It’s an unprecedented situation for Rahul Bahl, the owner of Bahl Enterprises, a utensil and appliances shop in Lajpat Nagar, Delhi, who is sitting idle on a Friday evening barely a week before Diwali. “There are hardly any customers in the market, despite it being Diwali time. People prefer to buy online, where they get a lot of discounts and offers which we are not able to compete with. Big shopkeepers and brands might be doing well, but small shopkeepers like us are suffering. At my shop, sales are down by 50%-80%,” he lamented.
A shopkeeper for over a decade, Bahl sums up the quagmire for physical shops when he discloses people come to the shop just to check out the products but end up buying online because of cheaper prices. “The rush in the market is mostly at the eateries. Not only are things cheaper online, e-commerce saves them the hassle of traffic and parking. Moreover, shops like us cannot provide EMI options like online.”
Chetan Kumar, the owner of Paradise, a shop selling accessories and bags in Palika Bazaar of Delhi, is more blunt. “Online stores have ruined the market. Customers don’t believe anymore that our prices are genuine. In the past few years, we have seen sales decrease by approximately 30%.”
Their views are echoed by many shopkeepers in popular markets across the national capital such as Janpath and Lajpat Nagar. Also, overall sales estimates of online platforms and brick-and-mortar stores reflect the precarious situation of the latter.
An estimated trade of Rs 4.25 lakh crore is likely in offline stores this Diwali, according to the Confederation of All India Traders (CAIT). Retail markets across India registered a trade of Rs 3.75 lakh crore last season.
And, while store sales might be up this year, it is less than half of what e-commerce is delivering this Diwali — merchandise worth over Rs 10 lakh crore.
Praveen Khandelwal, secretary general of CAIT, the trade body representing traders and trade associations, told FE that traders are trying hard to match e-commerce with ‘buy-one-get-one’ and special Diwali discounts to entice customers. “The increasing pressure from e-commerce has become a challenge for local traders.
However, merchants are adopting omni-channel strategies, leveraging both online platforms and physical stores to boost business. Some traders are introducing online orders and local delivery services to compete with e-commerce platforms.
They are utilising their store websites, social media, and even WhatsApp to receive orders and arrange deliveries,” said Khandelwal.
To enhance the personalised shopping experience, and retain customers, some traders are offering exclusive local deals and fast delivery services that are not available online. They are partnering with fast-track delivery services to ensure timely deliveries, he said.
“Delhi alone is projected to see business worth around Rs 75,000 crore this Diwali,” said Khandelwal. “The shops across the country are decorated with lights and decor to create a festive atmosphere and attract more people to the markets,” he added.
Consumer demand was strong across categories, particularly fashion and premium electronics, said industry experts. “Industry estimates indicate that e-commerce companies and online sellers in India are poised to deliver merchandise worth $12 billion (over Rs 10 lakh crore) this festive season, with Diwali as the primary driver, reflecting a 23% increase from the $9.7 billion recorded last year,” said Nilaya Varma, co-founder and CEO of consulting firm Primus Partners. He added that mobile phones and fashion categories are together projected to contribute nearly half of the total sales.
As for Flipkart, Amazon and other e-commerce marketplaces, which usually generate about a third of their total yearly sales from the festive period, customer shopping sentiments were high with an inclination towards premium products across categories.
“The shift towards premiumisation can be seen with the number of customers opting for top brands, which has witnessed a rise in demand of 17% year-on-year. Premium and mid-premium Android smartphones saw robust growth with high interest in the AI-led features,” Flipkart said in a statement.
Amazon also noted that consumer electronics saw a spike during the festive season, driven by the robust adoption of premium products across tier 1, tier 2, and beyond regions, contributing 75% of the overall smartphone orders.
“This shift towards premiumisation is fuelled not just by consumer preference but also by rising disposable incomes, urbanisation, adoption of technology, and demand for comfort and high-quality living standards,” Primus Partner’s Varma noted. He added that companies are witnessing about 35-40% of their sales coming from premium products.
Walmart-owned Flipkart recorded 7.2 billion customer visits during its Big Billion Day sale that began on September 1 and ended on Monday. Flipkart said it saw some of its sellers recording 40-50% year-on-year growth this festive period. Overall, sellers on the marketplace witnessed increased participation, better offerings and significant boost in sales compared to last year.
Particularly on Dhanteras, which marks the beginning of the festival of Diwali, Amazon said it recorded a 5x growth in demand in gold and diamond jewellery on its platform, including lab-grown diamonds. There was an 84% year-on-year spike in gold jewellery, said a spokesperson. Not just physical gold, Amazon Pay also recorded a year-on-year increase in digital gold purchases.
Online marketplace Meesho saw total orders rising over 40% compared to last year, besides a notable spike in engagement, achieving over 3 crore app downloads. Milan Partani, general manager, user growth at Meesho, stated, “Almost 45% of shoppers hailed from tier 4 cities, reinforcing our commitment to making e-commerce accessible and affordable for millions across the country, including remote towns.”
Quick commerce firm Zepto also recorded six times higher sales of gold coins and four times higher sales of silver coins this year, compared to last. Not just Zepto, Blinkit, Swiggy’s Instamart and BigBasket’s BBNow have also done brisk business for gold and silver coins on Dhanteras.
While online platforms did brisk business, physical sales suffered. Tina Nath, who runs Tina’s House of Fashion in Lajpat Nagar, also blames e-commerce for her slow sales. “Last year, our sales around Diwali were close to Rs 1 lakh and this time it’s barely Rs 25,000,” she rued.
Hemant Sharma, the owner of Janta Cloth Store at Janpath, said Diwali is usually a time for higher sales, and this year is no different. But overall sales are down. “Having a shop in Janpath poses some logistical challenges such as no parking, and we know online competition deters a lot of customers. But many of them want to feel the fabric and see for themselves before buying anything, and this section still buys from shops. A lot of them venture out to markets to get a feel of the Diwali buzz and festive mood. That said, our Diwali sales compared to previous years have decreased.”
For Kapil Anand, the owner of Variety Store in Palika, Diwali is a dull affair. “Our market is very slow at the moment. There are hardly any customers. In the past few years, my business has decreased by 75% with customers gravitating toward online shopping.”
From: financialexpress
Financial News