear sales, in particular, have been robust and formal as well as celebration wear are expected to see an uptick with weddings lined up after Diwali, said Neeraj Nagpal, chief business officer at Raymond Lifestyle Apparel & Retail Business.Record nos for AmazonAmazon India claimed that it has set records this year for its annual festive sale event that saw 276 crore customer visits. Premium smartphones priced over Rs 30,000 saw a 30% year-on-year growth while lot of shoppers upgraded to large TV sets.

The e-commerce space recorded a 24% year-on-year growth in order volumes while gross merchandise value (sales) posted an increase of 23%, data published by SaaS platform Unicommerce showed.In Oct 2024 (Diwali last year was on Oct 31), retail inflation stood at a 14-month high of 6.2%. Since then, inflation has reduced significantly with the latest Sept data showing an over eight-year low print of 1.5%.That said, volatility and shortage of certain commodities in global markets have had led to some price rise in India as well for items such as cocoa (steep rise earlier this year).