Festival season: Several important trends emerge as
companies woo consumers PART I
The festival season is upon us, and companies have left no
stone unturned. Here are the emerging trends.
Never mind the pollution and the haze. Ahead
of Diwali,
festivities are in the air.
Businesses have a game plan with Diwali in mind. E-tailers lead the charge. Flipkart has signed up an enviable star cast, including Amitabh Bachchan, Deepika Padukone, Ranbir Kapoor and Virat Kohli, to woo buyers.
Relatively understated, Amazon is leaning on its global might and millions to roll out its Great Indian Festival, its third back-to-back sales. From restaurants to malls, airlines to telecom operators, fashion wear to consumer electronics, real estate to cars, virtually every consumption category has a spin on festivities.
Amid dull sales, automakers hope Diwali and its new launches (Hyundai Santro to M&M’s Marazzo) will bring some sparkle. Mobile phone sellers launched over 65 handsets. Airlines are offering discounted tickets. Even Dubai Duty Free is entering the fray, slashing prices by 20%.
Diwali frenzy is understandable. In India, thanks to festivals and weddings, the October-December quarter is the most critical for businesses in grabbing sales. In a country that celebrates one festival after another, festivities legitimise consumption and are a critical link between the society and a consumption-driven economy.
A few trends are discernible this Diwali. Digital is the new battleground. Offline retailers such as Big Bazaar as well as dealers of big brands are working hard to remain relevant and reconfigure their strategy. With more than 450 million internet users, over 400 million smartphones and the arrival of global retailing giants like Amazon, Alibaba and Walmart, expect digital fireworks to gain momentum.
Moving beyond metros, both Flipkart and Amazon are now deepening their reach to access consumers in smaller towns. Intense competition benefits consumers so sales and offers are getting better. Retailers are adding bells and whistles to product offerings in terms of service (installation and delivery) and freebies (screen insurance). Low-cost or no-cost EMIs are a big hit. With smart TVs doing brisk sales, expect OTTs like Netflix and Amazon Prime to gear up for big growth.
Two structural shifts are important to note. Even as public discourse is getting polarised, festivals are becoming more secular as Indians embrace cross-cultural traditions from Diwali to Halloween, Onam to Karva Chauth. Two, since 2000, India’s consumer spending is steadily shifting from merchandise to services, says Technopak chairman Arvind Singhal. The merchandise share in consumption spend has dipped from 70% around 2000 to 48% now, thanks to services like education, leisure and travel.
Did someone mention the bad news gripping India? Car sales are hurting. Industries from airlines to telecom are steeped in losses. Amid rising fuel prices, weak rupee, high interest rates and credit crisis, layoffs are routine and investment is muted.
Well, life is a lot about perceptions, of seeing the glass half full rather than half empty. Festivals help you reboot, and change the lens with which you see the world. Here’s wishing that this Diwali manages to do just that for you.
E-commerce Slugfest
So, who is winning the e-commerce battle this year? “The sensitivity of the numbers can’t be emphasised enough. We will need to wait for the data to comment on it,” says Navkendar Singh, associate research director (devices and ecosystem), India and South Asia, IDC. So, on record few are willing to lay their bets.
However, it’s possible to gauge a sense from conversations. We spoke with more than two dozen people, including avid online shoppers and expert e-commerce watchers, to bring you a ringside view.
Since mobile phone is the hottest and the most visible selling category across platforms, here’s how this slugfest is playing out. Snapdeal seems to be almost out of the reckoning. “Flush with funds, it’s a battle between Alibaba (Paytm), Amazon and Walmart (Flipkart),” says Singh. Even among the trio, while Paytm has made some inroads, it’s a race between Amazon and Flipkart.
Who is leading? It’s mostly a draw, at least for now. (The third sale is ongoing at the time of writing.) Both e-tailershave managed to create buzz and are evenly poised on sales, offers and the logistics of order processing and delivery. Both e-tailers are also equally placed in their mobile phone offerings, exclusive models and range.
“While Flipkart has the maximum number of exclusive launches, they are more focused on the volume segment. Amazon has a skew towards the premium segment,” says Anshika Jain, analyst, Counterpoint Technology Market Research.
What is beyond doubt is that both Flipkart and Amazon are burning a lot of money this season. Shoppers, enjoy as long as it lasts!
Biggest Retailer
Guess who is India’s biggest retailer? Not Walmart. Not Flipkart. Not Amazon. The title must go to Mukesh Ambani’s Reliance Retail. With a quarterly (July-September 2018-19) revenue of Rs 32,436 crore (compared with Rs 14,646 crore in the same quarter last year), it is India’s biggest multi-category product retailer in terms of sales and store network (9,146 retail stores and 512 petro outlets), with a footprint that spans verticals like consumer electronics, grocery, fuel, fashion and lifestyle. Its plans look aggressive — by FY2020 it wants to open 6,000 outlets and hit a topline of $20 billion.
