Retail Stores Face 30% Loss Due to Online Indian Festive Sales
As Amazon and Flipkart vie for $4.8 billion in festive sales, malls and offline retails stores are witnessing a massive drop in footfall and are set to lose nearly 30 per cent in sales in just a couple of days.
Online retailers like Amazon and Flipkart in India are expected to generate about $4.8 billion in sales from September 25 to October 29, mitigating the impact of the general economic slowdown.
About 80 per cent of these sales are likely to occur between September 29 and October 4 - the period in which Flipkart and Amazon are organising their 'Big Billion Days' and 'Great Indian Festival' sales, said global market research firm Forrester.
According to Praveen Khandelwal, Secretary General of Confederation of All India Traders (CAIT), offline retail sales have dropped about 30 per cent due to the ongoing online sales in the last 3-4 days.
"The discounts they are offering are unbelievable, which is even lower than the lending cost. The customer who are suppose to come to the market have diverted to the online market," Khandelwal told IANS.
According to Satish Meena, Senior Forecast Analyst with Forrester, the growth (year-over-year) in online retail spending during the five days of festive sales will take a hit, from 93 per cent in 2018 to 32 per cent in 2019.
In 2019, 74 per cent of Indian online buyers research products online before purchasing them in-store. "The influence of digital on offline purchases will be the key area of brand investment in the near future in India," said Meena.
Khandelwal said that in the festive season, people do extra spending apart from their routine spending and the sales rise, ranging from utensils, garments to home furnishing and vehicles.
"Because of deep discounts and malpractices of the online players as there is no regulator on the e-commerce industry, the government too has not taken any action. These companies have made the Indian e-commerce market a free playground, playing the game with their own set of rules," the CAIT executive stressed.
The CAIT last month wrote to the government seeking a "blanket ban" on festive season sales conducted by the e-commerce giants.
"By offering deep discounts ranging from 10 per cent to 80 per cent on their e-commerce portals, these companies are clearly influencing the prices and create an uneven level playing field which is in direct contravention of the policy," CAIT said in a letter to Commerce and Industry Minister Piyush Goyal.
CAIT said that the practice of deep discounts offered by various e-commerce platforms during the festive season goes against the foreign direct investment (FDI) rules.
According to Khandelwal, people in the offline trade increase their inventory in general but this time, offline retail sellers have not even increased their stocks because in the past few years, they have seen that their increased festival inventory remains a dead stock and their capital is blocked.
"Malls are in a bad shape. Retail outlets there are not able to recover even the rent of per square feet area as footfall has decreased tremendously," he added.