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Festive demand & GST impact: Muted start to the festive season

GST benefits largely passed on

Subdued consumer sentiment continues for apparel and footwear retailers

The onset of the festive season following Shraddh – namely Navratri, Dussehra, Karwa Chauth, and the pre-Diwali period – has so far seen muted consumer sentiment across apparel and footwear retailers. Overall demand during the Navratri period, which included GST adjustments and the festival itself, was transient and modest. Most stores experienced a visible uptick in the initial days of Navratri, but this momentum quickly waned, and the anticipated pre-Diwali surge has been softer than usual. After Navratri, the market entered a post-festival lull, with consumers broadly deferring purchases. Although mall-level footfalls continue to grow YoY and MoM, store-level performance remains highly locationdependent. Retailers are now hoping for a demand pickup over the coming weekend to ensure a stronger Diwali.

GST cuts have not led to any major boost in consumption trends for footwear and apparel

The recent GST revisions have yielded a mixed impact across consumption categories. While the rate cut to 5% on select footwear and apparel offered theoretical price relief to consumers, the actual demand response has been modest. Mid-premium SKUs priced above INR2,500 faced mild headwinds following the GST increase from 12% to 18%, prompting several retailers to partially absorb the higher tax to preserve price competitiveness. Consequently, the overall net impact of the GST changes has been largely neutral for the broader apparel and lifestyle segments. Interestingly, despite being the category most directly benefiting from the rate cut, footwear has not witnessed a meaningful demand uptick so far, in our channel checks.

Demand for electronic retailers improves following the GST rationalization

Driven by ~10% GST rate cuts on high-ticket white goods such as TVs and room ACs, the electronics retailers emerged as clear beneficiaries, with a sharp uptick in footfalls and conversions. Our channel checks suggest that TV demand is sustaining even beyond the festive period, underscoring faster transmission of tax benefits in the durables segment.

Our take

Following our discussions with retailers, it appears that consumer buying patterns have shifted in recent years, with purchases increasingly back-ended closer to Diwali. While pre-festive sales have been slow, momentum is expected to pick up sharply as the festival approaches. Departmental stores such as Shoppers Stop are likely to outperform exclusive brand outlets (EBOs) due to greater brand variety, convenience, and in-store assistance. Several retailers appeared wary of a softer festive season due to low footfalls amid a variable incentive-driven pay structure; others remained optimistic about stronger sales over the coming weekends. The recent GST reduction has not materially influenced consumer demand, and its initial impact is expected to remain largely neutral across retailers.

Pre-festive buying trends

* Consumer sentiment across apparel and footwear retail remains muted, with footfalls at normal to below-average levels. Retailers indicated steady but softer-than-expected demand through Navratri, marked by a brief early pickup and a notable improvement during Dussehra. The first weekend of Oct (4-5th Oct’25) saw a modest uptick in store walk-ins and sales, though the trend lacked structural strength and has not sustained the festive momentum. Some brands saw momentum sustaining post-Navratri; however, this was limited to a few retailers and not the norm. Overall, retailers are waiting for a stronger weekendled traction as the core Diwali buying window approaches, hoping for a more sustained lift in demand trends.

* Evening footfalls remained weak, as consumers engaged in festive activities or fasting, an annual structural pattern observed during Navratri. Typically, preDiwali sales begin 10–15 days before the festival, but this year’s post-Dussehra surge was softer than anticipated, and Diwali walk-ins remain below the earlier “jam-packed” norms, pointing to a muted festive start.

* Nevertheless, the weekend before Diwali remains the key, with most store managers hopeful of pent-up demand materializing closer to the festival. Some also noted that sales shortfalls versus internal targets could impact employee incentives.

* On the other hand, mall-level footfalls continue to show a positive trajectory, both YoY and MoM, according to mall representatives. However, store-level performance remains highly location-dependent in malls, as store placement within the mall continues to be a key determinant of productivity, walk-ins, and conversion rates.

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