Bear in mind that Reliance Jio’s aggressive expansion (215 million subscribers in 25 months) will add more synergistic ballast to Reliance Retail’s future growth. The two can easily cross-sell products and deals across its millions of customers. “It’s only a question of time when Reliance begins to tap its Jio platform for selling merchandise,” says Arvind Singhal, chairman of retail consultancy firm Technopak.
The Mi Onslaught
In India, the world’s second largest market for smartphones, China’s Xiaomi is leading the charge. It has been a meteoric rise for the $18 billion Chinese firm, which was founded in 2010 and entered India late in 2014 with a big online push. Today, the company leads the race in India with 30% market share. It sold 12 million smartphones in Q3 2018.
The buzz is that this Diwali, Xiaomi is rapidly tightening its grip on other segments. Raghu Reddy, head, category and online sales, Xiaomi India, says: “Diwali sales have been phenomenal. We set a new record — sold 2.5 million devices in less than 2.5 days.”
The company, which has set up a plant in India for smart TVs and six plants for smartphones, rolled out an aggressive pricing strategy this Diwali with a big focus on smart TV. It sold over 100,000 LED TVs. Mi is the No. 1 smart TV brand as per IDC quarterly report. It also sold over 400,000 Mi Ecosystem products like wearable smart bands.
Walmart: Landed but not Arrived
In the e-commerce world, this Diwali is special. In August, Walmart acquired 77% stake in Flipkart in a $16 billion deal. This is the first big battle the two global retailing giants — $500 billion Walmart and $178 billion Amazon — are fighting in India.
Looks like Diwali came a bit too early to feel the Walmart impact here. Smrithi Ravichandran, who heads growth at Flipkart, when asked about the Walmart effect this year, says: “For Flipkart, this Diwali was business as usual, nothing different... it came too soon” for Walmart to deliver its Diwali greetings via Flipkart.
However, Amazon would rather play the ignore game. Kishore Thota, director for customer experience and marketing, Amazon India, starts his interview with this reporter on the festival season with the opening line: “Before I tell you what this Diwali is about, I wanted to mention what it is not about. It is not about competition for us!”
Continues in PART IIBusinesses have a game plan with Diwali in mind. E-tailers lead the charge. Flipkart has signed up an enviable star cast, including Amitabh Bachchan, Deepika Padukone, Ranbir Kapoor and Virat Kohli, to woo buyers.
Relatively understated, Amazon is leaning on its global might and millions to roll out its Great Indian Festival, its third back-to-back sales. From restaurants to malls, airlines to telecom operators, fashion wear to consumer electronics, real estate to cars, virtually every consumption category has a spin on festivities.
Amid dull sales, automakers hope Diwali and its new launches (Hyundai Santro to M&M’s Marazzo) will bring some sparkle. Mobile phone sellers launched over 65 handsets. Airlines are offering discounted tickets. Even Dubai Duty Free is entering the fray, slashing prices by 20%.
Diwali frenzy is understandable. In India, thanks to festivals and weddings, the October-December quarter is the most critical for businesses in grabbing sales. In a country that celebrates one festival after another, festivities legitimise consumption and are a critical link between the society and a consumption-driven economy.
A few trends are discernible this Diwali. Digital is the new battleground. Offline retailers such as Big Bazaar as well as dealers of big brands are working hard to remain relevant and reconfigure their strategy. With more than 450 million internet users, over 400 million smartphones and the arrival of global retailing giants like Amazon, Alibaba and Walmart, expect digital fireworks to gain momentum.
Moving beyond metros, both Flipkart and Amazon are now deepening their reach to access consumers in smaller towns. Intense competition benefits consumers so sales and offers are getting better. Retailers are adding bells and whistles to product offerings in terms of service (installation and delivery) and freebies (screen insurance). Low-cost or no-cost EMIs are a big hit. With smart TVs doing brisk sales, expect OTTs like Netflix and Amazon Prime to gear up for big growth.
Two structural shifts are important to note. Even as public discourse is getting polarised, festivals are becoming more secular as Indians embrace cross-cultural traditions from Diwali to Halloween, Onam to Karva Chauth. Two, since 2000, India’s consumer spending is steadily shifting from merchandise to services, says Technopak chairman Arvind Singhal. The merchandise share in consumption spend has dipped from 70% around 2000 to 48% now, thanks to services like education, leisure and travel.
