Ayodhya set to develop into a far bigger tourism destination after SC verdict
SBI cuts India's GDP growth forecast to 4.2% for Q2, 5% for FY20
President's Rule In Maharashtra Recommended By Union Cabinet
Passenger vehicle sales rebound in October but two-wheeler, CV sales portray a grim economy
PMC Bank scam: Maharashtra Sikhs unable to go on Kartarpur pilgrimage due to fund crunch
JNU Students Protesting Huge Fee Hike Clash With Cops
3 years of demonetisation: 66% say PM Modi's note ban negatively impacted economy
Auto slowdown: Suzuki sceptical about growth in India after slump in quarterly profits
Kaun Banega Crorepati comes under fire over Shivaji Maharaj reference; Sony TV apologises
Over 80 Punjab Farmers Arrested Over Fires That Smothered Delhi
Indirect tax authorities to use new system for search, summons, other communication
Lawyers Shut Courts, Want Delhi Police Protesters Arrested
J&K Bank continues to register growth despite recent events: Financial Commissioner
Pollution in Delhi 'very poor', but govt claims 12% decline in stubble burning
CBI raids 169 locations over bank fraud cases worth Rs 7,000 crore
"What Will Odd-Even Achieve?" Supreme Court Grills Delhi Over Pollution
1 Dead, 15 Injured In Grenade Attack In Srinagar, Third In J&K In 2 Weeks
Shubman Gill Breaks Virat Kohli's Decade-Old Record In Deodhar Trophy Final
Odd-even scheme in Delhi: Check dates, fines, timings, rules, exemptions
Delhi air quality remains 'critical' for sixth consecutive day

Latest Posts

Festive cheer limited to e-commerce players this year

Contrary to expectations, the ongoing festive season has failed to bring cheer to most consumer industries, be it consumer durables or travel. The deepening economic slowdown that has gripped the country has clearly caused households to tighten their purse strings - while sales typically spiked 15-20 per cent over the September to January period in the past, growth this year has been largely lacklustre at around 3-9 per cent across these consumer segments.

According to stakeholders, although business is not shrinking, it is growing painstakingly. Much now rides on how the Diwali week pans out followed by the Christmas to New Year run up, but consumer companies and mall owners are a skeptical lot. The general pessimism of the consumers is similarly weighing heavily on the tourism sector where the bookings have gone down sharply over the past two months.

The e-commerce sector is the only one that is bucking the trend to post strong growth despite the downturn. According to a RedSeer report, the whole festive month till end-October is expected to generate up to Rs 39,000 crore in sales. Significantly, e-tail festive sales are largely a two-player market with Flipkart and Amazon dominating over 90 per cent of the market share during this period.

Here's a detailed look at how these three segments are faring:

Consumer products

The festive season generates close to 50 per cent of revenues of most mall operators, but low consumption appetite coupled with prolonged monsoons and the Shradh period, which ended on September 28, impacted footfalls. At most malls and lifestyle retail outlets, footfalls had reduced to low single digits, ranging between 2-6 per cent in the July-September period.

However, the first half of October has been comparatively more optimistic. The Dusherra week saw footfalls increasing anywhere between 6-10 per cent for the likes of Palladium High Street Phoenix and Oberoi Mall in Mumbai, while Nexus Malls claims to have seen a 14-15% spike year-on-year. Consumer durable retailer, Croma, reported an impressive like-to-like sales growth of 26 per cent this Dusherra while footfalls jumped 10 per cent.

The demand for apparel, too, has also been muted of late. Cantabil Retail, a homegrown apparel manufacturer, reported that footfalls at its stores have not grown this festive season, although sales have been able to match moderate expectations. "Customers are moderately spending towards fashion and not aggressively for last few months," the company added.

Retailers are now pinning their hopes on decent Diwali sales - the festival typically accounts for 60 per cent of festive sales in malls. While consumption mood may have improved thanks to government incentives such as the corporate tax rate cut as well as increasing willingness among banks to offer loans, mall owners don't expect overall festival season revenues to exceed 10-12 per cent.

"I expect Diwali sales to be good," says Nandi, Business Head, Godrej Appliances, coming on the heels of tepid Dussehra sales for the company. According to him, Dusherra sales are good only if it comes in the second week of the month, especially since bonuses are typically disbursed just before Diwali. This year, the festival fell in the first week of the month, when most people were yet to receive their salaries and hence sales took a hit, especially in the budget category.

Travel and tourism

The beginning of the peak season for this sector - October to March - has come at the most inopportune time. Growth in air passenger traffic has plummetted to 3.24 per cent in the January to August period this year, down from 21.2 per cent in the year-ago period. Similarly, growth in hotel room nights has halved to 6 per cent between July and September as opposed to 12 per cent in the first six months of 2019. This is based on data for the top three hotel chains, which control 40 per cent of the total inventory.

Given the sentiment, both personal and business-related travel has taken a hit, and the outlook for October is even more dismal. Experts predict that hotels, particularly business hotels in cities like Mumbai, Delhi, Bangalore, and Chennai, will record their worst sales of the year in the current month.

E-commerce

According to research firm RedSeer, e-tailers led by Amazon and Flipkart achieved Rs 19,000 crore of gross merchandise value (GMV) during the six days of the recently concluded festive sales. That's a 30 per cent increase over last year, with significant share coming from customers in Tier 2+ cities. This is about 80 per cent of RedSeer's forecast of $3.7 billion sales in the first phase of festive sale this year.

According to RedSeer Consulting founder and CEO Anil Kumar, the numbers indicate that consumer sentiment on online shopping remains bullish despite the challenging macroeconomic environment.

Walmart-backed Flipkart's Big Billion Days event this year saw a 50 per cent growth in the number of new customers as well as the seller count as compared to 2018. Arch rival Amazon's Great Indian Festival also made waves this year. "The first wave of the Great Indian Festival was our biggest celebration ever with Amazon.in - witnessing highest share of transacting customers and purchases across all marketplaces in India; orders from 99.4% pincodes; over 65,000 sellers from 500+ cities receiving orders in just five days and customers from over 15,000 pin codes joining Prime," Amit Agarwal, Senior Vice President and Country Head, Amazon India, said last week.

A big trend in the online festive sales was the increasing preserence to pay for purchases in installments. The share of transactions via options such as EMIs, Flipkart Pay Later and Cardless Credit has increased by 70 per cent during The Big Billion Days 2019 against last year's event. Similarly, Amazon reported that the number of customers shopping using EMIs saw a 1.5X uptick compared to of Great Indian Festival 2018. Moreover, customers from over 15,000 pin codes joined Prime with a 69 per cent increase in signups from small towns.

The Confederation of All India Traders (CAIT) has once again accused online sales of snatching festival trade courtesy predatory pricing and deep discounting offered by the etailers. "There is a lot of disappointment in all the markets of Delhi as there is no glimmer of festive sales and despite the festivals, all the major retail and wholesale markets are completely deserted," says the body's National General Secretary Praveen Khandelwal. He added that as the the festive season of Diwali draws to a close, the hope of the traders in the capital to notch up good business is getting bleak because the market is very low in the subscriptions and traders have ample stock of goods.

×

Alert Message

Ok
Please Wait...

Share the Opinion Poll with your Friends At

Ok

Share the Survey with your
Friends At

Ok
×

Statistics

Ok
No
×

Statistics

Ok