Studies signal low consumer spend this festive season

Retailers’ worst fears seem to be turning into reality.

A recent CluFin survey, shows consumer confidence is at its lowest level in 2012, which means consumers are not likely to spend on anything that isn’t essential. At 36.7, the Consumer Confidence Index for September weighed 2.9 points below the August level -- the biggest month-on-month decline since October 2011. And the reasons included current economic conditions and high inflating leading to low consumer sentiment.

While economic growth during the quarter ending June, stood at 5.5 per cent, high vegetable prices pushed up retail inflation to 10.03 per cent in August, up from 9.86 per cent in July. Added to that a recent survey by recruitment firm Manpower said India’s employment scenario is the weakest in three years. And a FICCI survey reveals the waiting period to find a job has increased from 2-3 months to 9-10 months, with many people settling for junior roles.

The recessionary mood has largely spread in metros like Delhi and Mumbai. An Assocham survey points out that, consumers in Delhi will lead the pack in penny pinching and consumers from Mumbai too are in low spirits. Over 70 per cent of respondents from middle and lower income families in Mumbai see a lacklustre festive season, given a steep rise in inflation, fewer job opportunities and shrinking salary packages.

This surely does affect retailers’ business sentiment. After the extended heavy discount season, retailers were hoping for a positive revival during the festive season, when consumers generally step out to make big purchases. But survey results of all various research firms have a different story to tell, looks like the consumer will wait for another discount season to loosen his purse strings.