Retailers Flourish Online Amid Discount Wars As Festival Season Kicks Off

"This year's Onam sales have been better than the last year's, when the market had de-grown, yet the growth rate is still not up to our expectations as the mass segments continue to see limited traction," Kamal Nandi, business head at refrigerator and washing machine manufacturer Godrej Appliances, told NDTV Profit. Still, Nandi remains hopeful that sales will peak ahead of Diwali. "We are aiming for a 40% growth between October and December driven by our premium portfolio."

To be sure, the white goods sector anticipated a growth of 15%, but both Kerala and Maharashtra have seen only single-digit increases in sales during the recent festivals, said industry executives.

However, a potential recovery in consumption is expected in the upcoming quarter. The October-December period is the country's largest consumption period, spanning from Onam to Diwali, including Navratri and Durga Puja. It accounts for a fifth of annual sales for most categories.

In contrast to the industry's cautious mood, the festive spirit is rather vibrant among online-only appliances brands such as Thomson. "After a challenging three-year period marked by high inflationary pressures, consumer sentiment this year appears to be notably positive with a strong inclination towards purchasing," said Avneet Singh Marwah, chief executive officer, Super Plastronics Pvt., the exclusive brand licensee of Thomson in India. "Consumers have already begun adding items to their carts in anticipation of upcoming sales. This proactive behavior suggests that sales will pick up further, indicating a promising outlook for the festive season."

Offers Galore

Smartphone brands such as Xiaomi and Samsung have ramped up their marketing budgets to take advantage of the festive season. They have launched substantial discounts to clear unsold stocks, with some brands offering incentives to offline retailers for meeting ambitious sales targets.

Market leader Xiaomi has unveiled deals exceeding Rs 1,000 crore, including initiatives like 'Win Every Minute' and discounts of up to 70% across its portfolio. In a bid to defend its market share against Apple, Samsung has introduced price cuts of up to 35% on its flagship S24 range. These discounted models will be available exclusively on Flipkart for a limited time.

Major players like Amazon, Flipkart, Myntra as well as quick commerce players like Blinkit and Zepto are at the forefront of this digital shift by offering discounts up to 80% and delivering orders at doorsteps in just 10 minutes. Clothing, footwear, beauty, electronics and even the packaged food brands are turning to online channels in a bid to cash in on the buying frenzy.

Arvind Fashions Ltd. has partnered with Zepto to launch an exclusive collection of its flagship casualwear brand US Polo Assn. ahead of the festive season.

"With Zepto’s lightning-fast delivery, we are bringing a new level of accessibility and convenience to our customers. That’s such an exciting trend setting solution for modern day needs of our consumers," said Shailesh Chaturvedi, managing director, Arvind Fashions.

Arvind Fashions is also investing heavily in its own online direct-to-consumer business. "This channel has grown more than 60% year-on-year in Q1 and delivered higher channel profitability as well. We are making wholehearted investment behind our online business," noted Chaturvedi.

Swedish brand H&M has tied up with Reliance-owned Ajio to launch a collection starting as low as Rs 399, positioning itself against local fast fashion rivals like Zudio. The entry of H&M into this price-sensitive segment is a testament to the shifting purchasing behaviour of inflation wary-consumers, where younger shoppers increasingly seek stylish options without breaking the bank.

Parle Products Pvt., the most chosen consumer brand, is betting on quick commerce channel this festive season to boost sales, according to its vice-president Mayank Shah.

"This channel is seeing 40-45% growth, outpacing the performance of general trade. Additionally, we are seeing a notable rise in the average bill value for online purchases, implying that quick commerce has evolved beyond merely serving as a platform for impulsive buying."

Market researchers are also backing this optimism. E-commerce is set to dominate festive sales, according to Kushal Bhatnagar, associate partner at Redseer Strategy Consultants. The channel is projected to grow 20% over last year generating over Rs 1 lakh crore in gross merchandise value and the proliferation of quick commerce channels is expected to further boost sales in segments such as mobiles, electronics, and fashion, fueled by pent-up demand, the advisory firm said.

Meanwhile, the coupon and cashback sites are also acting as powerful catalysts in shaping India’s rapidly evolving e-commerce ecosystem.

Ratan-Tata backed CashKaro generated Rs 150 crore in sales within the first six hours of Amazon and Flipkart festive sales, and another Rs 8.5 crore sales on the first day of the Myntra Big Fashion Festival. The highest transactional activity came from Delhi, Patna, Kolkata, Bengaluru, Hyderabad, Lucknow and Kochi, according to company data.

"By offering exclusive deals and promotions, we are aiming for 2x growth in the transaction as compared to last year," said Swati Bhargava, co-founder of CashKaro, a platform that offers cashback that goes beyond the deals and discounts offered by brands.

Empty Aisles

As consumers increasingly prioritise speed and convenience, the physical stores remain deserted.

NDTV Profit earlier reported that muted consumer spending in the past several quarters prompted many companies including the country's largest retailer, Reliance Retail Ventures Ltd., to shut down 249 stores and chase profitability. The current slowdown again raises a pressing question: Will retailers be compelled to shut more doors?

"I don't think so as we are seeing a lot of brands refurbishing their stores and investing in enhancing in-store shopping experiences," according to Pushpa Bector, senior executive director, DLF Retail Ltd. While she acknowledged that foot traffic in malls has remained stagnant, particularly due to unfavourable macro factors like unexpected rainfall, she is hopeful of a 5-6% increase during Navratri, Diwali as well as the wedding season.

"For the first time, we're also planning a large-scale shopping festival around the second week of October, where brands ranging from food to apparel and beauty will not only offer discounts but also unique experiences. We expect this initiative to boost foot traffic," she noted.

Other industry executives that NDTV Profit spoke with indicated they will closely monitor the upcoming festive season. If the numbers do not favor margins, there could be another round of potential shutdowns this fiscal.

Analysts agree, noting that the apparel industry is particularly at risk.

According to Anil More, associate director, Crisil Ratings Ltd, the apparel industry's revenue per square foot is expected to remain flat at Rs 11,900 due to subdued same-store sales growth. He states that any marginal profitability gains will result from retailers streamlining existing stores and opening new stores only as necessary as demand has yet to fully recover. Similar to last fiscal year, revenue growth is projected to be slower than the 11-12% compound annual growth rate observed from fiscal 2018 to 2023, prompting caution among retailers regarding new store openings.