New Delhi [India], August 21 : The consumer discretionary sector witnessed continued moderation in the first quarter of the current financial year, but hopes for a recovery are pinned on the upcoming festive season, according to a report by Systematix Research.
The report stated "Q1FY26 marks continued moderation, hope rests on festive season ahead" highlighted that the broader consumption environment in the first quarter of FY26 reflected signs of moderation with muted demand conditions persisting.
While demand remained weak in urban discretionary categories, Tier 2 and Tier 3 towns managed to outperform. Overall consumption trends during the quarter showed a mixed performance across different categories.
The consumer discretionary sector includes companies that produce and sell non-essential goods and services, such as value fashion, jewellery, and quick service restaurants (QSRs).
These products are often sensitive to economic conditions, as consumers tend to spend more on them during times of expansion and cut back during slowdowns.
In the value fashion segment, growth continued at a double-digit pace, though moderation was visible compared to previous quarters.
The report added that expansion in Tier 2 and Tier 3 towns supported this growth. However, the segment was partially impacted by the early onset of Eid-Ul-Fitr, which shifted some related sales into the fourth quarter of FY25.
The organised jewellery retail sector delivered strong double-digit growth during the quarter. This performance was aided by a revival in wedding demand, the festival of Akshaya Tritiya, and support from higher gold prices.
In contrast, the QSR segment reported muted growth. Weak discretionary spending in urban markets and rising competition placed pressure on same-store sales growth, the report pointed out.
Looking ahead, the report expressed optimism that growth in the second and third quarters of FY26 will be supported by festive triggers.
The upcoming season is expected to provide a boost to discretionary categories, especially in value fashion and jewellery, which tend to benefit the most during festive occasions.
Overall, the report noted that while Q1FY26 highlighted persistent demand challenges, the festive season in the coming months is likely to act as a key driver for recovery in the consumer discretionary sector.
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