The insight: Loosening COVID-19 restrictions helped consumer spending among households in India surpass pre-pandemic spending levels ahead of this year’s Diwali celebrations.

By contrast, retailers in China are expecting much more modest growth for this year's Singles Day shopping festival as Beijing's zero-COVID policy and an ongoing property crisis weigh on demand.

Revenge spending: While inflation has led consumers in the US, Europe, and other markets to pull back on holiday spending and other discretionary purchases, Indian shoppers continue to spend enthusiastically as loosening pandemic restrictions and a recovering economy buoy consumer confidence.

• Shoppers in India spent an estimated 2.5 trillion rupees ($33.81 billion) in stores during the pre-Diwali festive shopping season, which ran between September 22 and 30, per Bloomberg.
• Ecommerce players Amazon and Walmart-owned Flipkart generated $5.7 billion in sales during the shopping period, per RedSeer data.
• Overall sales were up 15% compared with pre-pandemic levels, per the Retailers’ Association of India, while foot traffic to shopping centers around the country also recovered fully.

India’s ecommerce opportunity: In many ways, the development of ecommerce in India is similar to what’s occurred in China over the past decade. While early adopters such as Alibaba quickly became the platform of choice for consumers in China’s largest urban centers, upstarts like Pinduoduo and JD.com saw an opportunity to reach consumers in underserved areas of the country.

• India is one of the fastest-growing ecommerce markets in the world, but ecommerce will make up only 7.8% of total retail sales this year.
• By expanding quickly into Tier 2 and 3 cities, Amazon and Flipkart can establish an early lead—assuming they are able to convince Indian consumers of the benefits of shopping online.

China’s problems continue: While Indian households show no signs of pulling back, Chinese consumers are exhibiting less desire to spend amid economic uncertainty.

• Retail sales rose just 2.5% year-over-year in September, well below the 3.3% expected by Reuters’ analyst poll.
• One-third (34%) of shoppers plan to spend less during this year’s Singles Day promotions than last year, per a survey by Bain & Company.
• Meanwhile, lockdowns in Beijing, Guangzhou, Zhengzhou, and other cities across China continue to wear on consumers and dampen spending.

The big takeaway: Retailers have long looked to China for growth—but the never-ending lockdowns coupled with falling demand have made it increasingly difficult for businesses to operate in the market.

• Adidas, Tapestry, and Estée Lauder are just a few of the many retailers facing slowing sales in the market.

Instead of doubling down on a region where future growth is uncertain, retailers should be looking to new markets such as India, where getting a head start could prove a lucrative opportunity to reach the country’s over 1.4 billion inhabitants.

This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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