The Hindu Business Line : Disaster dampens Chennai New Year sales

DECEMBER in Chennai is known for its music season and New Year sales, but this year the devastation and desolation wrought by last week's tsunami has made a few retailers circumspect. While some expect it to affect their prospects, some have withdrawn advertisements announcing the sales and others have refrained from illuminating shop fronts and buildings out of respect for the dead and the distressed. Some manufacturers of electronic goods and home appliances who are participating in the sales have followed suit.

Says Mr S. Anand, Managing Partner, Abirami Home Appliances, "The sale is going well but we are in no mood to go to town about our gifts, discounts and such stuff. Considering what happened, it doesn't look nice, so we've toned down publicity and pledged 5 per cent of the turnover from this sale as contribution to relief efforts."

Mr B.A. Srinivasa, Director, Vivek Ltd, said that while it has been a good year for retailers, the tsunami can be a "dampener" considering the sentiments it stirred up in people. Mr S. Jayaprakash, proprietor of Jayam & Co, says the sale prospects are good as prices have been dropping steadily due to cuts in duty and due to the Free Trade Agreement India recently concluded with Thailand which has made it cheaper for manufacturers of electronic goods to import their wares from there rather than manufacture them here.

This apart, it seems that New Year sales are not quite what they were earlier. With some sale or the other year-round, New Year sales' contribution to retailers' annual turnover is on the decline every year. According to Mr Jayaprakash, for Jayam & Co, which has four outlets in Chennai, the New Year sale contributes between 35 and 40 per cent of the year's turnover. However, this is declining every year as consumers are buying as and when they need things and have enough cash to afford them at any time of the year.

While Vivek earns 18-20 per cent of its annual turnover in the New Year sales, Abirami, which has two outlets in Chennai city, earns about 5 per cent of its total sales. Mr Anand of Abirami echoes other retailers when he says that this amount is coming down every year. Sales are being spread out through the year. This also helps bring down the rush during the New Year and allows salespeople to serve customers better, he adds.

Not only are there sales throughout the year for some festival or the other, manufacturers also have some promotion or other going on to maintain consumers' interest. Every retailer and manufacturer promises the lowest prices, the best deals and the biggest or the largest number of freebies at almost every sale. So are the New Year sales losing their relevance? Mr Anand is reluctant to dismiss their utility. "We really can't say that. For us, it's a religious sentiment and we will have a New Year sale. It's also a form of thanksgiving to our customers," he says, adding that this year's special feature at Abirami is the "combination schemes" where customers can walk away with two appliances for a special price. Mr Srinivasa of Vivek says that for customers too, there is sentiment attached to buying something new in the New Year.

In fact, Vivek, with over 40 outlets in Tamil Nadu and Bangalore, was the forerunner of the New Year sales when it started them 28 years ago. Mr Srinivasa explains that it's the best time of the year to buy products because prices are at their lowest then, provided there are no sharp changes in sales tax, other levies, petrol and dollar value.

While some retailers maintain that purchases don't plummet in the few months that there aren't any sales, Mr Jayaprakash of Jayam says February is "almost dead."

Manufacturers, for their part, say that "seasonality" is factored in when they plan production and promotions. Suresh Sukumaran, Director (Marketing-TV), Philips India Ltd, says New Year sales in Chennai (and Bangalore) are almost at the level of the Diwali sales. (For Chennai-based retailers, the New Year sales far exceed the Deepavali sales.)

According to Mr Shivasubramaniam, Regional Manager, LG Electronics India Pvt Ltd, "There is a big spike in Chennai city. December sales contribute 7-8 per cent of LG Chennai branch's turnover." LG is not actively participating in the sales this time because of the tsunami. The company expected to do well as the market for durables is growing but is not so sure now given the circumstances.

Both companies say there are two sets of customers - those who wait for sales and those who buy whenever they need to.

Moreover, the fact that sales now are spread out through the year also helps them mitigate the effects of crests followed by deep troughs.

Categories that are growing rapidly include high-end TVs, home theatres, DVD and VCD players, DVD-based audio systems and mobile phones.

Many consumers are upgrading their TVs, retailers said, adding that while most categories have grown, washing machines are the slowest to pick up.

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Disaster dampens Chennai New Year sales