Diwali, the festival of lights, being one of the most celebrated occasions in India, provides the most opportune time for businesses to increase their sales.
Shopify’s 2022 Festive Shopping Outlook identified a noticeable shift in how consumers will shop in the lead-up to Diwali, as cashless payments, online shopping, and deals on fashion, electronics and essentials top consumer wish lists.
“The digital shift is here and it’s sweeping Indian consumers towards the next generation of shopping. Diwali 2022 will be a monumental shopping event across the country as consumers spend more than ever before and opt for the convenience of online shopping. For brands, participating online through marketplaces and their own website is now a given as consumers shift to browsing online before making the trip to the neighborhood store. And, with some uncertainty around the global economy, buyers are more cautious about where they spend, however, deals and discounts for fashion, electronics, and essential items and support for local brands have boosted overall spend,” said Bharati Balakrishnan, Country Head, and Director, Shopify India.
The Festive Shopping Outlook also identified 10 trends shaping India’s retail sector ahead of Diwali
1. Consumers raising the bar for festive expenses: Owing to the increasing spending capacities, along with a renewed aspiration for uplifting their lifestyle post-pandemic, Indian consumers are planning to spend more on their festive shopping as compared to previous years.
As many as 85.82 percent of consumers surveyed expressed a desire to spend more than they have in previous years.
2. Trust in e-tailers continues to run high: The Indian retail space continues to see a growing shift from offline to online shopping this year as well. 78.57 percent of consumers plan to shop online more than they did before the pandemic over the festive season.
The change in consumer preference can be attributed to the convenience of shopping from anywhere offered by online shopping, along with partner discounts, exclusive deals, easy payment options, and quick deliveries. In addition to the shoppers residing in the metros, people from non-metros are also increasingly trusting e-tailers with their festive purchases.
3. Electronics and fashion rule the festive sales: While traditional festive gifts such as dry fruits, sweets, and chocolates continue to be a consumer favorite, Shopify India’s survey noted a sharp increase in the number of people planning to spend on fashion and accessories, followed by consumer electronics and gadgets.
81.65 percent of consumers prefer to purchase fashion and accessories, closely followed by 76.37 percent also buying dry fruits, sweets, and chocolates, and 68.57 percent spending on home electronics and gadgets. This shift is indicative of the aspirations of modern consumers, who look at festival deals as a perfect opportunity to level up their lifestyle.
4. Cashless payments becoming the new norm: With the Government of India encouraging cashless payments among the population through secure payment gateways and incentives, digital payment methods such as UPI, cards, and internet banking have emerged as the options most preferred by Indian consumers.
In light of the growing popularity of cashless payments, upfront cash payments are slowly taking the backseat. UPI emerges as the most preferred payment method with 67.36 percent of consumers opting for it, followed by 45.49 percent for credit cards, 37.69 percent for net banking, and 38.68 percent for reward points.
5. Festive season shopping big business for local merchants: 96.04 percent of consumers expressed their interest in buying from local sellers/brands this festive season. This is in stark contrast to the trust and preference Indian consumers have traditionally held for foreign brands and their products. A major propellant of this change may be the government's call for consumers to be “vocal for local”.
6. Essentials surpass luxury in consumer preference: Amid the global economic slowdown, its impact on the Indian economy, and an air of uncertainty created by the pandemic, Indian consumers are spending cautiously despite planning to increase their shopping budget this year.
25.71 percent of respondents plan to spend on essentials rather than luxury items this year, in a bid to stay prepared in the event of any unforeseen circumstances.
7. Discounts and deals emerge as major tools for consumer retention: Moving from the traditional focus over the brand name, product range, and quality, 75.82 percent of consumers have listed discounts and deals to be the major reasons for being loyal to a brand/seller. Most consumers plan to flock to the brands/sellers offering them maximum value for their money.
8. Consumers scrolling their screens to land new finds as social commerce takes hold: As window shopping becomes passé, more and more consumers now choose to rely on their internet-connected devices to find new products. Shopify’s research found that 57.58 percent of consumers listed social media platforms, online shopping websites, review websites, and online ads as their preferred ways of knowing the trends to shop this year.
9. Sustainable shopping gaining ground: With eco-conscious practices taking a centre stage all around the world, Indian consumers are beginning to also take notice. The report reveals that 62.86 percent of consumers plan to be more sustainable in 2023. This shift can be attributed to the growing sensitization around the impact of consumer choices on the environment, combined with the consumers’ desire to make a difference in whatever way possible.
10. Ethical and responsible brands take the lead: Indian consumers are preferencing socially and environmentally responsible brands over other available options. The majority (67.36 percent) stated that they prioritized brands actively giving back to society, selling cruelty-free and vegan-friendly products, and promoting environmental sustainability. As many as 17.91 percent of consumers stated that they avoided buying from companies that promoted fast fashion.