Lacklustre Diwali business for physical stores, courtesy Amazon and Flipkart

Mobile phone sales dropped 55% this year compared to last year

INDIA-RELIGION-HINDU-DIWALI Customers shop for utensils at a market during Dhanteras in Allahabad | AFP

Was the Diwali business good this year? The answer depends on who you ask. 

The 21 days leading up to the festival of lights is the biggest shopping season in India—retailers make anywhere from 35 per cent to 45 per cent of their profit during this period. After the last few years of economic slowdown, the demonetisation disaster, GST uncertainty and the real estate bill (RERA), retailers were anticipating a bumper crop this time around. The monsoon was good, stock markets generally on an upswing and property prices had started going up. Shopkeepers and e-tailers had both stocked up big time for the bonanza.

But as the lights go up and the crowds retreat for the festivities, not everyone has reasons to cheer. And as expected, the worst hit are brick-and-mortar retailers, especially those selling electronic items, courtesy e-commerce giants Amazon and Flipkart.

According to the All India Mobile Retailers Association, the umbrella body of mobile phones and accessories traders across the country, sales have dropped by a whopping 55 per cent this year over last year's festival shopping period. 

A similar dip in sales is expected for electronic appliances, and fashion and apparel segments.

It's a familar story, having played out in a similar fashion in the last two years as well. Right at the beginning of the auspicious period for shopping (after Shraddh), both the giants launch their big shopping bonanza—the Amazon Great Indian Shopping Festival and Flipkart Big Billion Sale. If that wasn't enough, this year both had additional deals and offers sales taking place closer to Diwali.

Both shopping festivals, like in the last couple of years, came with oodles of offers and deals, zero interest loans and cashbacks. All, with the convenience of ordering, and getting delivery, at the comfort of your home and with easy returns policy.

While both giants do not share figures, some reported estimates had put the revenue at a staggering $15 billion, just after the first shopping festival.

The worst affected, obviously, are the mobile phone shops, which had mushroomed across the country after the smartphone boom in the last few years. Industry sources say there are at least 25,000 stores spread across India, which are facing dismal sales this time. 

While the bigger brick-and-mortar chain retailers, such as Vijay Sales and Sangeetha Mobiles, saw shoppers thronging their stores, but the actual sales were reportedly down. Here again, the culprit seems to be customers' new trend of checking out the look, feel and price of a handset at a physical store, before returning home to see how much discount they will get for the same on an e-commerce site!

Even big shopping malls are facing the brunt. “We may have glitzy shops and crowds milling about, but actual sales are down,” said the CEO of a tony shopping mall in Delhi's Saket. “Shoppers have got into this habit of checking out clothes and even shoes at a mall, but instead of buying it, they go back and order it online!”

A last minute rush on Monday on the account of Danteras, the traditionally auspicious day for shopping, as well as Tuesday's Chhoti Diwali, the eve of the main festival, might save to a large extent the bottomline of many retail shops. Gold prices have shown a record upsurge, and many shops remained open till late into the night on Monday. Groceries, sweets, chocolates, dried fruits as well as sundry gift hampers saw bigger traction on Monday and Tuesday.

That said, not even the conventional retailers are expecting a miracle, even as they say they will approach authorities to complain about the unreasonably high discounts being offered by the online shopping sites. As Amazon and Flipkart laugh all the way to the bank, the woes of conventional retail shops only look set to compound in the future.