Offline retailers upbeat on festive sales

Online retailers have tasted success this festive season after the recent sales went off smoothly

Online entities are not the only ones caught in a growth frenzy this festival season, whether for gross merchandise volume (GMV) or multiple-time increase in traffic. Traditional ‘brick and mortar’ sellers are also expecting double-digit growth this Diwali.

“While eastern India witnessed around 15 per cent growth in retail sales around Dussehra, we believe during Diwali the sector would witness growth of 10-15 per cent,” said Kumar Rajagopalan, chief executive, Retailers Association of India.  He said e-commerce marketplaces were doing well in specific categories, such as mobile phones. While brick and mortar was showing good results in almost every other category. “Customer sentiment is buoyant and this would drive sales. Last year, we saw growth of around 10 per cent,” said Rajagopalan.
 
However, after the success of online sales this festive season, experts believe growth here would be much higher than offline retail this year, though this  is only 1.5 per cent of the $600-billion (Rs 3.9 lakh crore) Indian retail sector.

ANOTHER SIDE OF THE STORY

• Brick-and-mortar retailers are showing good results in almost every other category, says Kumar Rajagopalan, CEO, Retailers Association of India
• While he is confident of growth, traditional retailers also complain of predatory pricing by their online counterparts
• CAIT says it plans an e-commerce portal, E-Lala, with HDFC Bank, to combat marketplace players

Experts say the combined GMV of Indian e-commerce sites has risen threefold over last year at this time, to $12 bn. Amazon India’s unit sales surged five-fold; its biggest competitor here, Flipkart, grew 150 per cent, selling $300-million (almost Rs 2,000 crore) goods during its ‘Big Billion Day’ sale. Snapdeal grew  222 per cent, selling over five million products during its festive sales this year.

“This year, the customer experience on online marketplaces was much better; these companies have expanded their reach and the array of products offered. Most of them registered almost a 10-time increase in sales. This would continue during Diwali. Brick and mortar stores have specific reach and a lot of customers have shifted online,” said Rohit Bhatiani, director of Deloitte in India.



While Rajagopalan is confident of growth, traditional retailers also complain of predatory pricing by their online counterparts. “Prior to last year, sales grew 15 per cent around Diwali but since last year, predatory pricing by e-commerce companies has affected offline retail,” said Praveen Khandelwal, secretary-general of the Confederation of All India Traders (CAIT).

CAIT says it plans an e-commerce portal, E-Lala, in association with HDFC Bank, to combat major marketplace players. According to CAIT, the portal would only be a technology platform for sellers. “There will be a direct interface between consumers and sellers, and for all sales made at the portal, the consumer will be directly paying to the seller, with all logistics and delivery mechanisms handled by the seller,” added Khandelwal.