Consumer durables firms are pulling out all the stops to woo consumers this festival season.
The past few months have been tough for companies in this segment, with inflationary trends, macro-economic headwinds and the rupee’s depreciation playing spoilsport, forcing price hikes in the run-up to the festive season.
For now, white goods makers are taking their cue from the positive buying trends seen during Onam in Kerala and Ganesh Chaturthi in the Western region.
Onam Sales
“Contrary to fears that the slowdown may dampen sentiment, sales were strong during Onam. We saw a good jump in the sale of high-end LED TVs, front-loading washing machines and high-end refrigerators,” said Sanjeev Agarwal, Sales Head, LG India. The Korean major has set a 20 per cent sales-growth target this festival season.
Flat panel TVs did well during Onam, with Panasonic and Godrej saying they recorded good sales in this category.
“Panasonic India has already achieved the target that it earmarked for Kerala. Our Viera flat-panel displays saw 30 per cent growth in Kochi,” said Manish Sharma, Managing Director.
“Onam sales were good for panel manufacturers, as barriers were imposed on imports and better deals were offered. This shows that even during a slowdown certain categories work,” added George Menezes, COO, Godrej Appliances.
“It (sales growth during Onam and Ganesh Chaturthi) comes as a huge boost, as the market was stagnant for most of the year,” said Videocon Industries Director, Anirudh Dhoot.
Videocon expects to see double-digit growth. Other players, too, anticipate growth of about 20 per cent in revenues this season compared with last year.
Innovative products
It is these ‘encouraging’ signs that durables makers are banking on. Also, they believe this is the time to push forward with innovative products.
Panasonic’s Sharma said that despite poor consumer sentiment in the last month, no company wants to go slow on launches and promotions. “What matters in the business, especially when the markets go weak, is the perception and visibility of the brand,” he said.
Instead of offering discounts and freebies, commodity and other input-cost increases have forced these companies to focus on strategic value additions. Nilesh Gupta, Managing Partner, Vijay Sales, said: “This Diwali, durables companies have put some additional thought instead of mindlessly giving away freebies. It is about complementing the products consumers buy.”
For instance, LG India is offering value-added products, such as a 3D-Blu ray Home Theatre with a 3D TV and a magic motion remote with a smart TV.
Whirlpool India is also offering gifts on purchase of appliances and is banking on new products in the microwave, refrigerator, washing machine and air-conditioner categories.
“There are challenges, but the festive season cuts across all segments of people and we believe they will come out and shop. So, we are aiming for growth of about 15 per cent and sales turnover of Rs 850 crore during this period and are confident of getting there.”
EMI schemes
However, it is not yet clear whether the Reserve Bank’s diktat earlier this month banning zero EMI schemes by banks will impact the market. There is also no clarity on whether the ruling covers non-banking finance companies (NBFC).
Shanta Roy Sanjeev, Haier India's marketing head, said consumer durables were largely financed by NBFCs and the company had a tie-up in place to finance its schemes. Haier, which has also launched assured-gift schemes, expects to almost double its sales revenues.
Agarwal of LG adds: “We still need clarity on RBI guidelines. However, we do not foresee any slump in sales due to this.”
As far as ad spends are concerned, Panasonic, Whirlpool and Haier said they were expecting to spend more than last year. However last month, Group M, a leading media buying agency, had made a downward revision in its forecast for overall ad spends in the second half of the year.