GST reforms drive 25% rise in festive sales across India
What's the story
The recent Goods and Services Tax (GST) reforms, which came into effect on September 22, have given a major boost to festive demand. The changes have resulted in a 23-25% increase in sales across metropolitan and emerging markets. The reduction in tax rates on electronics, fashion items, and furniture has led to lower retail prices. This has encouraged aspirational purchases and increased spending from tier-2 and tier-3 cities.
Market response
Aspirational purchases surge as retail prices fall
The GST reforms have directly benefited consumers by reducing tax rates on large-screen TVs, mid-range fashion items, and furniture. This has not only lowered retail prices but also encouraged shoppers to make more aspirational purchases. According to market research firm Redseer, the reduction of GST on large TVs from 28% to 18% has resulted in a 6-8% fall in retail prices, thereby boosting demand for premium models.
Sales spike
E-commerce platforms report exponential growth in user visits
The first two days of sales during the festive season saw a 23-25% year-on-year (YoY) increase, a four-to-fivefold jump over last year's muted start. Amazon recorded over 38 crore customer visits during the first two days of its festive sale, its biggest-ever seasonal start. More than 70% of the traffic came from outside India's top nine metros. Flipkart also witnessed a 21% rise in user visits during the first 48 hours of its festive sale compared to last year.
SMB growth
Small and medium businesses witness sales momentum
Small and medium businesses (SMBs), especially those from tier-2 and tier-3 cities, have witnessed significant sales momentum. Over 16,000 SMBs have tripled their sales compared to an average day during Amazon's festive sale. Flipkart also reported a 26% YoY jump in demand for mobiles, TVs, and refrigerators during the first two days of its festive sale.