Oil prices, dollar rates dim the sparkle of retailers this festival

Kumar Rajagopalan, the CEO, Retailers Association of India, said, “Although the deep discounting model has brought many shoppers to the online marketplace, the festive season sales and retailers feedback so far indicate that the retail business is slated to grow just about 12 per cent falling short of an anticipated industry growth of 15 per cent.”

 He added, “Primarily, brands try to clear off their old stock and out of season products during the festive sales organising mega shopping events to woo customers. Therefore, sellers seldom showcase their latest products in this marketplace. So the conflict of pricing between offline and online does not arise.”

 Rajagoplan is also concerned about knock-offs entering the e-marketplace thereby sending the wrong signals to the end user. Counterfeits and grey market supplies or those bypassing custom duties are denting the image of online vendors.” This is another cause of worry with the rate of returns destroying the marketplace. “Some of the retailers have been hit hard with sales getting dented by 20 per cent on account of the returns component,” Rajagopalan said.  As per studies, the online market comprises roughly about 2 per cent of the total retail business in India as opposed to a market like China, where the online business constitutes a staggering 40-50 per cent of the total retail scenario.

 Rajeev Krishnan, MD and CEO of Spar Hypermarkets, is cautiously optimistic about the season.

He said, “These are the biggest two weeks for Indian retail as it’s a holiday season across the country. What’s been happening over the past few years is that the window has been getting tighter for the retailers. Previously the festival mood would take over almost a month in advance, but now it boils down to two weeks of major business.”

 Recently, an e-tailer major ran a festival offer for groceries, pricing its products at about 1 rupee. Speaking about the deep discounting practice employed by many e-tailers, an industry insider said, “If you want to run a profitable business, you need to look at your profit and loss. No matter how much deep discounting you do, there is only so much margin on any specific item and at the end of the day, you have to pay your bills. But if you are looking at only valuations and funding, then such practices may be the norm.”

“Most offline stores are still concerned with being profitable, so they will not go that route. The Draft E-commerce Policy should hopefully address these issues of predatory pricing to offer a level playing ground for all the stakeholders involved,” he said.