Festive sizzle in slowdown season
Consumer durable makers are betting on the likes of Misra to pep up sales this festive season in which desires are clashing with the hard realities of an industrial slowdown, high interest rates and eroded purchasing power after about two years of high inflation. Vivek Sinha reports.Rosy optimism, juicy offersbusiness Updated: Oct 01, 2011 14:27 IST
Shivanki Misra, 28, has been planning to upgrade her plain-old colour TV with a high-end flat panel LED set. For the past several months, the software engineer has been saving up for her TV that would cost her around Rs 150,000.
“It was during January this year when I first thought of it. I am yet to decide on the brand but I would like to buy one before Deepawali this year,” says Misra, who is trying to raise her living standards while coping with inflation that is eating up a big chunk of her salary.
Consumer durable makers are betting on the likes of Misra to pep up sales this festive season in which desires are clashing with the hard realities of an industrial slowdown, high interest rates and eroded purchasing power after about two years of high inflation.
As competition for the consumer wallet hots up, makers of TVs, refrigerators and other consumer durables are stepping up efforts and this is only making the shopping season hotter with discounts, special offers and advertisements.
Benchmark inflation was 8.93% during September last year and rose to 9.78% by the end of August this year. The Reserve Bank has raised interest rates that make personal, home and consumer loans costlier 12 times in 18 months.
Household budgets are now being carefully planned and impulse purchases has given rise to meticulous planning.
The Navratri -Dussehra-Diwali festive season is when the purses turn loose and no company is willing to let go this growth opportunity. Navratri is particularly considered auspicious for purchases, while Diwali brings in bonuses for corporate workers.
On offer to lure the customer this season are freebies, deep discounts, innovative products, aggressive marketing and interest free finance schemes.
South Korean electronics giant LG feels interest rate hikes would not have much effect, as consumer finance constitutes a small proportion of durable sales.
“We expect unprecedented sales growth this festive season and anticipate substantially higher sales as both Deepawali and Durga Puja fall in the month of October,” said YV Verma, chief operating officer, LG India.
Compatriot Samsung is looking at doling out incentives for consumers to lure them into purchasing Samsung’s products. “Under our Samsung Smart Utsav we will give gifts worth Rs 150 crore to consumers during the 45-day period,” said a spokeswoman for Samsung India. The freebies include DVD players to 3D glasses.
Japan’s Panasonic and Sony have doled out similar incentives to lure consumers. Panasonic is offering international holidays, gold coins, cars, travel bags and wireless keyboards among gifts offered with bigger purchases. Sony is offering digital photo frames, discounts, memory cards, and easy financing schemes.
Dutch major Philips is betting on interest-free finance options.
Companies admit, in hushed tones though, that rate hikes do affect sales but feel that they have to live with it and bear it.
“There is a definite brunt of rate hike which is likely to affect the profitability and sales in festive season but the brands and dealers will have to bear it,” said Manish Sharma, director at Panasonic India.
Firms know that inflation or no-inflation, consumers like Ms. Misra are always keen to synchronise their purchases with the auspicious season at this time of the year and hence go all over to lure them into buying their products. It is all about keeping the mills buzzing and keeping rivals at bay. With India the second-fastest growing major economy in the world still, oppurtunities clearly overshadow threats.