A Cautious Festive Mood
This year, the bright lights of Diwali and Navratri are met with a more measured approach to spending. According to a recent survey, total festive spending by urban households is estimated to fall by 6% to ₹1.97 lakh crore in 2026. This dip follows a strong
14% increase in 2025, which was partly fuelled by GST rate cuts that are absent this year. While a majority of households still plan to shop, a significant 31% do not intend to make any discretionary purchases at all, highlighting a widespread sentiment of caution. The data points to a clear trend: consumers are still celebrating, but they are doing so with their budgets firmly in mind, often dipping into savings to fund their purchases.
The Pinch of Rising Prices
The primary driver of this conservative spending is the economic environment. Rising inflation is squeezing household budgets. India's retail inflation climbed to 5.54% in September, with food inflation hitting a worrying 7.74%. The Reserve Bank of India’s consumer confidence survey reflects this anxiety, with over half of urban households feeling that the general economic situation has worsened over the past year. With expectations of prices rising further, families are being forced to make difficult choices. This pressure on disposable income means less money is available for big-ticket luxury items, as essential expenses take priority.
What 'Value' Means in 2026
The pivot to 'value' isn't simply about choosing the cheapest option. Instead, it reflects a smarter, more discerning consumer. Shoppers are looking for products that offer durability, functionality, and a fair price point. This is evident in e-commerce trends, where overall order volumes have increased by 31%, but the average order value has dropped by 10%. This suggests people are buying more, but each purchase is smaller and more considered. The fastest-growing categories include fast-moving consumer goods (FMCG) and beauty and personal care, while growth in high-priced electronics has been slower. Consumers are opting for deals, EMI options, and assured rewards over lottery-style promotions, signalling a clear preference for tangible benefits.
Shifting Category Preferences
The modern festive shopping cart looks different. While clothing and footwear remain the most popular purchases for 72% of families, other categories are seeing a shuffle. Home appliances and travel are on the list for about 45% of shoppers, but expensive buys like jewellery are being considered by only 6%. Interestingly, the growth in online fashion is being driven by both premium and value ends of the market, squeezing the middle ground. There is strong demand for products priced under ₹500, especially from smaller Tier 4 towns, indicating a broadening of the e-commerce base. This shows a market that is not just about trading up, but also about making practical, affordable choices.
How Retailers Are Adapting
Brands and retailers are taking note of this behavioural shift. The focus is now on accessibility and value. Many retailers are aggressively expanding into Tier 2 and Tier 3 cities, where organised retail has more room to grow and demand for value formats is strong. For example, Trent's value retail format, Zudio, massively accelerated its store openings in early 2026. Online, the rise of quick commerce, which saw an 85% surge in order volumes, shows a demand for convenience for even small purchases. By offering more EMI options, bundled deals, and a product mix that caters to budget-conscious consumers, businesses are trying to capture the attention of a shopper who is careful but still willing to spend on the right product at the right price.
