Consumers should expect lower discounts on appliances and electronics at offline stores this festive season, as inventory constraints persist and cautious buyers shop online during the pandemic.
Components for consumer durables are imported and local lockdowns have created supply issues despite India allowing nearly all types of economic activities. According to Harshit Kapadia, research analyst at Elara Capital, dealers have reduced inventory from four weeks to two weeks.
“If the supply remains scarce, then brands may not go for deep discounts this festive season,” Rohit Ghosal, chief marketing officer at Croma, Tata Group-owned electronic goods retail chain, told BloombergQuint. There is shortage of inventory across all brands, especially laptops, tablets and televisions.
Companies are betting on the period considered auspicious for buying to recoup sales lost during the summer lockdown. But the supply chains haven’t fully recovered from the Covid-19 disruption after India imposed one of the harshest curbs in the world. The economy contracted nearly 24% in April-June, the most among large economies. Consumption tumbled as millions either lost jobs or saw deep salary cuts.
There will be need-based sales, and not so much on the festive side, this year, said Nilesh Gupta, managing director at Vijay Sales. Inventory levels were low particularly in televisions, one of the biggest selling items during the Diwali festival period, he said, citing restrictions on imports as nearly 70% of the TV components are shipped into India.
Companies don’t expect to offer any deep discounts as the operating leverages won’t kick in, Anuj Sethi, senior director-ratings at Crisil Ratings, told BloombergQuint over the phone. Average capacity of the consumer durables makers is around 70-75%, he said.
Here’s what some of the companies plan to launch and discounts they will offer during the upcoming festive season:
Banks, too, are offering finance schemes in partnership with merchants and companies, both offline and online. While waivers of processing charges during this period is commonplace, this year, lenders are going the extra mile to tie up with merchants and offer cashbacks and discounts to lure consumers into purchases.
Online Sales To Drive Demand
A chunk of the demand is expected to shift online as people avoid crowded places due to the pandemic. Discounts of 5% to 45% are already available on online marketplaces of mobiles phones to air conditioners.
Most electronics and appliance makers are pushing online sales from their own websites, while distributors and small retailers have tied up with e-commerce platforms.
E-commerce biggies are expected to mount the biggest festive season fight with Redseer Consulting forecasting up to$7 billion in gross sales. Amazon and Flipkart have already teased their upcoming ‘Great Indian Festival’ and ‘Big Billion Days’, respectively. Mukesh Ambani’s JioMart, too, will join the fray this time.
Online share in consumer durables is around 11%, according to a report by market researcher GfK India. For consumer electronics and small home appliances, it rises to 30-34%. This is expected to rise this festival season.
Courier service providers are preparing for this online demand.
“We are augmenting our express logistics capacity by twofold for the upcoming festive season,” Bala Aghoramurthy, deputy managing director at Gati-KWE, said in a statement. This expansion will drive the company’s volume by 50% despite the pandemic, he said.
What Appliance Makers Expect
Makers of televisions to refrigerators expected the sales to jump, according to Kamal Nandi, president of Consumer Electronics and Appliances Manufacturers Association. Rural sales and pent-up demand have aided sales July onwards, he said.
Crisil estimates 8-10% growth for consumer electricals (ex-mobile phones) in October-December, the quarter that coincides with the Diwali festival season. Industry is hoping for recovery as sales tumbled during the lockdown which impacted the first half, Sethi said.
Salil Kappoor, business head-home appliances at Orient Electric Ltd., cited a good monsoon and the pace of recovery seen across sectors in the last couple of months as the reason for optimism. Even as the future remains uncertain because of rising Covid-19 cases in India, he said demand for fast-moving electrical goods will remain steady.
Also Read: Banks, Merchants Come Together To Push Festive Demand
Work from home will aid demand, Shashi Arora, president and chief executive officer for Lloyd (consumer durables) at Havells India Ltd., said over the phone. People need a second television or air conditioner in their homes, he said, and replacement of domestic helps has triggered a demand for cleaning and kitchen appliances.
As a Subscriber you get
Stories
RECOMMENDED FOR YOU
POPULAR