The Hindu Business Line : Buyers lukewarm to New Year sales

Chennai, Jan. 1 In what seems to be a clear indication of a slowdown, retail outlets that offer ‘New Year Sale’ across the South wore ‘just-another-day’ look today. On the second day of this traditional three-day ‘sale’ (December 31 to January 2), sales people outnumbered consumers in several stores that this correspondent visited.

“In the last ten years, I have never seen such a poor response from our customers to the New Year Sale. I would not be able to talk to anyone like I’m doing now,” said a store manager at one of the outlets of a prominent retailer. He said only low-ticket items were moving fast.

According to him, reasonable sales were reported only in categories such as kitchen appliances and electric appliances such as fans, stabilisers and light fittings.

“Leave alone a drop in sales, we see a big drop in walk-ins. Not even to check the after-discount price tag,” complained the head of sales of another leading retailer.

Reality different

Particularly, the floors where the big-ticket categories such as high-end refrigerators, front-loading washing machines, flat panel TVs and split air-conditioners were displayed looked almost deserted. With an average 20-25 per cent drop in prices from what they were last year, LCD and plasma TVs were expected to sell like “hot cakes” this year. However, the reality is different. “We are terribly disappointed. People seem to have decided to cling on to their conventional TVs for some more time,” said this manager.

Industry sources attribute this low mainly to limited finance options.

Except Shriram Finance and Bajaj Finance there is no one else in the fray this year.

Till last year, there were close to a dozen players including ICICI, Citibank and GE Countrywide. Now with all of them pulling out of the consumer finance market, ‘hire purchase’ sales have come down next to nil. Usually, ‘financed’ sales account for 30-35 per cent of the overall durables sales.

With the absence of ‘interest-free’ instalment schemes, usually offered by the manufacturers, sales are mostly through cash or credit card.

According to the ‘cashiers’ in some of the stores, this year around 45 per cent of the sales is through credit card, 50 per cent through cash and only 5 per cent through ‘finance’.

Even for durables manufacturers, the New Year sales in the South used to contribute 10–15 per cent of the annual sales from this region. According to experts, this year, it cannot be more than 5 per cent.

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