Companies gear up for brisk festive sales

Last Updated: Thu, Oct 25, 2012 05:00 hrs
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Going by the initial signs, companies across categories such as consumer goods, retail, automobiles and real estate could be in for happy times this festive season. Consumers have begun thronging stores in recent days as the decibel levels around offers and promotions grow.

Last weekend saw a flurry of advertisements by manufacturers and retailers in the run-up to Dussehra and Diwali. Unlike last year, when sentiment was low, the government's reform push this year is bringing consumers back to the shop floor.

Retailers and manufacturers who spoke to Business Standard indicate the year is likely to be better than the last in terms of sales. Yasho V Verma, director, home appliances, LG Electronics, says they've been seeing sales growth of about 30 per cent so far and expect to continue growing at this pace. Last year, sales growth was 20-25 per cent in the run to Diwali. It was a time of high inflation and interest rates, with a rupee depreciating against the dollar putting pressure on companies to take up prices every now and again.

  • Companies in consumer goods, retail, auto and real estate say that the festive season is likely to be better this year over last year
  • On an average sales growth for most companies expected to be in the region of 30 per cent this year. Last year it was lower

This year, with the rupee having risen against the dollar by six to 10 per cent in the past month, the cycle of price rises has stopped for now, says a Samsung Electronics spokesperson. Manufacturers say if the rupee had continued its downward slide, then price rises, especially in home appliances, could have been a lot more than the 10-15 per cent seen so far.

Says Rajan Malhotra, president, retail strategy, Future Group, and head of its Ezone electronics chain, "We are seeing good double digit growth at Ezone. While the technology segment, led by tablets and smartphones, has been doing well, home appliances was lagging. From last weekend, this segment has picked up, too. We are seeing good numbers in air conditioners, washing machines and other white goods."

General mood
Consumers across markets from Mumbai to Delhi, Kolkata to Bangalore, appear in a mood to celebrate. Sony India's senior general manager, sales, Sunil Nayyar, had this to say about the just-concluded Durja Puja sales in Kolkata: "We never expected the market to be so buoyant there. We saw a growth of 65 per cent in flat panel sales this Puja. We are hoping this momentum continues across the country as we get into Dussehra and Diwali."

Says J Suresh, president, Arvind Retail, part of textile major Arvind, "Things are looking up from last weekend. It is festive time and people are buying." Between September-end to mid-November, the company is opening 20-odd stores across its formats -Megamart, Arrow, US Polo and so on. Growth in sales so far has been 25-30 per cent; last year was lower, says Suresh.

For two-wheeler and four-wheeler manufacturers, creating excitement in the marketplace by timing new launches around the festive season is common. Yet, even they appear pleasantly surprised with the response to their new products. Says a Maruti Suzuki official about their new Alto 800: "Bookings have crossed 21,200. Fabulous, to say the least."

Pune-based Bajaj Auto, the third-largest two-wheeler maker, says it is confident of 30 per cent sales growth this festive. K Srinivas, president, motorcycle business, says, "Response for the Pulsar 200NS, a product launched this year, is amazing. The company is increasing its production to 10,000 a month from 8,000 a month presently. We are also increasing production of the Discover 125ST, also launched in the run up to the festive season."

Promos, financing up
Manufacturers and retailers say price discounting is down, with most counting on offers, promos, freebies and financing schemes to improve sales. The good news is that apart from non-banking financial companies (NBFCs), even regular banks have stepped in aggressively to lend to the retail consumer this season. So, consumers have more choice when seeking an auto or durables loan, apart from home loans.

Banking sources say the growth in home loans so far has been around 20 per cent. Automobile and consumer durables loans are up about 10 per cent each. As interest rates begin to come off their peaks, banks and NBFCs say the trend could improve. "Demand for housing loans continues to be robust, especially in tier-2 and tier-3 markets," says V K Sharma, chief executive, LIC Home Finance.

With the number of financing companies growing, manufacturers say they are actively pushing consumers to consider high-ticket items. "With more financing options available, consumers are in a position to uptrade," say the Samsung spokesperson. Malhotra of Future Group adds, "We know affordability is the key and prices of white goods in particular have gone up in the past six months. Hence, it is important to offer such schemes."

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