The Retailers Association of India released its latest Business Survey this week, and the topline is genuinely encouraging: retail grew 8% year-on-year in July, with store-level demand — the RAI’s SANKET report’s cleaner read on actual footfall and sales, stripped of base-effect noise — recovering to 7.1% growth, its strongest reading since the quarter began. RAI’s own CEO, Kumar Rajagopalan, is calling it “measured recovery rather than complete confidence,” and that phrase is worth sitting with, because the data underneath the headline shows the recovery is real but genuinely uneven — by region, by category, and by price tier — in ways that matter more for planning than the national average does.
The Regional Split Nobody’s Leading With
Buried in the RAI survey is a three-point regional gap that deserves more attention than it’s getting: northern and southern India posted 9% growth in July, while western and eastern India came in at a more moderate 6% each. That’s a genuinely different recovery pace across the country’s two broad halves, in the same month, on the same survey. A brand reading “retail grew 8%” as a uniform national tailwind is missing a regional divergence that, if it holds through the festive window, has real implications for where inventory, promotional spend, and staffing investment should be weighted this year.
Two Kitchen Staples Are Doing Outsized Damage to the Discretionary Story
The most specific, actionable risk flagged in this data isn’t inflation in the abstract — it’s onions and sugar. All-India onion prices were up over 22% year-on-year by mid-July, prompting the government to plan a buffer-stock release from September specifically to ease festive supply. Sugar climbed from roughly ₹48/kg in July to nearly ₹56/kg by August. Retail expert Rohit Bhatiani’s read is direct: when staples like these get expensive, households cut back on discretionary spending to protect the essentials budget, which is exactly the transmission mechanism that turns a food-inflation story into an apparel, electronics, and durables story. For category research, this argues for testing discretionary intent specifically against onion and sugar price awareness, rather than a generic inflation-perception question — these two commodities appear to be doing disproportionate psychological damage to festive spending confidence relative to their actual budget share.
Premium Is Genuinely Outperforming — But That’s Not the Whole Category Story
CRISIL Ratings notes that festive and wedding shopping sees disproportionate participation from mid-premium and premium categories, and that pattern is already showing up in corporate results — Trent posted 19% standalone revenue growth in Q1 FY27 on continued Westside and Zudio expansion, and Shoppers Stop swung back to profit with 10% revenue growth after a loss the year before. But CMAI’s own survey adds an important qualifier: mid-premium apparel priced above ₹2,500 has actually seen softer demand since facing a higher GST slab, even as GST cuts elsewhere have supported affordability. That’s a more precise story than a blanket “premiumisation” narrative — certain premium price bands are thriving while a specific higher band, right at a GST threshold, is showing resistance. Category research that treats “premium” as one undifferentiated tier risks missing exactly this kind of threshold effect.
Online Isn’t Replacing Offline for Festive — It’s Running Alongside It
With online apparel sales expected to gain further momentum this festive season, particularly in value fashion, and currently accounting for roughly 12% of apparel sales, the CRISIL read is that this isn’t a channel-share battle so much as consumers “moving seamlessly between digital and physical channels” — favouring online for value fashion while still preferring to see, feel, and try products in-store for mid-premium and premium festive and wedding purchases. That distinction matters for anyone planning festive channel investment: the right question isn’t “online or offline,” it’s which price tier and occasion type belongs on which channel for your specific category.
What to Build Into Research Before the Season Peaks
- Test discretionary intent against onion and sugar price awareness specifically, rather than a generic food-inflation question — these two commodities appear to be carrying outsized weight in shaping festive spending confidence this year.
- Report regional recovery data separately for North/South versus West/East, given the three-point growth gap already showing up in July’s RAI data, rather than defaulting to a single national retail-recovery figure.
- Map your own category’s price-tier response around GST slab thresholds, particularly near the ₹2,500 apparel mark, where CMAI’s data shows demand behaving differently just above and below the line — a pattern likely to repeat in other categories with similar slab boundaries.
- Test channel preference by occasion type, not just by category. The same consumer may be online-first for value fashion and in-store-first for a wedding purchase — understanding that split within your own category’s festive basket is more useful than an aggregate online-versus-offline number.
Frequently Asked Questions
Q: What did RAI’s July 2026 retail survey show?
The Retailers Association of India’s July 2026 Business Survey showed retail grew 8% year-on-year. The SANKET store-level demand index recovered to 7.1% growth — its strongest reading since the quarter began. RAI’s CEO described the environment as “measured recovery rather than complete confidence.” The data shows a genuinely uneven recovery by region, with North and South India growing 9% while West and East grew 6%.
Q: How are onion and sugar prices affecting festive season spending in India?
All-India onion prices were up over 22% year-on-year by mid-July, with the government planning a buffer-stock release from September to ease festive supply. Sugar climbed from approximately ₹48/kg in July to nearly ₹56/kg by August. When these kitchen staples get expensive, households protect the essentials budget by cutting discretionary spending — turning a food-inflation story into a direct impact on apparel, electronics, and durables demand.
Q: Is premium retail outperforming in India’s festive season 2026?
Mid-premium and premium categories are generally outperforming — Trent posted 19% standalone revenue growth in Q1 FY27 and Shoppers Stop swung back to profit with 10% growth. However, CMAI’s survey shows mid-premium apparel priced above ₹2,500 has seen softer demand since facing a higher GST slab. Premium is not one undifferentiated story — specific price bands are thriving while a band right at the GST threshold is showing resistance.
Q: Is festive shopping moving online or staying in stores in 2026?
Both — but for different occasion types and price tiers. Online apparel sales account for approximately 12% of total apparel and are gaining momentum in value fashion. For mid-premium and premium festive and wedding purchases, consumers still prefer to see, feel, and try products in-store. The right question for brand planning isn’t “online or offline” — it’s which price tier and occasion type belongs on which channel.
The Bigger Point
RAI’s own framing — “measured recovery rather than complete confidence” — is a more useful way to think about this festive season than either an optimistic or pessimistic headline would be. The recovery is real: footfall is genuinely improving, FMCG demand is projected to rise 9-11% through November, and festive hiring is climbing. But it’s a recovery with real fault lines running through it — regional, category-specific, and tier-specific — and last year’s record ₹6.05 lakh crore festive trade figure isn’t a guaranteed baseline this year if essentials inflation continues eating into discretionary budgets in the way onion and sugar prices currently suggest it might. Brands planning off the 8% national number alone are working with less precision than the data actually allows for.
If you want a category or region-specific read on festive demand before the peak season hits, talk to our research team at Maction.
