Consumer durable firms bet on discounts, easy loans to drive Diwali sales

Nandana James Mumbai | Updated on October 15, 2018 Published on October 15, 2018

A file photo of a consumer durables showroom

Say depreciating rupee, interest rate hikes, higher fuel prices could play spoilsport

Shops and web portals emblazoned with offers herald the onset of the festive season like nothing else. But, with a plummeting rupee, repo-rate hikes by the RBI, import duty hikes and other tumultuous forces taking the market by storm, it remains to be seen whether the festive season sales of consumer durable companies will face a blow.

BusinessLine spoke to a few companies and an analyst to discover what is happening with the festive season sales of consumer durable companies this year and the factors underpinning it.

With the GST implementation and demonetisation behind them, consumer durable companies are looking to the pent-up demand from last year’s to drive the growth. According to Rahul Prithiani, Director at CRISIL Research, while demonetisation impacted sales in November and December of 2016, in 2017, festive season sales “did not witness a significant jump on a lower base of previous year” due to pre-GST buying by customers, as well as a hike in GST rates which increased product prices.

Kamal Nandi, Business Head and EVP at Godrej Appliances, says “the pre-GST sales had wiped off the Diwali sparkle” last year.

Improved customer sentiment due to better affordability and no major increase in most product prices will lead to healthy sales this year, says Prithiani. Reduction in GST rates in July signals a positive impact on the sales of washing machines, small TVs, and refrigerators, with easy availability of finance too a contributing factor, he pointed out.

However, this is likely to be partially offset by the depreciating rupee, Prithiani said. “Overall demand is likely to remain robust during the festive season as consumer sentiment continues to remain strong.” . He added that televisions and mobile phones are likely to be the fastest selling products this festive season.

Godrej Appliances is targeting a 30 per cent growth this season as compared to the same period last year.

B Thiagarajan, Joint Managing Director at Blue Star, said: ‘Counter sales’ continued to be healthy and the consumer spending story continues despite the Kerala floods. Hence, they are expecting to at least hold on to last year’s festive season growth of 20 per cent.

According to a spokesperson of Samsung India, the industry grew by 20 to 25 per cent during the festive season last year with “Samsung outperforming the market”. This year, they are expecting a higher growth and they plan to “outperform the industry once again”, she said. The company has pinned its hopes on a huge product portfolio, rising disposable incomes, increasing demand from tier-II, tier-III cities, a host of offers such as cashback, finance schemes and warranty offers to drive growth.

Thomson TV expects an increase of 30-40 per cent growth in the sales of TVs due to exchange offers and festival deals, according to Avneet Singh Marwah, CEO, SPPL, Exclusive Brand Licensee of THOMSON in India.

Ajay Seth, Head of Channel Operations at Panasonic India, said the company hopes to increase sales by 20 per cent this season with TV, refrigerators and washing machines expected to be the main growth drivers.

However, the strengthening of the US dollar is putting pressure on the overall inputs costs, said Seth.

Marwah of Thomson TV said being a completely ‘Make in India’ brand works in their favour.

However, Godrej Appliances’ Nandi says the consumer durable industry is one of the most vulnerable industries when it comes to an increase in repo rates as there is a possible impact on the entire supply chain. .

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Published on October 15, 2018
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