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This season, consumer durables look to festive fizz

Source : BUSINESS_STANDARD
Last Updated: Wed, Dec 05, 2012 03:52 hrs
10 Smart Digital Appliances

Makers of products such as refrigerators, washing machines and television sets are turning to the Christmas and New Year to drive sales, as a weak Diwali left many scrambling to achieve their targets.

On an average, Christmas and New Year give companies 10 to 12 per cent of their full-year sales. Diwali's is bigger, contributing 30 to 35 per cent to a company's top line. While LG and Samsung say they had good sales during the Diwali season this year, seeing growth in excess of 20 to 25 per cent, retailers say the uptick was largely seen in technology-led categories such as smart phones, tablets and flat-panel TVs, especially light-emitting diode or LED TVs. Home appliances suffered because of a combination of factors, explains George Menezes, chief operating officer, Godrej Appliances. He says, "A major deterrent was the steep increase in price of home appliance products thanks to the fluctuation in the rupee-dollar exchange rate. Second, the replacement cycle for home appliances is getting extended, which means consumers are opting not to change their products too soon."

If the replacement cycle earlier was around two to three years, depending on the product they brought, now consumers are opting not to go for a change even four years after purchase, Menezes explains. For white goods, the problem is even more acute because prices shoot up year-on-year, unlike flat panel TVs which see an erosion in price because of technology advancement.

A RETAIL CAROL
  • Companies are hoping, with Diwali turning out a damp squib, for a good sales season ahead
  • Technology-led categories, such as smart phones, tablets and flat-panel TVs, saw good sales uptick
  • Home appliances, such as refrigerators, washing machines, air conditioners and microwave ovens, on the other hand, saw no growth at all
  • Most companies are likely to push home appliance products using discounts and offers as baits during Christmas and New Year
  • Smart phones, tablets and flat-panel TVs will continue seeing growth momentum at year-end

This year, refrigerator prices were up 10 per cent, while air conditioners, micro-wave ovens and washing machines were up 15 per cent, say retailers. In comparison, the price differential between LCD and LED TVs is rapidly diminishing, making it attractive for consumers to go for the latter, Nilesh Gupta, managing partner of Mumbai-based consumer durable chain Vijay Sales says.

For instance, a 32-inch entry-level LCD from Samsung costs Rs 28,000 to Rs 29,000, while an LED of the same screen-size from the company costs about Rs 3,000 more, at Rs 31,000 to Rs 32,000. The scenario is no different with other key manufacturers such as LG whose price differential between LCD and LED TVs has come down dramatically in the last one year. Sony is the only key player, whose price differential between LCD and LEDs is 25-30 per cent. But technology advancements, say company executives, make LED TVs affordable, turning it into an attractive draw in the process.

Manufacturers admit the demand for mobile phones, tablets and flat-panel TVs, especially LEDs, is not likely to recede during Christmas and Diwali, too, since they are attractive gifting options. Home appliances, on the other hand, are likely to be pushed with the help of discounts and offers. "Christmas and New Year is particularly strong in the south and west. So yes, there will be offers to drive sales during that period," a Samsung spokesperson said.

Godrej and Videocon executives said they were putting final touches to what they proposed to offer, while LG executives said they had not lined-up anything for the moment.

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