Firms eye 20% sales boost this festival season
A combination of factors including improved sentiment from the ongoing monsoon, stable economic growth and increased income among government employees stemming from the Seventh Pay Commission will boost demand, companies feel.Updated: Sep 26, 2016 12:02 IST
Consumer goods companies are optimistic ahead of the shopping season: Early trends from the August 15 Independence Day sales, and from Ganesh Chaturthi in Maharashtra and Onam in Kerala earlier this month, indicate a 15-20% sales growth year-on-year in this year’s festival season, compared to the 7-10% growth seen last year.
A combination of factors including improved sentiment from the ongoing monsoon, stable economic growth and increased income among government employees stemming from the Seventh Pay Commission will boost demand, companies feel.
“Sales of our air conditioners are at a three-year high. We do see sales uptick in rural markets too this festive season with improved sentiments and expect people to upgrade existing appliances,” said Anirudh Dhoot, director at Videocon Group, one of India’s largest consumer goods companies. The company is targeting sales of over ₹1,200 crore, up at least 30% from last year.
Videocon’s rival Goderj has similar expectations. “Onam sales this year were much better than last year. Overall, we expect growth to double to 15%. At Godrej, our sales should grow at least 25%,” said Kamal Nandi, business head, Godrej Appliances.
Japanese electronics major Panasonic is looking at an even more ambitious sales growth of around 35% to ₹1,200 crore, and has hopes from new markets in rural areas. “The rural market would be a key sector to watch out as we expect an encouraging response. Necessities in the form of durables, smartphones, beauty products and consumer electronics goods will be in high demand. Urban buyers would look at upgrading,” said Ajay Seth, head of sales at Panasonic India.
E-commerce companies such as Flipkart and Amazon have intensified hard-selling Diwali sales, and brick-and-mortar retailers and durables makers are following suit with free gifts, complimentary jewellery and extended warranties. Companies such as Panasonic are offering two assured free gifts, including a three-day holiday package. Retailers too are offering higher prices for old products with zero interest finance schemes and cash-backs on purchases using select credit cards.
Panasonic and Videocon are slated to spend ₹85-100 crore on festival season marketing and promotions.
“Most companies are also building inventories higher than last few years, in anticipation of strong sales this year. We are expecting the best Diwali in the last 4-5 years,” said Nilesh Gupta, managing director of Vijay Sales, which offers online discounts on electronics goods.
The trends are clear: 40-inch LED TVs, usually bought by the upper middle class, now account for a fifth of the 12-million-unit plus TV market, indicating its spread to lower segments.
“Be it large-screen TVs, refrigerators or washing machines, “premiumisation” is a clear trend we are seeing in our stores,” Gupta said.