The first bastion in the battle for supremacy between the online and offline worlds was media.

The second (arguably) is retail. We’re exploring the order values and foot fall in offline retail stores across India.

This is important. Not just because of the amount of capital pumped into e-commerce but also because it’s indicative of people’s consumption patterns.

  • Are people going to shopping malls less often?
  • Even if foot fall hasn’t changed, have their spending patterns?

We define New Users as: People who hadn’t shopped at a particular outlet in the last 3 months but did in the next 3 months.

Dormant Users: People who shopped in the last 3 months but have not shopped in the next 3 months.

A few observations, proportion of new users have increasing by roughly 15%, dormants have increased by about 23% in the period July 16 to July 17. If this gap doesn’t seem like much, the changes in absolute growth rates from the beginning of the period tell a starker story.

Dormancy is increasing at a much faster pace than the influx of new users.

Yes, we could change the definition of new and old shoppers, tweak the time frame, but the reality of the data is plain to see. I’m not sure, if the reduction in offline shoppers is necessarily the same as the reduction in footfall. God knows there are enough people who make the trek to the mall in order to ‘hangout’. But do footfalls matter when all you’re getting is window shoppers?

If you’re not convinced that a marked transition is taking place in how middle class India shops, then the following chart — which tracks Average Order Values over the same period, will dispel all doubts.

A few things you could infer:

  • Shoppers — both old & new, are now spending less money in offline retail stores (‘obvio!’). The contraction is as high as 12% & 14% respectively.
  • The Big Billion Sales and the Festive Discounts are working
  • The Post Demonetization period saw negative growth and exponential dormancy in shoppers

Keep in mind, that this doesn’t mean that offline retail is dead. For the purpose of this report — the companies we covered were Big Bazaar, Hypercity, Shoppers Stop, Reliance Fresh, and Spencers. These don’t really represent all of India, just the urban middle class. J

Some of this change could also be a result of demonetization and the general tightening of people’s wallets. If nothing else, this data will tell you if ‘India’s consumption story’ is over/ stumbling/ going strong.

I’ll let you be the judge of that.

Thanks for your time,

- Ashish

Team KG

P.S. Since we’ve reduced the frequency of our newsletters, I was wondering do you think this is good or bad? Should we push it up again or keep it to a nice and easy once a week? Inputs/ suggestions/ criticism is welcome.

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