Urban India splurges big: Festive spending hits four-year high

Diwali is more than just a festival—it’s a spending frenzy that fuels the heart of the Indian economy. And according to YouGov’s Diwali Spending Index 2024, this year’s festivities are set to break records.

Urban Indians are feeling more generous, with a spending propensity of 117.37. This is the highest in four years, from the time YouGov started tracking consumer spending habits during the festive season.

It also signals a strong resurgence in consumer confidence. This year’s spike is particularly significant, with last year’s figure at a relatively modest 96.43. The enthusiasm, it seems, is palpable.

A major driver of this surge comes from tier-1 cities, which saw a 35% jump in spending compared to last year’s 30%. Northern India, in particular, is leading the charge, with its residents showing the most spending zeal.

YouGov’s Diwali Spending Index is calculated based on a weighted impact of nine factors, including household income, expenses, investment plans, and overall optimism about the economy. And of these, household income plays the most crucial role in driving the Index upwards. This year, over 35% of urban Indians agree that their gross household income is higher than last year—a notable rise from 32% in 2023.

Indians are traditionally savers at heart, but this Diwali, a shift seems to be in the air, especially with residents in urban cities. Around 24% strongly agree that their savings have increased compared to last year, while 21% are gearing up for a splurge.

The data gets more interesting. YouGov reports that 34% of urban Indians plan to spend more than they did last Diwali, up from 31% in 2023. Those who plan to tighten their purse strings remain steady at 25%, while 28% expect to keep their spending the same as last year.

Deepa Bhatia, general manager at YouGov India, noted, “Our Diwali Spending Index 2024 shows a record high of 117.37, driven by higher household incomes and increased savings. Despite some economic concerns, consumers are clearly embracing the festive spirit with renewed vigour.” For brands, understanding these consumer motivations is crucial to making the most of this opportunity.

Another notable shift in consumer behaviour is how early Diwali shopping starts. A decade ago, it was a month-long affair. Today, shopping windows have shrunk, with sales kicking off earlier and lasting right through to Diwali and beyond.

E-commerce giants have noticed too—Unicommerce reports a 16% rise in e-commerce volumes in the first 10 days of the sale season (26th September – 5th October 2024) compared to last year’s period. Gross Merchandise Value (GMV) is also up by 17%.

Shoppers are more proactive, with research and evaluations beginning months before Diwali. While talking at webinar organised by MMA Global recently, Shivani Chopra, marketing head at HP India, advised, “If you haven’t started planning yet, it’s time to catch up. Consumers have already started researching the products they want to buy around Diwali.”

Anika Agarwal, chief marketing and customer experience officer at Orient Electric, echoed these sentiments, recommending brands to focus on new launches during July-August to catch early buyers. “Pick strategies based on market size and brand size. It’s all about choosing where you can win and exploring that funnel,” she said.

The buzz around Diwali doesn’t stop with traditional ads anymore. Brands are pouring over INR 500 crores into influencer marketing this Diwali, as revealed in Qoruz’s ‘Diwali Festive Report 2024: Insights from influencer marketing’. It’s a clear sign that influencers now play a pivotal role in pushing festive sales.

According to the report, traditional advertising is losing ground. TV ads have seen a dip of 4.4%, while print ads have dropped by 10%. Meanwhile, influencer marketing has proven to be a juggernaut, boasting an 11x return on investment (RoI) and a 21% rise in spending over recent years.

The numbers are telling. In 2023, over 22,000 influencers generated around 67,000 posts during the Diwali season, with influencer campaigns engaging 80% of Diwali shoppers. What’s more, content aimed at millennials proved to be 1.5 times more effective.

So, as brands gear up for Diwali 2024, they’ll need to embrace this shift in consumer behaviour. The old rules no longer apply—shoppers are more informed, more proactive, and more inclined to engage with influencers than ever before. To capture the Diwali spending spree, brands need to be prepared, flexible, and above all, relevant.

After all, this isn’t just another festive season—it’s a golden opportunity to tap into a market that’s ready to spend like never before. And with the right strategy, brands can light up their sales charts just as brightly as the Diwali diyas.