After an arduous year, festivities have begun and so has the consumer’s spending. The current market dynamics show that this festive season is going to be a lot better than last year’s. The flagship sale events of Flipkart (the big billion days), Amazon (the great Indian festival) and Myntra have already set the momentum for the e-commerce sellers.
According to consulting firm RedSeer’s e-commerce festive season report, the e-commerce platforms are expected to potentially clock over US$ 9 billion gross GMV (Gross Merchandise Value). If compared against the US$ 7.4 billion last year, it’s a growth of 23 per cent.
Whereas for the full year, the overall online gross GMV is expected to touch US$ 49-52 billion, which is around 37 per cent higher than last year ($38.2 billion), primarily driven by strong consumer funnel expansion and the high adoption of online shopping post-COVID across the categories.
“We see strong bullishness in sellers towards online festive sales as about 80 per cent of them believe that the festive sales will enable them to drive strong sales growth and make up for the losses during the COVID period,”
comments Ujjwal Chaudhry, Consulting Associate Partner, RedSeer.
Due to this, the industry leaders are brimming with positivity, as they foresee people going on shopping sprees, with more disposable incomes to splurge with to their heart’s content.
“After the second wave, the market is expected to be positive with improving economy numbers adding to it in the festive season in which demand will increase which in turn will improve the market outlook,”
says Milan Thakkar, CEO at Walplast.
“This implies better business growth and hence higher cash flow in the market, indicating the higher buying capacity of consumers,”
adds Kunal Saha, Director & Co-founder, Vandelay Brands.
Mood of the consumers
This year’s market forecasts are extremely bullish on consumer sentiments ahead of the festive season. As the festive season is auspicious for Indian shoppers, various agencies report that consumers are eager to splurge during these two months.
A survey by the advertising firm Trade Desk and YouGov, found that 91 per cent of Indian consumers are planning a purchase during the upcoming festive season and 6 in 10 are interested in learning about new brands during the festive season sales.
Similarly, LocalCircles survey findings from over 38,000 households across 396 districts of the country indicate the same. About 60 per cent of the households in the survey agreed that they would be shopping during the upcoming festive season. But for 35 per cent of these, ‘budget’ will be the most important criteria during shopping. While a similar number indicated that ‘safety’ is key for them. Around 18 per cent of households keep ‘convenience’ in mind while shopping.
Big items are the priority
In terms of big-ticket purchases, 33 per cent of households are likely to spend on smartphones and consumer electronics like tablets, laptops, printers, routers etc. 15 per cent will buy white goods and appliances such as ACs, heaters, vacuum cleaners, TVs and refrigerators. Around 15 per cent of respondents showed a preference for home renovation items like furniture, decorative pieces, furnishings, paints, sanitaryware and lighting.
Lalit Arora, Co-founder & CEO at VingaJoy says that the Indian electronics sector is witnessing major traction due to several factors. “Demand in this segment can be attributed to an increase in demand from households, the changing lifestyles of individuals, easier access to credit, and the rise of disposable incomes,” he explains.
Gadget and consumer electronics brand Vingajoy is positive about a better festive season. “The sales in certain categories have already surged, and we hope it sustains itself during the next few months too,” avers Arora. During this festive season, Vingajoy aims to create an impact and increase their visibility at the retail level by focusing on offtakes. “As the market is booming, we are expecting a growth that is 1.5 times more than last year,” he informs us.
In addition, the brand is planning to launch youth-centric gadgets and products with new innovations, to attract more consumers in this age group.
WK Life, which is a global lifestyle and electronic gadgets brand, is all set for the festive season. Rohit Sahni, its Co-founder says, “Customers are the king in the market, and they are the ones whose decision impacts your business’s growth. That’s why the festive season is a time where we need to be more focused as there is always a huge demand in the market. We are now ready with an all-new set of products in our stores.” This season the brand is expecting a good increase in revenue and an overall growth of 30 per cent given the fact that consumers are more relaxed now and are equally comfortable in purchasing from both the online and offline mediums.
Similarly, Candes, an electronics and home appliances brand has started to see green shoots in sales. “The rate of upturn is fast, and it is reasonably visible with the vertical sales trends,” says Sandeep Aggarwal, the Co-founder of Candes.
According to him, the WFH culture has led to an ever-increasing demand for home and kitchen appliances. The other reasons for this massive demand are the huge discounts and lucrative offers that are being offered to the consumers. “This time, the offers are steeper because of the growing requirements of the WFH culture,” he further explains.
Recognising this fact, Candes has expanded their existing range of products and have come up with an even more diversified range of home and kitchen appliances at the right time. To name a few- washing machines, IoT enabled fans, LED TVs, electric choppers and toasters feature among their recent launches. “To tap into the existing market trends, we offered the products with the most recent technology and followed the model of sincere pricing, making it very affordable for the prospective buyers,” he asserts.
Indians will buy gold this Diwali
The gems and jewellery industry is all set to squeeze out profits from this festive season. YouGov’s Diwali spending index also shows that there is a recovering appetite to spend during the festive season among urban Indians. Nearly three in ten urban Indians (28 per cent) are planning to spend on gold in the next three months, states the survey.
As per the survey, nearly three in five respondents (58 per cent) are planning to buy gold for personal or family use either in physical gold form or through a gold scheme by organised retailers.
Further, the survey showed that 69 per cent of these prospective gold buyers believe that Diwali and the festive season is the best time to buy gold, highlighting their inclination to spend during the festive season.
