Festive shopping expected to fuel demand and sales

With the new government promising to bring in better days to the economy and the overall upbeat sentiment retail sales is expected to get a boost around festive season. Experts feel that the season, beginning with Onam and ending with Diwali/Christmas from September to December will give a fillip to

India’s retail scenario.

According to ET, the festival season will see most Indian companies setting aside over Rs 2,000 crores as advertising, marketing and promotions budget. Experts say

e-commerce majors such as Flipkart and Amazon will be the major spenders, followed by electronics, multi-brand retail and auto companies. Ad spends, this festive period are estimated to be 20-50 percent higher than last year owing to the positive consumer sentiments and general buoyancy among the businesses.

Festivals: A major booster dose

With good monsoon and positivity, retailers are looking forward to make the most of festival shopping. Industry insiders are attributing the buoyed demand and change in sentiments to the stable government, upbeat economy and general sense of positive days ahead. Some time back people were worried that bad or lack of monsoon showers may lead to high inflation but even that is not a concern anymore. Last year, the Festive/Winter season followed by the holiday period could not attract consumers. Then the retailers and brands announced their end-of-year sales with the hope of booking some profits since usually shoppers throng stores to take advantage of the discounts and freebies. But even the discount season failed to lure them.

But now, the things seem to be taking a positive turn. The feeling is that ecommerce companies will surely witness an increase in spends by at least 40-50 percent this festive season, because of the wide range of products they offer. Amazon and Flipkart are expected to spend Rs 50-60 crores each on advertising, including creative and media to gain eyeballs.

Luring the consumer to spend

Not only online companies even brick-and-mortar retailers will invest on advertising, which is expected to be highest ever during Diwali. The Rs 1,800-crores Arvind Lifestyle Brands, for instance is looking at significantly increasing ad-spend as it now has more brands under its fold, to promote compared with last year. Arvind now sells more than 28 owned or licensed fashion brands, including Calvin Klein, Nautica and US Polo Association.

Retailers’ margins are expected to be better this year due to lower discounting and the sale period ending early, Axis Capital had said in its report, for which it spoke to retail companies across formats. “Discretionary categories like apparel and footwear are showing marginal recovery in urban markets, though most branded and big-box retailers expect a concerted improvement in the second half of FY15,” the report added.