Key expectations from India’s 2020 festive season

India’s festive season is a harbinger of love, laughter and good luck not just for the masses but also commercial businesses. The 2020 festive season is especially significant because it is expected to bring back the bling and provide respite from minimal sales.

According to a Forbes article, India’s online retail spending is expected to witness a year-over-year growth of 34% between October 15 to November 15, 2020. Approximately about 55 million to 6o million consumers are likely to shop online during the festive month. Online retailers are estimated to generate nearly $6.5 billion in online sales during the period.

Leading online retailers like Flipkart, Amazon and Snapdeal are well-prepared to greet the consumers with special events that will offer great discounts and new product launches. All the major online retailers have roped in independent craftsmen and MSMEs to be able to offer maximum varieties of products to woo the consumers. Other important highlights of the festive season include:

Gradual return of economic activity

Google’s Mobility Report shows how the lockdown impacted people’s movement. In April, mobility related to retail and recreation declined by 90% in metros, 86% in tier I and 80% in tier II cities. The same report for the month of September shows a marked improvement with a 40% recovery in mobility in all cities. Although it is a far from pre-Covid levels, it is indicative of slow resurgence of economic activity. However, the grand figures projected for the online retail sales for the festive month is expected to come at the cost of offline retail, at least to some extent.

A major shift in consumers’ buying behavior

The extended lockdown period in India and the safety measures warranted by Covid-19, made sure a large section of the Indian population started buying products online. Although the consumers shifted to online channels by compulsion, they have gotten comfortable shopping via online channels and all inhibitions about the channel has almost evaporated. This is a major behavior shift that took place in a few months which would have otherwise taken at least two years.

Moreover, with the economic slowdown, many people have lost jobs and unemployment is at all time high. Hence online channels offering greater discounts is expected to be preferred over traditional offline channels by consumers. Since a large part of the Indian employees are now working from home and have migrated to their hometowns, greater demand is likely to come from tier I and tier II cities. Increase in demand is expected in home appliances, home furnishing, consumer electronics, and smart phones.

Marketplaces are geared up for festive bonanza

Online retailers have ramped up infrastructure, workforces and technology across metros and lower-tier cities to address the increase in consumer demand from all regions. Amazon added 10 new fulfilment centers this year and now has 60 fulfilment centers across 15 states in India. Online seller base has also expanded for most e-tailers. Amazon has increased its online merchants base by 30% compared to last year, with 80% rise in new seller inductions since February. Since most of these sellers are MSME businesses, rise in online sales is expected to bring some degree of economic relief to the sector.

Smartphones remain strong and grocery is surging

Consumer electronics and smartphones are expected to grow at 43% and 26% respectively. With many new product launches and attractive offers, both the categories are expected to do good in the festive month.

Grocery as a category is expected to become the fastest growing category as a majority of the festive-themed grocery items will be purchased online. Fashion has emerged as the third largest category; however, it is likely to shrink by 9% compared to 2019, since people will spend less on clothes being stuck at home.

Overall the festive season is geared up to see some fireworks and the initial trends are encouraging. However, the extent of the economic success will only be fully revealed in time.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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