14 September 2022, Mumbai:
India is regarded as the global festivity capital given the secular, vibrant democracy we have & been known to celebrate all festivals with colour & gusto. Broadly if we were to define the festivity/festive period, conventionally it is the Winter season which ushers in many multi-coloured festivals celebrated Pan-India starting from sometimes as early as June and lasting till the Diwali week or new normal is unstated extended run till new year eve.
Festivity & its fervour
E-commerce firms are expected to log a 28% year-on-year growth in sales at USD 11.8-billion during the festive month this year, and in 2021 overall online retail GMV (gross merchandise value) of $52 billion is likely to grow by 30% hitting $68 billion in 2022. The growth is expected to be driven by the doubling of online shoppers during festive sales as against 2018. ahead of festivity as it sees that in the 1st week itself, the sales are likely to hit around USD 5.9 billion. Additionally, the quick YOY comparison of 28% rise V/s corresponding period of USD 4.8$Bn gives a big heart a Redseer report said recently.
Revenge buying drives retail sales
As a back-of-envelope calculation given sales triggers festivity fuels consumerism and impulse buying. Albeit the demand forecast at the granularity level cannot be a straight line in terms of the category mix as pre-festive months/festivity unfolds & evolves year in and year out.
Who doesn't want to celebrate? On the back of economic recovery and improving business & consumer confidence Who doesn't want to celebrate? These newfound expectations will be the key to driving sales revenues for brands during the festive season leading to an increase in volume sales.
The secular trend of witnessing non-discrete consumer spending is mirrored by E-commerce majors Flipkart and Amazon India experienced a strong start to this year's festive sale earlier this week. It is driven by synergies of better deals and new launches ahead of festivity in some of the categories where the forecast is as high as 4x growth in the number of online shoppers from 2018.
Digital adoption
As an anecdotal, observation season shoppers' journey begins with fashion promoting the participation of fashion-led players in the festive sales this year well supported by first-time shoppers and enthusiasts alike all on the back of the accelerated digital adoption and increasing digital penetration deep down leading to a goldilocks kind of a scenario.
Affordability Quotient
In layman's terms, What it means is to know what exactly can you afford exactly. The affordability quotient plays an important role in consumers' buying decisions and is a major catalyst in driving realty demand. On the back of this heightened optimism, brands are buying into these hopes & are expecting the expanding customer base to reflect incremental sales amid the unfolding festival sales period.
Supply cannot be behind demand
Given that currently, India is the strongest & fastest growing market as most of its macroeconomic variables are pretty stable. In some sense today India is a proxy for China's growth and has the potential of becoming a global growth engine in the coming years.
Given this demand tailwinds, brands are upping their ante this festival to make hay when optimism sun shines.
Additionally, considering the new initiative's having the ability to move the needle being noticed in the marketplace such as the launch of new e-commerce models such as live/video commerce will help strengthen sales/volume metrics driving further eyeballs during the festive period. So how come the outcomes be disappointing?
The growth in festive sales is a function of heightened footfalls at the offline retail & pupil dilating eyeballs at e-commerce platforms & resulting in impressive outcomes like the overall online retail GMV (Gross Merchandise Value), having clocked USD 52 billion in 2021, & further to inch up as much by 30% clocking USD 68 billion or thereabouts in 2022, asserts Redseer in its recent report. Sanjay Kothari, Associate Partner at Redseer Strategy Consultants alludes, "The doubling of online shoppers during the festive season is majorly due to increasing awareness of the festive sales among the shoppers".
Most of the brands we are talking to echo the spirit of festivity alluding that," We are seeing strong booking trends & expecting this season to be strong despite of inflationary/cost pressures and hoping optimism will realise.
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