How Retailers Can Leverage AI to Improve Diwali Sales


On October 27th, Indian households all over the world celebrate one of the country’s biggest festivals which spans for five days, Diwali. Derived from the Sanskrit word “Deepavali,’ which means a series of lighted lamps, this is known as the festival of lights and is celebrated by millions. 


For most Hindus, the festival marks the return of deities, Rama and Sita to Ayodhya, and to celebrate this return, villagers often light oil lamps that illuminate the path. On the consumer side of things, the festival is often closely linked to Lakshmi, the goddess of wealth and prosperity.


Why Diwali is important for retailers

Although the significance of the festival may carry different nuances according to region, as a whole, it marks the victory of light over darkness, good over evil and with this in mind, people are in the mood to keep their homes clean, bright and festive. 


As such, people spend a lot of time cleaning, renovating, and decorating their homes, along with dressing up in new clothes, eating feasts of food, and exchanging presents with loved ones. Depending on the individual’s culture, the main feast can be quite lavish in display and consist of lots of extravagant decoration.




For all of the reasons above, Diwali is a great opportunity for retailers to increase sales, as many households prepare to spend a large number of ornaments, lights, and presents. Much like Christmas or Valentine’s Day, many retailers can adapt their offerings and extend lengthy sale promotions to stay ahead. 


In Indian e-commerce alone, festive sales that were marked by FlipKart and Amazon India illustrated a growth of 25% in 2017. Consumer spending increased leading up to the celebration, with clothing, jewelry, and electronics being the main area of consumption. Consumer durable firms are expected to have a 10-40% increase in sales from the past year during the Dussehra-Diwali period


Competition with e-commerce and falling sales for traditional retailers

Until now, brick-and-mortar stores have made huge profits from festive holidays like Diwali. However, in recent years, with e-commerce growth and consumers turning to online shopping, sales during this festive season have dropped


It’s no surprise why more and more consumers have been choosing to buy online. Not only are they able to shop from the comfort of their own home, but they can also select from thousands of items with a never-ending selection of discounts to benefit from. Furthermore, price differences are quite vast from online and offline retailers, making it an even harder deal for brick-and-mortar retailers to stay ahead in this intensely competitive market.




According to Arvinder Khurana, president of the All India Mobile Retailers Association (AIMRA), “large-format retail chains have the same pain areas… they’re also impacted. They are writing and escalating the issues with the brands. Sales are down 30% compared with last year’s Diwali, whereas it should have been up 30% versus last year”

This has been noted in fashion retailers all across the nation, as many prominent malls in New Delhi, Mumbai and Bengaluru saw much lower sales compared to the years prior. As some retailers commented, “even with all the walk-ins, purchases were lower.” Besides e-commerce shops making it harder for retailers to compete, the economic slowdown has also forced many consumers to keep their money close to their chest, holding back on their spendings.


Leveraging machine learning for boosting Diwali sales 

Despite the drop in sales, not all areas of retail have been completely glum, as consumer electronics and cellphone retailers have noticed sales in the last weekend before Diwali to have a slight uptick, improving compared to the same period of last year. In fact, many retailers such as FlipKart or Amazon India (although online) are taking advantage of artificial intelligence/machine learning to improve sales, meaning there is still hope for retailers if they choose to implement the same technology.


FlipKart’s Big Billion Day 

Flipkart is one example of a big e-tailer that has shown great improvement in sales through the use of machine learning. Claiming to have doubled their transactions, the website designed its app home screen to be personalized to each to more than 120 million customers.


By deploying machine learning algorithms on a multitude of different customer data points (customer location, language, gender, price, purchasing frequency, volume), the e-tailer was able to make predictions without the customer being on their platform. 


Through the use of machine learning, FlipKart was able to predict that if a customer was going to return a particular product. Some of India’s top data scientists at the largest domestic e-commerce are said to be using AI to research past buyer behaviors.




Amazon India’s Great Festival Sale

Another great example of e-tailers using machine learning for boosting festive sales has been Amazon India, during the Great India Festival Sale. During this sale period, Amazon India noticed its sales in smartphones and fashion increasing five to fifteen fold, respectively. 


They used improved campaign analytics for messages and outreach marketing. The data analytics helped spot clusters of client behaviors to get them to click and convert. According to a report by Neilson, Amazon India had the highest share of online purchase transactions.


How retailers can benefit from using AI 

There are plenty of benefits for using machine learning in a retail business. The following are some considerations that retailers should be making in preparation for the next year of festive seasons that are coming through.


  • Predictive discounting – Using predictive analytics, retailers can examine consumer clickstream behavior and use the data points to get a better idea of what kind of discounts to give their customers. The use of AI helps to provide a more accurate price point for items.
  • Inventory management – Companies can see which items of clothing, lights, decorations, and jewelry often sell better during the Diwali season. Since this period is often filled with spending a lot of money for loved ones and festive celebrations, retailers can use predictive analytics to understand what will be  their best and worst sellers. 
  • Personalized campaigns – By taking a more statistical, analytical approach to looking at browsing behavior, retailers can create marketing campaigns that target the right audiences in the right places. 


Final thoughts

Befitting to the Diwali holiday, where millions of Indian households clean out their home to welcome in the celebration of the light, retailers should be leveraging artificial intelligence for better inventory management, and refining their websites to sell the items that are truly desired. 


From the retail apocalypse to the looming economic downturn, there are a plethora of factors that are affecting retailers. This is why simply guessing or hoping for the best is not going to make a change. The best way to keep up in these modern times is to implement technologies like artificial intelligence into your business to make smarter, more accurate decisions of consumer demand. 


Solutions like Chain of Demand’s AI-driven predictive analytics can help to accurately forecast best and worst selling items, allowing retailers to understand when, what, and how to sell the right items for the right price. With that being said, retailers can learn to stock up on the products that truly matter, and that their customers actually want.

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