The Hindu Business Line : Shoppers throng New Year sales for durables — Longer warranties, finance schemes fuel spending

ON any normal day, at any given point of time, in most consumer durable outlets salespersons would comfortably outnumber shoppers. Certainly not so during this period. One may have to wait for minutes to catch the attention of a salesperson. New Year in the city is to consumer durable retailers as Diwali is to apparel retailers.

With good advertising support across all media from almost all consumer durable majors and retailers, the New Year sale is gaining in popularity with every passing year.

"For many middle-class households in Tamil Nadu, particularly in Chennai, it is almost a habit to buy a consumer durable during the New Year sale," says Ms Lalitha Prabhakar, a New Year shopper who hopes to buy a microwave oven this year. "Last year I bought a DVD player." She says, "It does make better sense to buy now, because we get genuine discounts on almost all products across brands."

Agreeing with her statement, Mr H. Vasanthakumar, proprietor of Vasanth & Co, a major consumer durable retail chain, says, "During the New Year sale, we focus more on turnover than on margin. We get good offers from manufacturers aswe give them volume business, and we genuinely pass it on to the consumer." According to him, many brands have extended additional warranty and assured gifts this year. He says last year there was a small setback owing to the tsunami . "But, this year we hope to clock at least 25 per cent of our annual turnover." The retail chain's annual turnover is Rs 220 crore. "We target Rs 300 crore for next fiscal," says Mr Vasanthakumar.

Vasanth & Co has been conducting the New Year Sale for the last 20 years. This year, its plan was to spend close to Rs 60 lakh on advertising to boost sales during the `Sale' out of its annual ad budget of Rs 3 crore.

"I see very positive signs this year," says Mr B. A. Srinivasa, Joint Managing Director of retail chain, Viveks. The group, which pioneered this concept 29 years ago in Chennai, now has three brands of retail chains — Premier, Viveks and Jainsons. It conducts the New Year Sale in all its 53 outlets spread across Tamil Nadu (45 branches) and Karnataka (eight branches in Bangalore). "Except in some pockets of Tamil Nadu where people depend mainly on agriculture, the mood is very buoyant," says Mr Srinivasa.

Though the sale generally starts on December 31 and peaks on January 1 and 2, many chains this year have extended the sale period to more than 15 days. Some started the sale as early as December 15 and may extend it to January 3 or 4, depending on the demand.

"The trend is slowly catching in Bangalore and Hyderabad too," says Mr Vasanthakumar, who plans to open a branch each in Hyderabad, Kochi and Delhi soon. He targets having 100 outlets by 2009 from 41 (including one each in Karnataka and Pondicherry) at present.

Another Chennai-based retail chain, Chellamani & Co, is also bullish about this New Year's sale. "We usually make 30 per cent of our annual turnover during this period," says Mr David Wilson, Managing Director, Chellamani & Co. According to Mr Wilson, apart from extended warranties and assured gifts, zero-per-cent-interest schemes from finance companies are a major growth driver. The chain also announced an `exchange offer' this time. "Apart from offering instalment schemes, we do not charge any processing fee on credit card purchases," says Mr Wilson. He says this year the trend seems to be in favour of colour TVs. "People upgrade to TVs with advanced technologies. Big-screen TVs are in great demand now." Chellamani & Co has 10 branches in Chennai alone.

While Mr Srinivasa of Vivek sees 25 per cent growth in sales this year sale over the previous year, Mr Wilson of Chellamani & Co puts it at 40 per cent.

Many consumers feel "tempting schemes" from some major credit card players such as ICICI Bank and Citibank are a major reason for a buoyant sale this year. ICICI Bank recently announced `5 per cent cash back' offer on every purchase and Citibank a `return flight ticket offer'.