Even as e-commerce companies have been hard hit by market realities this year, their discounting game drastically lowered, top offline retailers in India are buoyant about high consumer demand this Diwali.
The new FDI norms have caused quite the shift this year as compared to the situation in 2014 when slow offline sales had cast a pall of gloom over traditional retail with physical stores witnessing the slowest festive season revenues ever. This was the year when e-commerce had unleashed its first edition of the big festival discount and the buzz created by Flipkart’s Big Billion Day sale, matched by competitors like Amazon and Snapdeal, had captured the imagination of buyers like never before.
While things started looking better for offline retailers in 2015, the new FDI norms, a healthy monsoon and the Pay Commission handout to Government employees this year have further added to the overall buoyancy, with big offline retailers like Vijay Sales, Max, Lifestyle International, among others, notching up their game by pre- empting inventories, stocking relevant merchandise and improving store ambiance.
“Yes, it’s true that we are expecting one of our best festive season this year because of various encouraging factors. At our store level, the major preparation is of booking inventories so as to avoid last minutes disappointments. In addition, a lot of marketing and advertising plan is also on and we are trying to work out great finance and exchange offers for our consumers, like last year,” says MD, Vijay Sales, Nilesh Gupta. He expects an increment of “15 to 20 per cent” in this year’s Diwali sales.
Gupta also points out that pre-Diwali footfalls and consumption patterns are also indicating toward a considerable spike in sales.
“The first positive indicator has been a good Independence day sale this year which normally is a precursor to the Diwali sales. So the beginning has been good hence we feel this year there should be a bumper Diwali. The quarter too has seen a high single-digit growth,” he notes.
The sentiments were echoed by the fashion and lifestyle retailers – Max and Lifestyle International- who are witnessing similar pattern in stores and are swearing by right merchandise, exclusive tie-ups, sharp pricing and smart marketing and advertising moves to make most of the festivities.
“The consumer’s sentiment normally are buoyant during the festive quarter which goes up to the New Year’s and is crucial for every retailer. There might be a hiatus in demand and sales over the last few years but there is definitely a huge change from the past few months. Footfalls in the store have been growing at 14.5 per cent since last month, which is a very encouraging start to the sales season,” Vice President- Marketing at Lifestyle International – MAX, Jiten Mahendra, notes.
The company has recently started its annual event ‘Celebrate India’ for the festive season. For this year, the company is launching a full range of Men’s wear traditional merchandise, which will have 3000 designs, and have tied up with celebrity chef Sanjeev Kapoor to display limited edition ‘Virasat’ collection, exclusively designed by Kapoor. The collection will be launched later this month.
“All of this is directed toward developing a value added proposition for customers who look for more than a mere discounts from the brand. We are confident about our offerings and aims 50 per cent increase in the incremental sales vis-a-vis last year,” he added.
Lifestyle International, who is also the part of the same Dubai-based Landmark Group, have also put in efforts on multiple fronts. “We are focusing on strong product offering, merchandising, store ambience as well as festive specific marketing efforts to create an enjoyable shopping experience for our customers.We introduced our new collections in stores recently and have seen good sell-through,” Managing Director – Lifestyle International Pvt Ltd, Kabir Lumba said.
Confederation of All India Traders (CAIT), that has been seeking action against e-commerce players on several counts, including deep discounts and violation of foreign investment rules, also acknowledges the improvement in festival shopping this time round.
“Offline traders hope to do sizeable good business this year which may be much better from a previous couple of years. As a preparation to the same, large numbers of traders across the country have started upgrading and modernising their existing retail format including providing delivery at door steps of the consumer during the festive sale. This year traders are careful of their inventory and efforts are being made to bring new designs, new technology driven material and ethnic goods which have greater market during the festive season,” says CAIT Secretary General, Praveen Khandelwal.
Both online, Offline to witness good business
Meanwhile, e-commerce majors have started investing on sellers, better products and improving backend and logistics networks. The companies have moved away from discount-driven strategy and had made clear, in the earlier sale events, that the discounts on the platform, whatsoever, are funded by the sellers themselves.
Offline retailers, who themselves have started drawing benefits from their Omnichannel strategies, acknowledge the move and signals that e-commerce players and brick-and mortar retailers can coexist in the market, without necessarily harming each other.
“Online is maturing as a platform and discount is no more an anchor for any brand – either online or offline. It’s all about creating value added services for today’s digital consumers who want to shop across the platform,” explains Mahendra.
CAIT’s Khandelwal too believes in the power of e-commerce in India.
“We have never been against e-commerce per say but have always demanded the formation of separate guidelines, rules, and regulations for e-commerce to run in an ethical way in India. It is a promising and emerging market and moreover, consumers are moving there. Ultimately market and brands run according to consumer behavior which indicates that online market will also have a good business,” says Khandelwal.
“But the bottom line remains the same – there should not be any loss funding or predatory pricing or funding of discounts which could lead to distortion in e-commerce business and create an uneven level playing field,” he concludes.