Consumer durable firms pin hopes on festival discounts

MEENAKSHI VERMA AMBWANI PURVITA CHATTERJEE New Delhi/Mumbai | Updated on March 12, 2018

Challenging times Companies are going to take the shopping season head-on with giant discounts. .

Brands will turn to gifts, finance schemes to prop up sales

This festive season you could get bigger discounts and more interesting offers on consumer durable goods. In a bid to tide over any possible impact of delayed and deficient monsoon on consumer buying sentiments, consumer durable companies are firming up plans to counter this with offers in the upcoming festive season, which starts with Onam in Kerala in September.

Kamal Nandi, Business Head and Executive Vice-President, Godrej & Boyce, Appliance Division, says, “We are preparing ourselves for a rain-deficit year and fear that there will be a drop in demand. Sales in third and fourth quarter will not be as robust as they were last year. We fear that consumers may defer their purchases during the festive season due to which we are getting aggressive with our gifts and finance schemes.”

Aggressive selling

“We have decided to become more aggressive with our value offers during the festival season compared to the previous year and there will be even more attractive replacement offers to help consumers upgrade their appliances,” he said.

Analysts say white good makers have been trying to break into rural and semi-urban regions to boost growth, in a country which has low penetration levels in most consumer good categories.

Gaurav Gupta, Senior Director, Deloitte India, said that the deficient monsoon impacts rural income and also leads to increase in commodity prices, which in turn impacts production costs of companies. In addition, analysts believe that high food inflation could leave consumers with much less disposable income to spend on categories like white goods.

Bolstering sentiment

With the monsoon season being a lean period for most consumer durable categories, for now companies are focusing on finalising their festival season strategies. New launches, aggressive value-for-money offers besides financing schemes are on the cards.

Gulu Mirchandani, Chairman and Managing Director, Mirc Electronics (the makers of the Onida brand), added, “The dams are full right now but July has always been a weak month for durable sales.

The sale season for durables begins with Onam, followed by Diwali and Dussehra. We have to be ready with incentives, as that is the only way big durable brands sell during the festive season. There may be some impact because of the less rainfall this year but we have yet to figure out how much it would impact our sales.”

Mirc Electronics has a separate brand – Igo – targeting the smaller and rural markets, apart from Onida Meanwhile, Shantanu Dasgupta Vice-President, Corporate Affairs and Strategy, Whirlpool India, points out that nearly two-thirds of the total sales of the durable industry still comes from the top 40-50 cities in the country, which are not expected to see a direct impact of lower rain levels. However, the indirect impact of high food inflation and weak consumer sentiment among others issues still remain a challenge.

Not all bad news

“The past 36 months have been tough for the consumer durables industry due to macro headwinds. All companies are now focusing on strategies for the festival season, which will be critical for sales in the industry,” Dasgupta added. Though a weak monsoon can play spoilsport in the coming months, there could be an upside too for some players. Sunil Tandon, Group CMO, Videocon, said that prolonged summer is a blessing for the sales of air-conditioners and refrigerators and July has shown signs of revival for the white goods industry. With the delay in monsoon, AC and refrigerator sales have picked up and brought cheer to the consumer durable sector. “Though erratic rainfall had shown potential to dampen consumer sentiment and has hurt sales, especially in the rural market, we have been fortunate not to experience it,” he said.

This is part of a series on how India Inc is responding to the monsoon situation.

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Published on July 29, 2014
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