Reeling from the significant drop in spending amid the pandemic, consumer-focussed brands are betting on the festive season to help recover losses of the past few months. Seeing steady growth post the lockdown, the brands expect an uptick of up to 30% in business, led by home and kitchen appliances on the back of work-from-home trends and strong demand from semi-urban and rural markets.
“Driven by positive consumer sentiment and a gradual uptick in demand for value-based products, we are expecting steady growth in sales. We are hopeful the festive season will help recover losses incurred in the past few months,” Suguru Takamatsu, divisional head, CSD, CE, Panasonic India, said.
Festive sales, in general, account for 35-40% of annual business for most consumer durable firms.
Panasonic saw 10% growth in July, as opposed to a contraction in May, owing to pent-up demand, first-time buyers and rising rural contribution due to a favourable monsoon.
He added that growth in tier-2 markets was 13% in June and 19% in July, driven by accelerated demand for microwaves, semi-automatic washing machines, LED TVs and refrigerators.
Going forward as well, brands expect demand to be led by products such as dishwashers, washing machines, vacuum cleaners, food processors, OTGs, trimmers and TVs, with bigger capacities and screens. Usha International is also seeing a marked increase in sewing machine sales due to the surge in the hobby segment.
K.G. Singh, vice-president, Marketing, Whirlpool India, “Since the unlocking process started, we have seen strong demand return to the market. Initially, there was an unleashing of pent-up demand and later, with work-from-home becoming an established norm, consumers bought appliances that add to their comfort level and ease their pain from household chores.
Echoing similar views, Raju Pullan, senior vice president, Consumer Electronics Business, Samsung India, said consumers were looking to equip their homes with the latest technology while they stay and work from home. “Owing to this trend, we have seen strong, double-digit growth across cities... with many upgrading to larger screens (55 inch and above)... they are buying bigger 5-in-1 smart, convertible refrigerators above 300 litres to stock up more and venture out less, and fully-automatic washing machines…”
He added the trends are visible in smaller towns and cities as well and augur well for the upcoming festive season when he expects strong growth to continue, especially in the mid and premium segments of the market.
LG Electronics India is betting on health and hygiene being top priority for buyers. It is offering complimentary insurance benefits with home appliances for select diseases, such as COVID-19, malaria and dengue.
“Last year, we saw 30% growth in the festive season and hope to achieve the same this year,” Vijay Babu, VP, Home Appliances, LG Electronics India, said.
Acknowledging that customers are shying away from the stores, nearly all retailers have put together guidelines for their brand shops to help maintain hygiene standards, and are doubling down on digital efforts to reach consumers. For most brands, sales from digital medium have doubled.
However, Mr. Babu said in India, consumers still prefer to experience products before purchasing and hence the offline segment continued to be important. “Offline channel is our backbone and it will remain a key contributor.”
Stating that offline shopping cannot be discounted, Dinesh Chhabra, CEO, Usha International, said, “One of the big surprise trends is that businesses are going hyperlocal. Consumers are buying all kinds of products including appliances and gadgets – from stores closest to their homes. This shift has been most marked in the metros where the mall culture had become a part and parcel of life…”
He added that for Diwali sales, the company expects ‘gifting’ to give the appliance category a boost as well. “We are optimistic about our kitchen appliances like mixer grinders, blenders, OTGs, and even the heating segment as winter approaches,” he said.
But, local lockdowns, shorter store operating hours and smaller inventory cycles remain a challenge.
“Uncertainties exist regarding opening of stores due to ever-changing rules around closure of malls and market areas. For appliances, are a high-involvement purchase and there is a high touch requirement in the initial phase where the purchase is under consideration; hence, easy accessibility to stores is important,” Mr. Singh of Whirlpool said.
Mr. Chhabra said dealers were now cautious about building inventories given the uncertainty and preferred to look at a supplying daily/selling daily model. “However, we are optimistic that with the onset of the festive season, the durables industry will see an uptick in demand in the coming months. The forthcoming months up to December are a crucial period for the appliances industry,” he added.
Some customers have started to visit malls as they get more confident about venturing out, said Pushpa Bector, ED, DLF Retail, adding that, “Majority of our brands are doing well as the customers, who are visiting the shopping centres, have been very focused on what they want to buy and come with the intention of buying.”
The people have started coming out to dine as well and there is a “substantial rise in footfall over the last month...The quality of footfall in malls has improved across categories in Delhi NCR.”
She pointed out that footfalls have been encouraging during the festive weekends across properties. For instance, Footfalls at DLF Promenade went up to 18,000 during the Independence Day weekend. “We are hopeful demand will normalise by Diwali,” she said. The festive season from Dussehra to Diwali is expected to see a resumption in sales closer to the pre-Covid levels. Currently, people are focusing on their essential needs but the condition is improving by the day. We are positive that a recovery is possible. We are expecting tractions to go up for electronics, followed by fashion, beauty and homeware,” Ms. Bector said.