Diwali special: Buy all means

Written by Anirudh Vohra | Updated: Oct 12 2014, 08:12am hrs
ITS AN all-out war out there. With less than two weeks left for Diwali, the retail world is gearing up for its biggest showdown ever. The sale season hots up further when a particular e-tail major celebrates its never-seen-before flash sale carnival, another one tops it up with its own riches and ripostes, and yet another online biggie promises an out-of-the-world shopping experience to consumersand, in the thick of it all, a few brick-and-mortar stores are taking aim at the e-retailer flock for devaluing their brands and threatening their livelihoods.

True, its the mother of all sale seasons, and retailers, both online and offline, are pulling out all stops to woo shoppers in a period that is considered crucial for them. While e-comm firms are raining flash sales, lucky draws, special portfolios, exclusive product launches and the works, some brick-and-mortar retailers are being forced to increase discounts and promotional schemes this festive season, even at the cost of seeing significant hits to their margins.

Online attack

For online sites, sales spike around four-five weeks in the run-up to Diwali. The typical Diwali shopping season starts about a month before Diwali and goes on till Bhai Dooj, two days after Diwali. E-commerce sales jump by two-three times during this season. In fact, this year, customers might spend around 30-50% more as compared to last year. It is also expected that 50-60% of the sales for Diwali will come from rural, sub-urban and tier II and III cities, says Ashvin Vellody, partner, management consulting, KPMG India.

Although e-commerce accounts for less than 1% of the total retail market in India, it is, by far, the fastest-growing retail channel. While the overall industry was at $1 billion (about R6,000 crore) a few years ago, just the top three marketplaces in the countryFlipkart, Snapdeal and Amazonare estimated to cross $4 billion (about R24,000 crore) in sales this fiscal, as per some reports.

Sales literally jump during this season and can even add up to double the regular order size, says Sandeep Komaravelly, senior vice-president of marketing, Snapdeal. Unlike offline retail, Diwali momentum does not taper off in online retail even after the festival is over, he adds.

Ganesh Subramanian, chief operating officer, Myntra, which is targeting sales of R2,000 crore this fiscal, says: We expect a lot of interest from tier II and III cities thanks to mobile devices. At least one of two orders will be through the mobile platform. Myntra is setting up a special Diwali store on its site this year. The company has also put up a new warehouse in Gurgaon for the season.

Myntra will showcase more than 5,000 new products online as a first, including top brands like FCUK, UCB, Elle, SuperDry, Biba, FabIndia and Antony Moratto, while online marketplace Snapdeal is offering a minimum 40% discount on furniture, up to 50% off on watches and electronics, along with a buy-one-get-one free on several products for Diwali this year.

Soumitra Gupta, managing director and CEO, Oplus India, which launched its mobile device exclusively on Snapdeal recently, adds: Looking forward to the festive season, we rolled out offers with Snapdeal to best suit the timing of various occasions. We are expecting to sell 5,000 units per day during this festive season.

Flipkart, which recently acquired Myntra, will put up exclusive products and offer heavy discountsthis is not to forget the e-tail majors Big Billion Day sale, which earned a lot of bouquets and brickbats recentlywhile rival Amazon might introduce drone delivery in the country to bring in the numbers. Samir Kumar, director of category management, Amazon India, adds: The portal will have exclusive launches and innovative gifting options. Amazon had a festive sale from October 4-6 and also an ongoing Diwali Dhamaka sale till October 16.

Offline counter-attack

Shoppers Stop, the retail chain from the K Raheja stable, is offering discounts ranging from 15% to 75% across its product range this time around. Explaining the festive phenomenon, a Shoppers Stop executive based in Delhi says, This is a very important season for multi-brand chain stores like us, as it contributes to about 30-35% of our total sales.

Aditya Birla Nuvo-led Pantaloons, too, is offering discounts up to 50% across its vast product line. An associate of the chain in the country explains: Online stores will be a problem this year, as there has been an overwhelming response to them in the past few years.

Brick-and-mortar stores remain the mainstay sales channel for consumer goods brands, but of late some of them have been fearing that their businesses might be threatened by the march of online retailers. In categories such as smartphones, online retailers now account for more than a 10% market share, so much so that many new model launches now happen exclusively on these sites. Online retailers also account for 5% of sales in the television space.

However, Lifestyle seems to be least bothered about the e-retail phenomenon and is confident with its initiatives in the run-up to the festive season. The fashion retailer chain, which is promoted by the Landmark Group, is offering discounts of up to 50% on select products, besides cashbacks of up to R3,000. Festivals are not just about shopping, but also the fun of shopping together with your family and friends, which no online store can provide. They may offer big discounts, but where is the fun in shopping from a couch I think the Indian consumer is wise enough to get it, says a Lifestyle store manager.

However, Kishore Biyani-led Future Group has accused online marketplaces of adopting an anti-competitive strategy by selling products below the cost price. How can someone sell products below their manufacturing price This is legally not allowed in the country. Someone can do such undercutting only to destroy competition. Just because they have foreign funding, they cant kill local trade like that, Biyani reportedly said.

The knives are out after Flipkarts Big Billion Day sale, and even the commerce ministry had said it will look into the discounting offered by Flipkart. But in the end, its the consumer who is king, which even the Competition Commission of India endorses, which sees nothing predatory in deep discounts offered by online retailers.