How Holiday Market Drives Retail Industry
Indian retail sector is expected to reach $1 trillion by 2020! That calls for a need to review Retail Industry’s leading market - the Holiday Market.
The last holiday season of 2017 is around the corner and each retail shops, offline or on e-commerce websites, are flooded with discounts and offers. Today, we are here to investigate how the holiday market drives the retail industry. Undoubtedly, consumers are most active in the holiday seasons. The demand and supply are pushed and pull by the mutual activities of customers and sellers. Customers increase their buying because sellers are willing to offer discounts and sellers declare offers so the buyers buy their products, thus creating a perfectly elastic market.
The retailers have, in these years, studied the consumer behavior coarsely and meticulously. Retailers understand customers' expectations and they have realized the market is consumer-centric. Holiday season is the period when customers have shown to increase their spends multi-fold in comparison to their annual spends. Economic indicators point another year of growth in holiday shopping. In a survey conducted by Deloitte, it was estimated that there will be an increase of 4 to 4.5 percent of holiday sales in 2017 when compared to 2016. This includes both the online and offline sales where this year, e-commerce is expected to cross 100 million buyers by the end of the year. This means an increase in retail market. These are the few reasons how holiday market has pushed the growth of retail industry.
Considering another fact that about 70% of population is of working group, a huge shift is expected in the consumer spending patterns. Consumption is increasing year by year and holidays have become a trend of shoppers. The western culture has influenced the holiday market too. This age is a digital age and youth is exposed to a plethora of information, products and services available online. Curiosity to stay updated with latest products has spread like a plaque. This has resulted in consumption of more and more products hence increased opportunities for retailers.
With e-commerce websites showing substantial growth in Indian economy, more and more retail shops are being registered. Unlike traditional shops, online retail shops involves no set-up cost. This means more and more supply and benefits of lower cost to consumers. In Holiday markets such as Diwali, Christmas/New year, Republic Day, Independence Day, Valentine’s Day and a few smaller holidays, the retailers have been able to generate much more revenue than their annual sale. Flipkart's Big Billion Day and Amazon's The Great Indian Sale have shown exponential success in the past couple of years. Reasons why consumers shop more in holiday and how it affects retail:
- Tradition
Most of the holidays, whether Indian or International, have been formed to celebrate something. Celebrations accounts to exchanging of gifts. In India, gifting has been a very popular form of showing love and affection or for enhancing commercial relationship. Kings exchanged precious metals and stones with each other to enhance trades. Parents pass on their priced possessions to their heirs. Friends exchange memories and couples exchange personal presents. This tradition of exchanging gifts on special occasions is still alive and have a long way to go. In fact, networking has further boosted the gifting traditions. Now gifting is not just restricted to closed ones but stakeholders of organizations too.
- Price War
Since every buyer wants to buy and every seller wants to sell, the price of product is decided by the market mechanism. This price war allows increase in sales. The big market sales like that of Flipkart's Big Billion Day enables the buyer to choose from a wide range of products with wide range of price.
- Holiday Vibes
Even the modern population are buying in holiday seasons, the reason being, to satisfy their holiday vibes. Peer influence plays a major role in buying patterns of consumer. Marketing done by the sellers are too good to miss and hence consumers end up buying their majority supplies in holiday season.
However, it is worth noting that people are now inclined more towards gifting "experience" rather than a tangible gift. According to Delloitte's 2017 Holiday Retail survey, approximately one-quarter of survey respondents said they prefer to buy gifts that are experience and 24 percent expressed they plan to host or attend holiday events with friends and family. One-third of holiday budget is estimated to go in physical gifts. That been said, there will be a tough competition in product sector and service sector of retail industry. However, the industry as a whole is seen to be growing at a steady rate.
To conclude, Holiday season is undoubtedly the biggest shopping season and it has a significant impact on the retail industry. However, it is a challenging job to keep up with the changing behavior of consumers. Constant rolling is required to maintain the statistics of retail. However, concentrating only on holiday can prove disastrous for an organization.