THE last minute dash by frantic shoppers boosted retail Eid sales to an all-time high, as market watchers projected a minimum 10pc expansion, with business estimated to have reached a staggering Rs850bn this season.
The slight improvement in the weather in the closing days of Ramazan, discount deals at malls and by multiple brands, and the multi-layered Pakistani market offering options to all income groups were all factors that led to customers thronging regular and makeshift markets.
Except for high-end brands, prices were said to be broadly stable at last year’s level. But the children’s garment segment was an exception, as its prices crawled up marginally across the board.
Clothing, footwear, cosmetics and fashion accessories cut the biggest share of the Eid spending pie. Reports from major cities suggested that the dedicated markets dealing in household items, furniture, electronics and crockery also did roaring business before Eid.
The spending spike in Karachi may have been less than the country’s average this year, as Karachiites probably diverted a portion of their Eid budget to seek appliances to deal with the sweltering summer and frequent power outages. Record sales of UPSs, generators, ACs and fridges were reported in early Ramazan when the city sizzled.
“This year I wanted to dish out cash for my children to let them shop for themselves, but I bought a small gas generator to cope with the long power outages. It upset my Eid budget and I had to defer the plan to indulge my teenagers. Like always, I gave the leftover amount to my wife who knows how to make the most out of the least,” said Asif Ahmed, a petty officer with a monthly income of Rs60,000.
Assuming the spending projection of Rs850bn to be true would mean that 30m Pakistani families spent about Rs28,000 each on Eid.
“Not even in my dreams. It would be absurd to expect the poor to enjoy this scale of economic empowerment. My whole family struggles from dawn to dusk to earn this amount in a month. On Eid, we wear clothes that we get from our employers that are not necessarily new. We do spend a little extra on food and socialising,” contested Adam, a driver whose wife and a daughter are housemaids.
An economist attributed the unrealistically high average to the worsening class disparity in the country. “The averages may be misleading, but they are not necessarily incorrect. Yes, there is a big poor segment for whom others spend as they can’t afford to do it themselves, but I happen to know many people who spend a lot on Eid,” he said.
Yousuf Jamshed, CEO of LXY Global, did not find the estimates of Eid sales too astonishing. “No one can accurately track sales and turnover because they are not recorded. I can tell you that all brands — national and international, big and small — did very well this year. I am told that the demand surge was such that the businesses cleared their old stocks this year,” he said over phone from Lahore.
Mustaffa Mosajee, MD of AC Nielsen Pakistan, a market research company, was reluctant to comment. “We do not have access to any Eid-specific data. Yes, there is the activity hype, but does that translate into actual figures? My guess is as good as yours,” he avoided a direct reply.
Another analyst thought it would be interesting to find out the source of financing for the humongous Eid spending. He guessed that beside personal savings, overseas workers’ remittances cover no less than 25pc of the spending, particularly in Punjab.
“People often manage to get advance salaries and bonuses before Eid. The salaried class also avails the option of multiple credit cards to foot the bill,” an analyst reasoned.
“As much as $2bn (over Rs200bn) landed in the country in Ramazan, though official numbers will be announced by the State Bank later. Cash withdrawals from banks were tipped to be around Rs200bn in the fortnight before Eid. The SBP announced the induction of Rs141bn worth of new currency notes of different denominations, which are in demand for Eidi (cash gifts). If one takes into consideration all these factors, the spending projection does make some sense,” said a banker who did not want to be named.
For a developing economy growing at a slow pace, it is difficult to afford spending at this scale.
“It’s true that the formal economy cannot possibly sustain such high spending, but one must not forget that spending per capita in the country is close to double the official income per capita. It is not possible to justify the Eid spending, as well as the massive expansion of the retail sector, without accounting for the bustling parallel economy,” another market watcher commented.
“The informal flows through hawala and hundi are estimated to be at least about half of official inflows, i.e. around $1bn (over Rs100bn),” a currency dealer confided.
Some people felt that the five-day Eid holiday will increase the spending on socialising on the occasion. Besides workers heading home to be with their families, many people use the break to fly out to tourist destinations within the country and in the region for recreation.
According to Atiq Mir, chairman of the All Karachi Tajir Ittehad, the turnover of buyers this year in the city has been massive. He said marketers in the metropolis invested an estimated Rs90bn this year — about Rs10-20bn higher than last year.
Published in Dawn, Economic & Business ,July 21st, 2015