How MSMEs Thrive During India's Festive Season Amazon's "Great Indian Festival 2022" saw record participation from MSMEs, with 4.75 lakh sellers joining the B2B sales, and 70 per cent of the 35,000 B2C sellers hailing from Tier-II and III cities

The festive season in India brings an unparalleled boost in consumer spending, offering a unique opportunity for businesses of all sizes. For Micro, Small, and Medium Enterprises (MSMEs), competing with large brands and global corporations can seem like a daunting task. However, MSMEs have continuously demonstrated their resilience, agility and innovative strategies to capitalize on this surge in demand. The festive season in India is marked by heightened competition as global corporations and large brands ramp up their marketing efforts. MSMEs, however, have distinct advantages that allow them to stand their ground. MSMEs leverage their agility, cultural relevance and personalized service to differentiate themselves. Unlike the rigid supply chains of larger corporations, MSMEs can quickly adapt to local preferences, offering hyper-local and traditional products like hand-painted diyas or regional attire that appeal to their consumer base.

Kanishk Maheshwari, co-founder & managing director at Primus Partners, emphasizes the importance of authenticity and personalization by stating, "MSMEs create a strong customer connection through their focus on authenticity and personalized service, standing out from the mass-produced offerings of larger corporations." This connection is particularly effective during the festive season when consumers seek products that align with cultural traditions.

Digital adoption has also become a critical component of MSMEs' competitive strategy. With over 700 million smartphone users in India, MSMEs increasingly rely on social media and digital marketing to reach their audience. A 2023 report from Primus Partners highlighted that more than 80 per cent of MSMEs see online advertising as crucial in boosting their profits. Collaborations with platforms like Amazon's "Local Shops" initiative and Flipkart's 'Samarth Program' give MSMEs broader market access while maintaining their local focus. Investing in customer data analytics and real-time service tools like chatbots further enhances their ability to compete.

Capitalizing on Increased Festive Spending

To maximize the festive season's potential, MSMEs employ strategic promotions and product offerings. Seasonal discounts, limited-time festive bundles and loyalty rewards drive consumer purchases, encouraging bulk buying. As per a report by Bharat Labs' titled, 'Diwali Pulse 2024', 63.82 per cent of buyers are motivated by discounts and offers during the festive season.

Many MSMEs launch exclusive festival-themed products, such as eco-friendly décor or organic sweets, which align with the growing demand for sustainability. "83.36 per cent of consumers now prioritize sustainability when purchasing items like apparel and electronics," notes Maheshwari. This shift allows MSMEs to tap into a more conscientious consumer base, offering products that resonate with values-driven buyers.

Collaborations with major e-Commerce platforms help MSMEs scale their reach. For instance, Amazon's "Great Indian Festival 2022" saw record participation from MSMEs, with 4.75 lakh sellers joining the B2B sales, and 70 per cent of the 35,000 B2C sellers hailing from Tier-II and III cities. To keep up with consumer demands, MSMEs have also adopted mobile-friendly payment options like UPI and contactless delivery to provide a seamless customer experience.

The festive season is a vital period for MSMEs, not only in direct sales but also as ancillary units supporting larger manufacturers. As noted by Jyoti Prakash Gadia, managing director at Resurgent India, the MSME sector holds a unique position in India's economy, supplying consumer goods and supporting large industries. The festival period drives additional demand as it coincides with the busy season following the monsoon. "With farmers receiving payments for their Kharif crops, rural demand for goods produced by the MSME sector automatically increases," explains Gadia.

Large corporations, particularly in sectors like automobiles, white goods and consumer durables, also experience a surge in sales during festivals due to a traditional preference for purchases during this time. MSMEs, as suppliers to these industries, benefit from payments for previous deliveries, which further fuels their growth.

"The festival season provides a much-needed boost to the MSME sector, aligning with the cyclical pattern of India's economic growth," Gadia adds, pointing out how these festive periods create a ripple effect that sustains both the small businesses and larger corporates they support.

The Role of Gig Workers

The MSME sector in India is experiencing remarkable growth, employing nearly 23 per cent of the country's workforce, with 4 crore registered MSMEs generating around 19 crore jobs. The surge in demand during the festive season requires MSMEs to scale up their operations quickly. As Sumit Kumar, chief strategy officer at TeamLease Degree Apprenticeship, explains, gig workers play a crucial role in helping MSMEs manage seasonal peaks. Sectors like retail, tourism and FMCG experience significant foot traffic, and businesses turn to flexible gig workers to meet these demands without committing to long-term employment contracts.

"By hiring gig workers, MSMEs can quickly scale their workforce, ensuring they have enough personnel to handle peak periods, such as extended store hours and heightened service requirements, while controlling costs. Additionally, gig workers bring a diverse skill set that can be matched to specific tasks, whether in customer service, logistics, or specialized services like beauty treatments," says Kumar. This flexibility allows MSMEs to remain cost-effective while delivering high-quality service during the festive rush. Additionally, integrating apprenticeship programs into the hiring process enables MSMEs to develop a loyal, skilled workforce for long-term growth.

The festive season not only provides immediate revenue but also creates long-term opportunities for MSMEs. A successful festive season can help MSMEs acquire new customers, many of whom convert into repeat buyers if they experience quality service and products. According to a Harvard Business Review study, increasing customer retention by just 5 per cent can boost profits by 25 per cent to 95 per cent.

Maheshwari points out that customer retention and brand building are essential post-festive season strategies. "To maximize these long-term benefits, MSMEs should invest in robust customer relationship management (CRM) systems to track customer interactions and nurture leads." Post-festive loyalty programs, referral discounts and personalized email campaigns can keep the brand top of mind, turning a one-time shopper into a loyal customer.

The festive season also provides MSMEs with greater visibility and credibility, which can lead to future collaborations with larger e-Commerce platforms and financial institutions. By generating additional revenue during this period, MSMEs can build cash reserves, reduce reliance on external loans and reinvest in their growth, further strengthening their market position.

e-Commerce Surge

In 2023, India's e-Commerce sales hit an impressive INR 54,500 crore in the first week of the festive season, a 26 per cent increase from the previous year. This surge wasn't just beneficial for large e-Commerce platforms but also for smaller businesses and MSMEs. Rohan Bhargava, co-founder of CashKaro, observed generational shopping patterns that MSMEs could leverage. Gen Z shoppers leaned toward gadgets and tech, while millennials were more inclined to purchase home appliances, such as refrigerators and washing machines.

Bhargava highlights how MSMEs operating in cities like Delhi, Patna and Bengaluru can analyze customer data to offer targeted loyalty programs and cashback offers, further driving repeat business. "Mobiles, electronics and consumer durables, home and general merchandise categories accounted for 75 per cent of sales during the period, while smartphones and TVs accounted for over 70 per cent of sales in the tier 2 and 3 cities" he says. By analyzing customer data and understanding these regional trends, MSMEs can implement targeted loyalty & cashback programs and create more effective campaigns that bring value with quality.

With strategic use of digital tools, collaboration with e-Commerce platforms, and effective workforce management through gig workers and apprenticeships, MSMEs can not only thrive during the festive season but also build a foundation for long-term success. By capitalizing on customer trends, these small businesses can compete with larger corporations and carve out their unique space in India's dynamic market.