Consumer Durable sector bets on festive season to make up for lost sales
After a difficult year dealing with the pandemic, consumers in India are gearing up to celebrate the festival season, encouraged by the increase in the pace of vaccination.
With markets now fully open and consumer sentiment looking positive, consumer durable firms are betting on the festive season to recover sales lost on account of the pandemic. While the industry is looking at 20% growth, hurdles such as potential third wave of the pandemic, shortage in supply as well as the possibility of another price hike may play spoilsport.
“Consumer sentiment seems positive, post the second wave,” Kamal Nandi, president, Consumer Electronics and Appliances Manufacturers Association (CEAMA) told The Hindu.
“There is pent-up demand as a result of the restrictions in the first quarter, which will boost sales during the season. Consumers are also focusing on upgrades,” he added.
He added that after a difficult year dealing with the pandemic, consumers in India are gearing up to celebrate the festival season, encouraged by the increase in the pace of vaccination.
Mr Nandi, who is also the business head and executive VP, Godrej Appliances, added that the festive season usually contributed 30% of annual sales for the sector. “We are seeing encouraging signs of demand revival and are targeting a double-digit growth rate of 20% plus during the festive season,” he said.
Rohit Mathur, president, electric fans, water heaters and pumps, Usha International, said that the increasing raw material costs coupled with a shortage of crucial components had been a constant challenge for about a year now. However, the company was better prepared now and had planned operations accordingly.
“We are optimistic about being able to cater to the demands of our consumers and deliver a good buying experience to each one of them. This festive season, we expect a revival of consumer sentiment to pre-COVID levels and are optimistic there will be the typical festive upsurge in demand across categories,” Mr. Mathur added. The onset of wedding season will also help sales, he added.
LG Electronics India, which saw good double-digit growth during Onam and Ganesh Chaturthi, expected the trend to continue till the year end. Deepak Bansal, VP, corporate planning, LG Electronics India said, “As far as the demand is concerned, we are optimistic. [The] reason is the shift in consumer trends. Consumers are liking premium products with leading technology and big capacity appliances and bigger size TVs. This will generate enhanced business value.”
Mr. Bansal, however, added that as raw material cost continued to increase, there is a possibility of further price increase.
Due to the continuous upward trend in the raw material prices, players across the industry had taken multiple price hikes, leading to an increase of around 15% in products across categories.
“The total price hike is about 15% against a 22% cost increase and has impacted overall demand. Appliances in general are competitively priced, and that leaves the industry with no choice but to pass on this cost escalation to consumers,” Mr. Nandi said.
Manish Sharma, President & CEO, Panasonic India and South Asia, said that there is a gradual improvement in consumer sentiments and if the sales continue as per current trend, Panasonic hopes to cross 2019 festive sales figures. “The only potential risk is the possibility of a third wave, which can derail the performance. With the vaccination drives and increased awareness, we are hoping that the pandemic impact on sales will reduce in coming months,”he said.
Mr. Mathur added that the company is seeing demand from all regions — urban, rural, and metropolitan — and markets in the South had done particularly well, especially the States of Tamil Nadu and Andhra Pradesh.
“This can be attributed to the overall recovery in consumer sentiment. Additionally, the rural economy is doing really well in these last few months and this has made the demand and therefore spends more evenly distributed,” he said. Other factors helping rural demand, he added were adoption of digital by rural India, better distribution network, easy accessibility/availability, and easy finance scheme coupled with the money circulating in the rural economy due to a good monsoon and some great government initiatives have given a huge fillip to rural spends.
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