Consumer durable firms hit by inventory pile-up

Unsold inventory during the festival season and a pushed-back marriage season have resulted in a steep 35 per cent decline in the IIP (Index of Industrial Production) numbers for the consumer durable category during the festival month of October.

Companies such as Videocon, Haier and Godrej Appliances have been feeling the pinch but are hoping there will be better times ahead for this category.

“Unlike last year when Diwali extended into the marriage season, this year the marriage season was much shorter leading to pile-up of inventory at the distributor’s end,’’ said CM Singh, COO, Videocon Industries.

In fact, most city-based big retailers also felt the impact of low sales as they were saddled with unsold inventories more than their counterparts in smaller towns.

“Sales were not good during Diwali for most of the retailers in the big cities. Most of them witnessed a sales drop of 15-20 per cent,” added Singh.

But since Videocon had been seeding its distribution in the smaller towns, it believes it has remained relatively unscathed compared to its peers.

“Traditionally we have been present more in the tier II and III cities and so did not suffer as much,” said Singh.

In fact, sales for the MNC brands were affected in the metro markets during the festival months.

Chinese company Haier felt the brunt of drop in sales especially after Diwali.

“The market slumped after Diwali. Unlike last year, the marriage season was cut short this year. But December is looking like a better month as we are expecting things to improve with the economy picking up and the consumer sentiment getting better,” said Eric Braganza, President, Haier India.

Focusing on better innovation and product development is the job at hand for most of the durable players to generate demand.

“The IIP numbers reflect drop in sales of small appliances. We are now modifying our development of the ‘Chotukool’ line of refrigerators to make it more suitable for Indian temperatures,” said Kamal Nandi, Executive Vice-President, Sales & Marketing, Godrej Appliances.

“Seasonal products such as water heaters are also expected to get a boost.

“The overall durables market has been declining and construction activity has also slowed down. We are expecting a growth of 10 to 15 per cent over last year this winter,” says Mathew Jacob, Managing Director, Racold Thermo.

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