Did someone mention the bad news gripping India? Car sales are hurting. Industries from airlines to telecom are steeped in losses. Amid rising fuel prices, weak rupee, high interest rates and credit crisis, layoffs are routine and investment is muted.
Well, life is a lot about perceptions, of seeing the glass half full rather than half empty. Festivals help you reboot, and change the lens with which you see the world. Here’s wishing that this Diwali manages to do just that for you.
E-commerce Slugfest
So, who is winning the e-commerce battle this year? “The sensitivity of the numbers can’t be emphasised enough. We will need to wait for the data to comment on it,” says Navkendar Singh, associate research director (devices and ecosystem), India and South Asia, IDC. So, on record few are willing to lay their bets.
However, it’s possible to gauge a sense from conversations. We spoke with more than two dozen people, including avid online shoppers and expert e-commerce watchers, to bring you a ringside view.
Since mobile phone is the hottest and the most visible selling category across platforms, here’s how this slugfest is playing out. Snapdeal seems to be almost out of the reckoning. “Flush with funds, it’s a battle between Alibaba (Paytm), Amazon and Walmart (Flipkart),” says Singh. Even among the trio, while Paytm has made some inroads, it’s a race between Amazon and Flipkart.
Who is leading? It’s mostly a draw, at least for now. (The third sale is ongoing at the time of writing.) Both e-tailershave managed to create buzz and are evenly poised on sales, offers and the logistics of order processing and delivery. Both e-tailers are also equally placed in their mobile phone offerings, exclusive models and range.
“While Flipkart has the maximum number of exclusive launches, they are more focused on the volume segment. Amazon has a skew towards the premium segment,” says Anshika Jain, analyst, Counterpoint Technology Market Research.
What is beyond doubt is that both Flipkart and Amazon are burning a lot of money this season. Shoppers, enjoy as long as it lasts!
Biggest Retailer
Guess who is India’s biggest retailer? Not Walmart. Not Flipkart. Not Amazon. The title must go to Mukesh Ambani’s Reliance Retail. With a quarterly (July-September 2018-19) revenue of Rs 32,436 crore (compared with Rs 14,646 crore in the same quarter last year), it is India’s biggest multi-category product retailer in terms of sales and store network (9,146 retail stores and 512 petro outlets), with a footprint that spans verticals like consumer electronics, grocery, fuel, fashion and lifestyle. Its plans look aggressive — by FY2020 it wants to open 6,000 outlets and hit a topline of $20 billion.
Bear in mind that Reliance Jio’s aggressive expansion (215 million subscribers in 25 months) will add more synergistic ballast to Reliance Retail’s future growth. The two can easily cross-sell products and deals across its millions of customers. “It’s only a question of time when Reliance begins to tap its Jio platform for selling merchandise,” says Arvind Singhal, chairman of retail consultancy firm Technopak.
The Mi Onslaught
In India, the world’s second largest market for smartphones, China’s Xiaomi is leading the charge. It has been a meteoric rise for the $18 billion Chinese firm, which was founded in 2010 and entered India late in 2014 with a big online push. Today, the company leads the race in India with 30% market share. It sold 12 million smartphones in Q3 2018.
The buzz is that this Diwali, Xiaomi is rapidly tightening its grip on other segments. Raghu Reddy, head, category and online sales, Xiaomi India, says: “Diwali sales have been phenomenal. We set a new record — sold 2.5 million devices in less than 2.5 days.”
The company, which has set up a plant in India for smart TVs and six plants for smartphones, rolled out an aggressive pricing strategy this Diwali with a big focus on smart TV. It sold over 100,000 LED TVs. Mi is the No. 1 smart TV brand as per IDC quarterly report. It also sold over 400,000 Mi Ecosystem products like wearable smart bands.
Walmart: Landed but not Arrived
In the e-commerce world, this Diwali is special. In August, Walmart acquired 77% stake in Flipkart in a $16 billion deal. This is the first big battle the two global retailing giants — $500 billion Walmart and $178 billion Amazon — are fighting in India.
Looks like Diwali came a bit too early to feel the Walmart impact here. Smrithi Ravichandran, who heads growth at Flipkart, when asked about the Walmart effect this year, says: “For Flipkart, this Diwali was business as usual, nothing different... it came too soon” for Walmart to deliver its Diwali greetings via Flipkart.
However, Amazon would rather play the ignore game. Kishore Thota, director for customer experience and marketing, Amazon India, starts his interview with this reporter on the festival season with the opening line: “Before I tell you what this Diwali is about, I wanted to mention what it is not about. It is not about competition for us!”
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