In anticipation of the holiday cheer, Indian consumers tend to get a little excited and balloon their annual expenditure. While many consumers break free from a slumber of non-spending in the past few months, the industry gears up for slash-sales and heavy discounts.
This year's sales mark the 10th anniversary of this festive season tradition, which began in India in 2014 with the country's first-ever eTailing holiday sales. The landscape of Indian eTailing has undergone a significant transition during the past ten years.
As per a report by Redseer, the yearly gross merchandise volume (GMV) for the entire e-tailing sector has increased by approximately 20-fold throughout this time, indicating this transformation.
To put this into perspective, the industry's GMV for the entire year of 2014 was ₹27,000 crores. In contrast, it is projected to reach roughly ₹5,25,000 crores in 2023. Simultaneously, the number of users who transact annually has exploded by a factor of 15, according to the report.
Furthermore, Redseer anticipates India's eTailing would generate about ₹90,000 crores for the entire holiday season in 2023, marking an astounding 18–20% gain over the holiday season sales of the preceding year. This growth is expected to be fuelled by a significant user base of around 140 million shoppers who are projected to make online transactions during this festive month.
“Over the last several quarters, we are seeing enhanced GMV contributions from categories beyond electronics. While electronics sell a lot in the festive period, looking at the bigger picture and comparing the festive sale periods over the last several years, there is a clear trend of category diversification,” says Mrigank Gutgutia, partner at Redseer Strategy Consultants.
He elaborates that this is beneficial for the ecosystem as it shows consumers’ willingness to purchase multiple categories online and more brands come up to cater to their needs.
What to expect
More interestingly, it is the luxury sector that has caught the eye of Indian consumers this year. According to Deloitte’s ConsumerSignals research, 75% of consumers report improved financial situations over the past year. This newfound confidence is driving an interest in luxury brands, exotic travel, and new vehicles.
Rajeev Singh, partner and consumer industry leader at Deloitte Asia Pacific, states, “India’s booming economy is encouraging consumers to embrace premium and luxury spending. This shift extends across consumer durables, travel, and hospitality, with Tier 2 and 3 markets also showing significant growth.”
He adds, “Discretionary spending is poised to increase, benefiting sectors like retail, automotive, and travel and hospitality.”
Indian consumers are not only making luxury purchases but are also planning exciting travel adventures, with a surge in domestic flight bookings (74% in August) and international flight bookings (58% in August) compared to July.
The demand for luxury hotels has also risen by 5% in August compared to July.
Moreover, 63% of consumers plan to buy a new vehicle in the next six months, a 4% increase from July.
It is the allure of new vehicle features and simultaneously bearing the high maintenance costs of current vehicles that is behind this uptick. Furthermore, people are fuelled by a desire to go for something different, and a preference for fuel-efficient choices.
Apart from this, there has been a magnified exposure to global trends in the time of social media and a younger demographic that are showing a keen interest in luxury products that is carving the path for seasoned luxury consumer brands to penetrate the Indian market.
As the Chinese economic growth slows down, these luxury brands are betting on the more robust and stable growth of the economy in India.
French luxury retailer Galeries Lafayette is set to enter the India market in collaboration with the Aditya Birla Group, and Balenciaga SA – the Spanish luxury fashion house – is in talks to open stores in partnership with the Reliance group. Other brands include Swiss luxury chocolate maker Laderach as well as Swiss luxury multi-brand watch and jewellery boutique TimeVallee who have expressed strong interest in the Indian market.
Deloitte’s report suggests that the innate confidence of Indian consumers is increasing, with 56% indicating their readiness to spend on celebratory items. Additionally, 49% believe they can effectively handle significant unexpected expenses in the near future.