Did you say e-comm will hit offline stores?

The string of high-voltage pre-festive online sales held in October by e-market players have not hit brick-n-mortar retailers.

With online shopping fest by Flipkart, Amazon, Snapdeal and Myntra eating into consumers' wallets, offline retailers' Diwali festive sales season were expected to be hit. But speak to offline retailers and you get a different story.

In fact, executives of retail chains operated by Reliance Retail, Future Group, Shoppers Stop, Lifestyle International, Woodland, Spykar and others say there has been a double digit-growth in sales over the last festive season.

Ask Kabir Lumba, MD, Lifestyle International. He says Diwali festive sales have been higher than expected across all three retail formats -- Lifestyle, Home Centre and Max. "Each of these formats have witnessed a strong double-digit growth over the last year," said Lumba.

Though Reliance Retail and Future Group officials were not available for comments, company executives told dna that there has been no significant impact on Diwali festival sales across their retail formats in the country.

"Sales may be slow in certain category of products in the consumer electronics space, primarily mobile phones, accessories etc. But big-ticket items like TVs, refrigerators and washing machines are in great demand.

Customers are also lapping up apparel and fashion products this Diwali," said one of the executives.

Govind Shrikhande, MD, Shoppers Stop, said there has been a shift from the second quarter to the third this time round.

"Of the eight weeks of festive shopping period, we have had high double-digit growth in seven weeks. I am sure we will close the eighth week on a similar note. My analysis of the market situation is that it is a going to be a strong retail performance for offline players this year," said Shrikhande.

While e-commerce firms played the discount card to lure customers, offline retailers flashed shopping vouchers ranging between Rs 750 (in the case of Spykar apparels) and Rs 1,200 (at Lifestyle).

While Spykar offered immediate cashing-in of voucher purchases worth Rs 4,000, Lifestyle vouchers could be used only on the second purchase of goods worth Rs 5,000.

Harkirat Singh, MD, Woodland Worldwide, said: "Ours being an outdoor brand, people prefer trying out products and there is a good footfall across our stores in standalone locations as well as shopping malls. We have already seen sales growth of 15-20% over the last year."

Spykar Lifestyles sells through 200 own stores across 110 cities and 1,000-odd multi-brand outlets across the country. Its COO Sanjay Vakharia says: "Our stores have witnessed an 11% like-to-like growth this festive season and it's not a bad scenario at all, as is being made out to be."

What he is referring to are studies by industry bodies and the like. Recently, an Associated Chambers of Commerce and Industry of India (Assocham) study cited steep discounts by e-commerce players as the key reason for a decline in footfalls in shopping malls across Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata, Hyderabad, Bengaluru, Chandigarh and Dehradun this Diwali.

The study cited factors like economic slowdown, online shopping, high interest rates and steep drop in shoppers to have hit the malls, already suffering from large vacant spaces.

Arvind Singhal, chairman, Technopak, a domestic retail consulting firm, is also of the view that pre-Diwali sales were not what it used to be historically. This is because the festive buying season has got stretched beyond 20-30 days to 60 days of late.

"The first bout of festive selling happened in September, followed by online sales being announced by e-marketplaces. As a result, shopping continued even in the Shradh period preceding Dussehra and there is only as much shopping one can do, which is linked to festive buying," said Singhal.

On an overall basis, Singhal is of the view that this quarter i.e. September-end and October to December, would probably be a very good quarter for both online and offline retailers because the overall consumer spending has been quite buoyant.

"However, if you were to break it down to whether October was better than November, I suspect November may not be so good for physical retailers," he said.

Industry experts are of the view that, though, the retail market has matured overall, it is still not clear how much actual growth has been registered by e-marketplace operators despite a six-fold increase in advertising spend.

The Assocham study estimates online shopping to cross Rs 55,000 crore this festive season and a five-fold increase in revenues, primarily in categories like mobile phones, electronics, designer furniture, home decorations, apparel, accessories, jewellery and footwear.

A section of offline retailers, particularly those in the consumer electronics category, have seen an impact, owing to increased traction by e-commerce players. Kaniya Mulchandani, promoter, Snehanjali Electronics (a retail chain of consumer durables and electronics products), said that business is under stress and there could be decline in margins by 20-25%.

"We have adopted aggressive pricing across our retail chain to compete with online players. This strategy, hopefully, will help register good sales growth though margins may get hit," said Mulchandani.

While there is no denying the fact that online shopping is getting bigger every year, experts said that one needs to also consider the share of online retailing – estimated to be just about 2% in 2014 and projected to reach around 11% by 2019.

Accordingly, the percentage of people shopping online is still very small compared to those buying through physical stores. And with changing ways of doing business (online players setting offline stores, offline players selling online and the advent of omni-channel as a strategy), it is very unlikely that physical retail will face a major challenge, going forward.