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August 3, 2009
By Gouri Shah
These last few weeks have been hectic for freelance beautician Riddhi Kasurde. Her seven-year old son, Hrishikesh, was getting ready to head back to school—and juggling her work, his classes and a long shopping list had the 30-year-old mother in a tizzy.
Kasurde’s shopping list went beyond the usual school supplies: there was a Rs250 school bag that “looks like one that college students use.” Rs2,000 worth of fabric for his school uniform, Rs500 for the tricycle which was his reward for scoring well in his class I exams and a Rs550 computer game he could use to hone his English and math skills. “I would like to give him all the opportunities that we didn’t have,” she says.
Hrishikesh is the first child in the Kasurde family to go to an English-medium school.
The weeks, between the carefree joys of holidays and stressful months of rote learning, are emerging as a sweet spot for Indian retailers and technology product companies that are tapping the back-to-school market.
Gone are the days of basic satchels, canvas shoes and hand-me-down clothes from elder siblings. Children are now showered with everything from fancy school bags and sports shoes to iPods and gaming consoles.
“Typically after any major exam, parents promise their children that they will buy them something as a reward for a good performance. So, it could be anything from an iPod to a mobile phone to gaming console,” says Ajit Joshi, managing director and chief executive officer of Infiniti Retail Ltd, which runs the electronics and appliance retail chain Croma. “Who wouldn’t jump at the golden opportunity to attract new customers?” he asks.
The burst of back-to-school shopping is not yet of Diwali proportions, but it has enough potential to become one of the highlights of the Indian retailing calendar.
It is already large enough to bring a gleam into many a retailing eye.
Oyo, the brand of children’s clothing, offered hefty discounts this year, along with a chance to win a fully paid family vacation to Singapore. Retailer Croma launched a 24-page Back to School catalogue and ran promotions that bundled products together. It also tied up exclusive deals with brands such as computer maker Acer, to ensure that its new product range was only available at Croma for that time period. Bata launched two-three new types of sporty school shoes this year and also threw in free goodies from Ben Ten, a popular character on Cartoon Network, with every back-to-school purchase.
Office supplies chain store Staples registered high double-digit growth, “over 50%”, on its back-to-school promotions. “One thing is for sure. Indians will spend on their kids, no matter what. But at the same time they are looking for value and are willing to try out innovative products,” says a Staples spokesperson who did not want to be identified, citing company policy.
Other companies, too, bear this out.
“Our sales during the April-June period accounts for almost 40% of our annual revenue,” says Ashim Mathur, national marketing manager, entertainment and devices division, Microsoft India. This means the company sells almost an equal number of X-Box gaming consoles during this time as it does during the festive season in India, considered the peak season for several brands.
Acer India Pvt. Ltd has focused on educational clusters—or cities such as Pune with a high density of educational institutes—to drive sales. “An increasing number of professional courses require students to own their own computers, so what happens is that they invite bids from brands such as Acer, beat down the price and buy in bulk. The cost of each individual laptop is then worked into the student’s fee,” says S. Rajendran, chief marketing officer, Acer India. This season starts in April, peaks in July-August and ends by October. According to estimates by Rajendran, the total market is worth around Rs500-650 crore, of which 90% accounts for individual purchases.
“At this point, retailers will jump on every opportunity there is to shift merchandise and drive sales. Five-ten years ago, June-August was considered the low season for retail, so in that sense back-to-school sales are a useful tool to drive customer impact and cut across the clutter,” says Devangshu Dutta, chief executive, Third Eyesight, a retail consultancy firm.
It is hard to estimate how large the market is. Data from market
research firm Indicus Analytics suggests that around 700,000 students
in the top five metros come from families with enough purchasing
power to interest retailers and companies.
Average spending of around Rs3,000—as was the case with
the Kasurdes—would mean an estimated back-to-school market
of over Rs200 crore. But throw in the new gaming consoles and
digital music players, and the numbers would start looking even
more impressive.