Battered offline retailers hope for Republic Day succour3 min read . Updated: 23 Jan 2015, 12:32 AM IST
Offline retailers expect to see a spike in sales over the holiday weekend on the back of an increase in consumer spending
Mumbai: Diwali was a write-off, with India’s well-heeled online marketplaces stealing the thunder (and the sales) of traditional brick-and-mortar retailers, but Republic Day could be the saviour.
Traditional offline retailers expect to see a spike in sales over the holiday weekend—Monday, 26 January is India’s Republic Day, a public holiday—on the back of an increase in consumer spending and have announced heavy discounts to sweeten the deal.
Future Retail Ltd, which runs the Big Bazaar chain of hypermarkets, says its optimism is based on recent sales trends.
“The festive season sales were weak. However, December and January sales have picked up. Footfalls are increasing and consumers are coming in now during the promotion period," said Rakesh Biyani, joint managing director, Future Retail, which pioneered the concept of the Republic Day weekend sales with big promotions and discounts that have seen, in previous years, people queuing up outside the Big Bazaar outlets for hours waiting to get in.
Biyani expects this year’s Republic Day weekend sales record to surpass that of the previous years.
That remains to be seen, because online marketplaces are looking at Republic Day pretty much the same way they look at any other day—as an opportunity to announce another steeply discounted sale.
For instance, Amazon.in is running a Republic Deals Parade (RDP) from 23 -26 January, offering deals on apparel, electronics, books, gourmet and specialty foods, baby products, toys, healthcare and personal care products.
“Everyone will try to capitalize on the holidays. We should see more promotions this weekend," said Ganesh Subramanian, chief operating officer, Myntra.com. Myntra is also running end of season sales branded “End Of Reason" sales, with steeper discounts.
In response, traditional retailers are now rethinking their discounts and promotions to take on the competition.
“This festive season, sales were impacted by online retailers. But during the end of season sales we were better prepared with sharper promotions and are seeing consumers come back to the stores to buy," said Dipak Agarwal, chief executive officer (CEO) of DLF Brands, the retail arm of India’s largest real estate developer, which retails Mango, Boggi and Forever 21 in India. Agarwal also says that consumers are returning back to the malls as the online buying experience was poor.
“This year, promotions will be steeper as we compete with the online marketplaces," said Himanshu Chakravarthy, CEO, The Mobile Store, who is looking at a combination of coupons along with bank offers and discounting to lure consumers to his stores.
Mobile phones are a big category for online retailers.
The Mobile Store will start its Republic Day weekend sale on Friday and will keep it going till the end of the month. “Compared with a regular weekend, the Republic Day weekend sees three times the sales and we expect to see that trend continue," said Chakravarthy.
Lower inflation and improved consumer sentiment helps.
Overall spends will increase because “everything is looking up", said Anil Talreja, partner at audit and consulting firm Deloitte Haskins and Sells. Traffic at malls has increased over the past fortnight, he added.
“The market has grown. Both online and brick-and-mortar (stores) are growing," affirmed Nilesh Gupta, managing director at electronics retail chain Vijay Sales, who added that sales of consumer durables rose even during Diwali when online retailers were offering huge promotions.
At Vijay Sales, the like-to-like sales growth during the festive period was 15% over the year-ago period, said Gupta, who expects similar growth during the Republic Day weekend. Like-to-like sales growth refers to comparable sales growth of stores that have been operational for over a year and does not take into account growth on account of new store openings.
While signs of an increase in spending should provide some cheer to retailers, they may have to work harder to retain customers.
“The slowdown and rise of the Internet has changed the way consumers shop. Consumers are more networked—they talk to a lot of people, do their research and get all their information before they buy," said Sumita Kale, chief economist, Indicus Analytics Pvt Ltd. She added that retailers and marketers will have to work harder to get customers to buy.
“It’s more difficult to sell now."