E-commerce companies broke all previous records, and sales were up in high double digits over the last year for retailers across India during the almost six-week period, which includes the festivals of Dushera and Diwali.
Diwali marks the new year day in the Hindu calendar and is also known as the Festival of Lights.
Analysts estimated that the festive period generates almost 30 percent of retailers’ annual revenues. India’s $750 billion retail industry has been growing in double digits, but has seen a slowdown over the last two years due to the introduction of a goods and service tax in July 2017, and an abrupt demonetization policy in November 2016.
Collating results of the highly anticipated five-day sale that is held each year by e-commerce companies Flipkart and Amazon, consulting firm RedSeer said that there was 64 percent year-on-year growth over the same time period last year, with sales of both companies exceeding $2.3 billion, versus $1.4 billion last year.
This was due to a number of reasons. According to RedSeer, these included the growth of shoppers from smaller cities, more people coming online, higher awareness of sales and a higher participation by banks and credit card firms to offer schemes along with the discounts and the building of loyalty programs.
Popular and recognizable to customers now are Flipkart’s Big Billion Day sale (which ran October 10 to 14), and Amazon’s Great Indian Festival (October 10 to 15), marked by a blitz of discounting and a time when both companies generate revenues but burn cash at the same time (due to the deep discounts to draw customers in). The sale period was followed by other special offers for the ongoing festive season, and a war of words as both companies claimed to have outdone the other in terms of capturing market share.
Industry analysts backed Flipkart’s claims of being the leader by far in this season’s sales.
Both companies said that electronics was their biggest sales segment, followed by fashion.
Flipkart broke past all existing records to set new benchmarks for the retail industry, with gross merchandise value sales growing 80 percent over last year, and units almost doubling on a year-over-year basis. Traffic on Flipkart grew by 60 percent over 2017, while transacting customers rose 62 percent. “We are clear leaders in smartphones, fashion and home products. We don’t see any relevant competition this festive season. We have a share of at least 75 to 80 percent this time,” said Kalyan Krishnamurthy, chief executive officer of Flipkart.
Earlier this year, Walmart Inc. acquired a 77 percent stake in Flipkart with an investment of $16 billion.
But Amazon has been claiming a winning share of the market as well.
“The great Indian festival 2018 was our biggest celebration ever with more than half of online Indian shoppers choosing to buy on Amazon.in, making it the most visited and transacted marketplace in India,” said Amit Agarwal, country head, Amazon India. Fashion emerged as the biggest category in terms of units sold and new customers acquired, with 63 percent of orders coming from Tier 2 and Tier 3 cities.
Amazon Fashion had its biggest celebration ever, the company noted, clocking a 2.2 times jump over the first wave of the Great Indian Festival in 2017. Women’s shoes saw a 4.25 times jump over last year and top brands grew exponentially. W for Woman jumped nine times; Bata, 14 times; Clarks at 12 times; Pepe Jeans spiked 13 times; Casio grew 11 times; Puma, eight times; Titan, nine times, and Shoppers Stop brand spiked 8 times over their usual daily business, the company said. Jewelry saw a jump of 3 times.
In terms of beauty sales, which grew four times over last year, makeup products grew by over 4 times with Kajals and lipsticks being big sellers, daily care essentials like shampoos and conditioners saw a five times jump in sales and, with the winter season setting in, body lotions saw a six times growth led by Vaseline and Nivea. International fragrance sales were up by five times.
“Sales in the first 36 hours nearly surpassed the entire first wave last year and the event exceeded our most aggressive plans across all categories,” said Agarwal.
Surprisingly, brick-and-mortar retailers were not drowned out by the noise and energy of online sales and held their own this festive season.
William Bissel, vice chairman of retail group Fabindia, told WWD that sales were up 13 to 14 percent over the last festive season, “although the exact estimate is a challenge because of the changing calendar time of the festive season, which is set by the lunar calendar. While it was on October 19 last year, it fell to November 7 this year. The sales period is approximately one month earlier to a few days after,” he explained.
“I think last year was a subdued year for everyone following the implementation of the goods and service tax, and the earlier demonetization,” he said, indicating that this time all the cities performed reasonably well.
Bissel said that there had also been a shift in the real growth categories, with fusion and Western wear being among the top sellers. “Traditional is also doing well with, double-digit growth,” he said, adding that stores across the country saw growth in business, which was also fueled by the large format Experience centers that the retailer has been opening.
Department store chain Shoppers Stop, which has 83 stores in 36 cities, saw a brisk business nationwide as well. “Overall, our revenues have increased by a healthy 7.4 percent adjusted to the new accounting system and goods and service tax in the second quarter of financial year 2019 versus last year, despite Diwali and Puja shifting by a month this year,” said Rajiv Suri, managing director and ceo of Shoppers. “With a view to ease shopping and make Shoppers Stop’s fashion collections available to maximum customers, we scaled our Click & Collect service to more than 50 stores and expanded our fulfilment center base to 37 stores in addition to the four existing district centers. With this combined effort, Shoppers Stop has been able to serve over more than 25,000 pin codes in India,” he said.
Talking about the changing consumer, he said they were “looking for fresh fashion and latest merchandise during the festive season rather than old discounted inventory.” A nationwide campaign, “Wardrobe Refresh,” had offers from more than 400 brands. “Our beauty range, women’s shoes, handbags, ethnic wear, accessories, fragrances, decor and luggage have performed exceptionally well during the festive period,” he said.
Other brick-and-mortar retailers that have achieved scale across India reiterated the fact that consumers had not given up on traditional retail.
Sadashiv Nayak, ceo of Future Retail Ltd., which has 80 Big Bazaar and 800 Easy Day stores across 160 locations in the country, said that the Big Bazaar group had an approximate 20 percent growth over last Diwali. “In the fashion space, there was a lot of traction in the ladies ethnic wear and the kids’ wear categories,” he said, adding that with efficient vendor management and careful stocking of goods across the retail store formats, the prices were reduced by 4 to 5 percent, giving customers more affordable options.
As FabIndia’s Bissel pointed out, there was certainly a clarity of growth this festive season.
“It is clear that the retail landscape is changing — the consumer sentiment is high, there is much deep discounting going on by e-commerce companies and there is a shift in the way retail works. The huge increase that you see for e-commerce players of 25 to 30 percent is not just higher growth — the economy is growing about 7 percent — but the seismic shift from smaller retailers is being picked up by e-commerce, from unorganized sector to the organized sector,” he said.