According to Counterpoint Research, the smartphone retail average selling price (ASP) during the festive season grew by a record 12 percent to reach its highest ever at $242. The high demand of Apple's iPhone 14 has bumped up the overall ASP apart from the fact that one out of every three handsets sold were 5G, it said.

Industry executives perceived this growth occurring due to the long awaited demand with consumers going on high ticket purchases ahead of the first normal Deepawali, since the Covid outbreak after holding back on big value purchases since March-April due to record high inflation, wider penetration of consumer finance schemes at zero interest, normal monsoon and payout of festive bonus by the government.

At present, consumers across income levels are buying more premium products in consumer electronics, smartphones and fashion this festive season with brands, retailers, e-commerce platforms and malls claiming there has been a 12-20 percent jump in average billing value and shopping ticket sizes over last year.

“The roll out of 5G pushed consumers to upgrade their handsets to higher price bands leading to one of the best ever upgrade purchases by consumers,” according to Tarun Pathak, research director, Counterpoint.

Executives at smartphone and electronic retail chains like Reliance Digital, Vijay Sales and Great Eastern Retail reported that there has been over 12-15 percent jump in billing values this festive season over last year. For instance, at Vijay Sales, smartphone ASPs have increased to Rs 27,000 from Rs 22,000 last year, while for television it is Rs 38,000 from Rs 33,000.

Demand has been more for large capacity refrigerators, washing machines or televisions which are 43-inches and above. Voltas, for instance, has sold out its 8 kg washing machines. Voltas MD Pradeep Bakshi said even the first time buyers are buying premium products despite inflation.

The average billing value even for apparel and fashion this year as compared to last year, has been over 20 percent jump at malls, with all-time high conversion rates and footfalls exceeding pre-Covid levels since Navratri, says Rajendra Kalkar, president (malls) at Phoenix Mills, which operates nine malls in cities like Mumbai, Pune, Bengaluru and Chennai.

Bank of Baroda chief economist Madan Sabnavis says that the rise in interest rates did not impact much as almost all such loans are based on EMI options.

He further went on to say, "The repayment period gets protracted for sure, and those wanting to spend based on leverage may not change course, adding that the high inflation pushed the sales numbers up and that has come at the cost of savings.

E-commerce platforms saw a bump in transaction sizes even in the tier 2 and 3 markets. For instance, festive season purchases in Flipkart done using EMIs were of two times higher value than the average order value when paid in full through credit cards driving high-value purchases.

The festive season—covering Onam, Durga Puja, Dussehra, Dhanteras and Diwali—is the largest consumption period in the country, accounting for 25-35 percent of annual sales for most consumer facing companies. This year, it has assumed more significance due to lull in demand since April-May and past two years of low sales due to the pandemic.

Amnish Aggarwal, research head, Prabhudas Lilladher, says that there is a huge pent up demand across quick service restaurants, apparel and retail. Discretionary demand remained strong, more so with high sales proportion from the middle and upper middle class of population, he adds.