Muted demand pushes small brands to rewire festive plan

Brands are spending more on promotions and looking for higher working capital this year

- Sowmya Ramasubramanian

Brands that directly sell to consumers have realized that the usual festival preparations won't be enough to lift them out of a demand slump this year.

Ahead of the period considered auspicious for buying everything from appliances and cars to jewellery, such small and medium-sized businesses are front-loading investments in inventory and spending more on promotions than in the previous festival seasons.

Much of this is aimed at stocking up for quick-commerce, one channel that has so far been immune to subdued consumption.

Many brands are seeking as much as 40% more working capital this year compared to the previous year, according to Atul Khichariya, co-founder of Velocity, a platform which helps businesses sell online. Velocity offers cash flow-based loans to small and medium-sized businesses and startups to expand operations to meet seasonal rush. Last year, it earmarked ₹400 crore to support brands.

"The ticket size of loans is also on the rise, especially with quick commerce becoming a wellspring for growth. They all want to expand quickly," he said. "The number of brands showing interest this year is also nearly 60% higher than last year."

Urban spending on discretionary products from apparel to appliances has stayed subdued so far this fiscal amid global trade uncertainties.