It’s rush hour
For most businesses, the festive period is a money-making event, so it will be a mad rush, especially for the retailers. According to the stakeholders, the retail sector is expected to get a much-needed boost during the festive season. “Both in the urban and rural markets,” says Sahni. “This is due to the increased traffic generation in modern trade and e-commerce during the festive period,” he says while sharing the retailer’s perspective.
Considering the current sentiments, the Retail Association of India (RAI) is maintaining cautious optimism, citing the fact that retail sales in August 2021 were 88 percent of the pre-pandemic levels (August 2019), compared to 72 percent in July 2021.
Sahni too expects better sales compared to last year, “With increased demand, improved consumer sentiment, and increased mobility, it’s going to be a good season. Many brands have already started booking ‘hotspots’ at retail stores and are regularly coming up with new products and offers,” he says.
Meanwhile, Forrester research predicts that among the e-commerce platforms, Flipkart will lead in retail sales. “During the festive month of 2021, smartphones and fashion will account for 50 per cent of total sales, allowing Flipkart to maintain the lead,” states Jitender Miglani, senior forecast analyst. During these months, Amazon will rely on its Prime members to buy in more categories and buy more frequently during this month.
“Pent-up demand and new consumers from tier-2 cities and beyond will also drive the growth. Grocery will emerge as the fastest-growing category, as most of the festive-themed categories within grocery have moved online, aided by the increase in basket size during this period,”
According to its data, the online retailers in India are expected to generate about $9.2 billion in sales during the 2021 festive month, up 42 per cent (year-over-year) from the estimated $6.5 billion festive month sales in 2020.
However, Walplast’s Thakkar believes that even if consumers are preferring shopping via e-commerce, overall offline sales will remain dominant. “Whether its discretionary and non-discretionary, demand increases in the festive season, which improves the revenue and business for the entire sector. India after 2016 has rapidly shifted to online transactions and e-commerce has grown. But I still believe that offline transactions outnumber online transactions. The primary reason being the lack of infrastructure in the rural areas of India and trust issues due to the increase in the number of online frauds,” he opines.
Health remains the focus during this festive season
The pandemic, without a doubt, deserves credit for focusing our attention on keeping health as a top priority. This festive season, health or hygiene related products continue to be in the shopping lists. The players in the related fields also feel the same. Speaking to us, Saha of Vandelay Brands says, “With the increased awareness around health and its timely monitoring, the buyers are now aware of the necessities for a healthy lifestyle which works well for the market.”
Another industry insider, George P Joby, Director at the TheLifeKart.in agrees.
“We have witnessed a change in the consumer’s behaviour, especially the way we look at health. People have become conscious about what they are consuming and how it’s going to affect their health,” he says.
“The priorities have changed, and people are ready to invest in their health, which is aiding the growth of healthcare and wellness start-ups. The nutraceutical market that was majorly for sports nutrition or for people with lifestyle diseases, has become an essential requirement for almost everyone, leading to the phenomenal growth of the nutraceutical market in India,” he adds.
Lately, Joby’s brand has been receiving good traction. He informs us that their website has reported a 25 per cent increase in sales in the past few months. From this festive period, Joby expects a 20 per cent increase in sales, as people are investing on immunity boosters and preventive healthcare items.
Similarly, Vandelay Brands too have high hopes from this festive period. “The last festive season was relatively mute, and people looked more at saving, as one wasn’t too sure about what lay ahead. So online and offline sales, going forward into the festive season look good. We expect October to see about a 30-40 per cent increase over the previous month in buying and both the offline and online retailers are preparing for the same,” Saha informs us.
In addition, health platforms are also providing enticing deals to consumers. As an example, MediBuddy has roped in Arjun Kapoor for their festive healthcare sale ‘HealthPeWealth’.
Speaking on behalf of the healthcare sector players, TheLifeKart.in’s Joby says, “We do not want to miss any celebration with our customers and hence, during the festivities we keep on coming out with new campaigns to celebrate with our customers.” His platform too is offering good deals to consumers. “Earlier, we had provided an offer on one of our most important products- O2live, that helps in boosting immunity. We are planning to launch new products in the coming months and will keep coming up with new campaigns and offers,” he elaborates.
Trends in the market
Shopping online is undeniably one of the most popular trends that has now become the norm. “The dynamic websites and the easy online buying process form the grounds for higher sales as the consumers can easily buy products while sitting in their homes,” says Saha.
Another visible trend is of aggressive marketing. As the market has become extremely competitive, every seller wants to be unique in order to stand out in the pool. Thus, businesses are trying to attract consumers in creative ways. “Marketing always helps a company to reach their end consumer, but the company should be careful while marketing the product considering the Zomato scenario. Companies should be careful with their new ideas and content while marketing their products. As some advertainment idea and marketing mode may unintentionally hurt consumer sentiments. Which in turn can affect the company’s reputation,” suggests Thakkar.
After analysing the current market trends, the industry insiders are citing higher buying capacity as a major trend. The brands are also preparing for higher inventory stocks and online management systems.
“Retailers are stocking up for this season and are getting ready to offer good incentives and are also launching elaborate marketing campaigns as the festive season commences. Consumers are looking forward to great deals, and the retailers are under pressure to deliver and live up to these expectations. Hence, the retailers are preparing both their offline and online teams to monitor the excess influx of online and offline traffic. Additionally, digital marketing and social media marketing are at an all-time high, especially after two years of festivities in the midst of a pandemic,” Saha aptly sums it up.