Writankar Mukherjee, The Economic Times
Kolkata, September 25, 2012
Consumers can look forward to some mouth-watering bargains this festive season as white goods makers and lifestyle retailers ready to dole out freebies and special discounts to prop up demand at a time when sales have slowed down.
Durable makers like Panasonic, Samsung, Whirlpool, Godrej and Videocon are bringing back sales promotion schemes after almost four years as a last-ditch effort to boost sales in a period that typically accounts for up to 40% of annual sales.
manufacturers have decided to hold onto prices despite a recent
appreciation in the price of raw materials.
"Promotional offers are expected to boost consumer sentiment, which has been down so far this year," says Manish Sharma, Panasonic India’s managing director for consumer products. "There was a brief period of jump in sales during May-June when air-conditioner sales spiked due to extended summer, but the market after that has become worse," he adds.
Panasonic plans to invest 70 crore on promotional offers and marketing during the festive period.
As per industry estimates, sales of refrigerator and washing machines have remained flat throughout the year, while growth in air-conditioner sales fell by more than 10%. Sales of flat panel televisions including LCD, LED and plasma televisions grew marginally by 10% as compared to 80-90% growth during the pre-slowdown days, albeit on a lower base.
Arvind Uppal, managing director, Whirlpool India, reckons the weak consumer sentiment is more exaggerated than the ground reality. "We expect demand will pick up during festive season, but we have learnt not to live in hope. We are drawing strategies to outperform the market to grow by 15-20% during this period," he said.
Both Whirlpool and Panasonic have lined up gifts with every purchase, while Korean major Samsung is offering bundled offers with its premium product range such as flat panel televisions and side-by-side refrigerators.
These marketers are also going easy on passing increased costs in raw materials to the consumer. "We are holding onto prices despite input cost pressure," says Mahesh Krishnan, vice president, Samsung India; he expects consumer sentiment to improve and his sales to grow by 25-30% during the festive period.
While the rupee has stabilized against the dollar, durable makers say the pricing pressure on input materials is rising once again. Godrej Appliances COO George Menezes says copper prices have firmed up by 5% in the past one week. However, he adds, the industry has no option but to keep price hikes on hold during the festive season.
"Prices have increased three times this year, making refrigerators dearer by 7-10%, washing machine by 15-18% and air-conditioners by 18-20%; this has played a big role in dampening sentiments," says Menezes.
Godrej Appliances is launching a new range of refrigerators and washing machines during the festive season. It has lined up gifts with every purchase and even a trade promotion whereby dealers can get up to one kg of gold based on their sales realization. "It has to be a three-pronged growth strategy: product, trade and consumers to win in this tough market," says Menezes, who is a eyeing 25-30% growth in sales during festive season.
Analysts say the recent policy initiatives and reform on the policy front are unlikely to work as immediate triggers to boost consumer demand. "Hence companies have to create motivators to move products off the shelves since consumers are resisting any price hike," says Devangshu Dutta, CEO, Third Eyesight, a consulting firm.
Meantime, retailers too have lined up special deals around the festive season. Atul Chand, chief executive of ITC’s premium lifestyle retail format Wills Lifestyle, says it is currently working on a consumer promotion scheme.
Shoppers Stop too plans to offer special discounts or gifts to its loyalty card members, while India’s largest jewellery retailer Gitanjali is offering discounts on certain brands during the Durga Puja festival in the east. Gitanjali has also made few design changes to make the products more affordable.
"For instance, last year if a specific product had 4-5 grams of gold, we have reduced it to 3-4 grams this year to make it more affordable," Gitanjali Gems president Abhishek Gupta said.
(Additional reporting by Sagar Malviya from Mumbai.)