Tough fight from online players, but retail looks at double-digit Diwali growth

Last year, the retail sector had recorded single-digit growth owing to the aftereffects of demonetization and implementation of GST.

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With Diwali knocking at the door, festive shopping is at its peak. The crowded markets have given retailers hopes of double-digit growth in sales this season, despite the sector grappling with issues such as depreciating rupee and growing popularity of e-commerce players such as Amazon and Flipkart. Helping marketers this year is a positive consumer sentiment because of 8.2 per cent growth in GDP in the last quarter. Last year, the retail sector had recorded single-digit growth owing to the aftereffects of demonetization and implementation of GST.

The festive period in India is considered  the year’s biggest shopping period and accounts for 30-35 per cent of the annual sales for several industries. Almost all top retailers exchange4media spoke to, including Shoppers Stop, Blackberry and Lakshita, are positive about the festive season and have projected the sales to grow by double digits.

According to Uma Talreja, Chief of Marketing & Customer Officer, Shoppers Stop, their festive sales during Durga Puja in east witnessed a strong growth ranging between 18 and 20 per cent. And they are expecting the same for Diwali.

“Overall, our revenues have increased by a healthy 7.4 per cent in Q2FY19 as compared to Q2FY18, despite Diwali and Puja shifting by a month this year. On a like-to-like basis for the quarter, our sales have increased by 3.6 per cent because of our continuous endevour to improve our assortment and enhanced marketing efforts. Categories such as travel, leather, women handbag & accessories, watches and ladies ethnic wear have performed well and are expected to grow further during Diwali period,” added Talreja.

Snehal Shah, Senior- Vice- President, Marketing and operations, V Mart Retail Ltd, too is expecting double-digit growth. “We are expecting little better demand due to near to normal monsoon. Festive period sales accounts for 12-15 per cent sales of annual period. The brand is looking for the double-digit growth for the festive quarter.”

Talking about the marketing expenditures that the brand has made for the festivals, Shah said, “The company is spending around Rs 10 crore on festive marketing.”

Sachin Kharbanda, Director and Co-founder Lakshita, believes this year would probably be one of the best festive years for them.

“We are totally geared up for the festivals this year. We expect a double-digit growth this season. This would probably be one of the best years. We are making maximum efforts to reach out to the customers and are offering a varied range of products for them to choose from. With all these, we are expecting a good increase in sales. We have a very large and diverse range inspired by royalty, and we encourage customers to prepare for festivals in advance by offering discounts on a highly stylistic collection on our online store,” Kharbanda added.

Ramesh Kaushik, VP-Brand Experience, at Blackberrys Menswear, said the festival season typically contributes 50-60 per cent of their overall yearly sales. According to him, growth percentage from tier 2 and 3 cities, is much higher compared to tier 1.”

On the expectations from festive season this year, Kaushik said, “We are definitely seeing a jump. It would be a double-digit growth.”

Talking about their marketing efforts, he said the brand has opted for digital and on-ground activities for promotion. “We have consciously moved away from print, except for Durga Puja ads,” Kaushik said.

It is no secret that online players are giving a stiff competition to retailers. As a result, offline retailers are working quite hard to retain their consumers. According to a RedSeer Consulting report, e-tailers had a better “sales performance over the five festive days from October 9-14”, generating about Rs 15,000 crore (around USD 2 billion) in sales. This translates into about 64 per cent year-on-year growth compared to USD 1.4 billion (around Rs 10,325 crore) generated in the 2017 edition.

According to media reports, e-commerce platforms such as Amazon and Flipkart have had the biggest ever festive season this time in terms of sales, discounts, deals and finance options.

According to a Snapdeal spokesperson, this Diwali season, the e-retailer saw the order volumes grow 2.5X. The growth was driven by offers across categories such as fashion, home goods and kitchen accessories.

“Diwali to New Year is the natural period of high sales due to festive-linked increase in consumption and also due to the clustering of attractive deals. This year, Snapdeal's sharp value-focused promotions have also led to growth in the market, with nearly 38 per cent of the orders coming from new buyers,” said the spokesperson.

“More than 75 per cent of the orders are being received from non-metro cities, significantly higher than last year,” added the spokesperson.

When asked how much marketing budget is allocated for the festive season, the spokesperson said, “Our marketing budgets are RoI -driven and are highly adaptable to our business requirements. This festive season, we have used variety of print and digital advertising and have received significant and positive returns.”

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