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Big Billion Day Highlights India's CE Retail Transformation
India is in the middle of a digital transformation, fuelled by investment seeking to tap into the digitally hungry growing middle class. The last three years have seen major changes in India’s digital landscape; primarily following Reliance Jio’s aggressive mobile data pricing, lowering connectivity costs to affordable levels and aiding the growth of internet connections from 200 million in 2016 to 600 million+ in 2019. This growth in connected consumers, alongside growth in the economy powering rising disposable income levels, is creating digital opportunities in retail, banking and other digital services such as music and video streaming.
Amazon and Wal-Mart owned e-tailer Flipkart made headlines this October following the Indian Big Billion Day and Great Indian shopping festivals, which generated sales of $3 billion over the six-day event. Whilst these sales are small in comparison to China’s $30 billion+ Singles Day shopping event, the headline of this story is perhaps more focused on the fast-paced growth of modern retail in India, and the beginnings of strong returns on national ecommerce logistics investments.
As is seen in similar shopping events across other markets, consumer electronics contributed significantly to this revenue, with smartphones, headphones, TVs and wearables all breaking records in terms of sales. With the Indian consumer electronics market set to see an increasing yearly level of growth through to 2023, these shopping festivals are only expected to become more important for consumer electronics retail moving forward.
India’s premier cities, such as Mumbai, Delhi and Bangalore, have quickly become hotspots of modern retail and ecommerce, with retail solutions quickly gaining scale, thanks to the huge population India’s major cities contain. However, suburban and rural populations have been deeply underserved by the digital economy, due to the country’s expansive landmass and relatively low population density. With a long tail of economically significant cities and middle-class population hubs, investment into logistics and distribution of ecommerce in India needs to be strategic and targeted.
With internet connections growing year-on-year, momentum for the ecommerce channel is only just getting started. In this period of ecommerce growth, consumer electronics are expected to gain significantly. Across core consumer electronics products, Futuresource forecasts retail value to grow by CAGR 2019-2023 of 7.7%, making India the fastest growing major consumer electronics market worldwide. When split between pure online and other forms of retail, trends become more extreme, with a 12% 2019-2023 CAGR forecast for e-tailers, versus a 6% forecast for other store types.
India’s ecommerce market has largely cited the ability to provide customers with credit or financing payment options as a key driver of success. Whilst disposable income has increased, consumer electronics remain aspirational products for many. The use of credit is not only a driver of product purchases, but with many Indian consumers purchasing smartphones for the first time through the availability of credit, retailers are also seeding the market, providing internet access for more consumer to drive further purchases and service uptake.
Whilst the figures posted for the Indian shopping season thus far are positive, there remains a backdrop of economic struggle. Banks have largely ceased lending, following a number of corporations defaulting on major debts. Economists have suggested that these microloans and financed transactions may have a greater purpose than just to provide local populations with flexible payment terms. The stimulation that increased consumer spending may have on the wider economy is significant, generating increased revenue for businesses but also greater liquidity to drive India’s hungry economy into its next growth phase.
With the holiday season approaching, shopping festivals across other territories will soon commence and make headlines once again. India’s Diwali shopping festival will commence just a week after Amazon and Flipkart’s latest sale, again capturing a significant share of yearly consumer electronics demand. The ever-increasing pull of online retail will no doubt help attract grand sums spent online. However, with significant political events unravelling in major CE markets, including the Chinese-USA trade war, and the UK set to leave the European Union a month before black Friday sales begin, there are macro trends which could leave retailers with lacklustre results.
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.