The slowdown in the last two months has been a damper despite good monsoon. Retailers, on the other hand, don’t think the slowdown has affected the industry and are optimistic about the festive season.
The consumer goods industry is pinning its hopes on recent government measures and attractive offers to push up sales in the festive season, which accounts for around 25% of the annual revenue.
An extended summer led to a windfall of double-digit growth in consumer goods this year, especially in the cooling category. However, a slowdown in the last two months has been a damper despite good monsoon. Retailers, on the other hand, don’t think the slowdown has affected the industry and are optimistic about the festive season.
Customers are expected to gain with lucrative pricing as brands and retailers aim for a larger share of the pie. This year, the festivities in the Indian calendar are slated to last for only about 45 days due to an earlier Diwali, compared to over 60 days in 2018. This further reduces the sales window for the industry.
“In the last two months, the sentiment of slowdown, which is impacting other industries, has also started affecting ours. We are not seeing growth,” said Kamal Nandi, business head & EVP, Godrej Appliances, and president of Consumer Electronics and Appliances Manufacturers Association (CEAMA). The industry body has made representations for boosting the sector. According to him, if government measures are not able to drive positive sentiment and spend, then it will be a subdued season and that would be a big challenge for the Rs 70,000-crore industry.
“We are hopeful that the liquidity crunch will get addressed because of the measures that have come in. We are also hopeful that the RBI transferring Rs 1.76 lakh crore will help. Additionally, interest rates may go down, as directed by the government. If that happens, then there will be some disposable income with the consumer,” said Nandi. He added that the share of annual sales in the festive period may drop to 21-22% from the usual 25-26%.
Onam, which marks the beginning of festivities, has also not shown signs of boosting consumption yet. “In the backdrop of last year’s Onam being a washout as there were floods in Kerala, we were expecting this year to be good. However, the initial response has not been favorable,” said Nandi.
Retailers, however, are optimistic about growth in sales in the festive season. “There is not much impact of the slowdown on this industry. We are seeing 5-7% growth currently, and expect it to rise to double-digits during the festivals. There is 4-5 weeks’ inventory, which is under control, and we will be taking more stock for the season,” said Vijay Sales managing partner Nilesh Gupta, adding that the television category is seeing a revival.
However, according to Nandi, it was only ACs that recorded growth in excess of 20%, along with refrigerators at over 12% this year, due to the scorching heat. He also noted that TVs had not done well in spite of the cricket world cup earlier this year.
But other retailers say certain sizes of TVs did well. “I don’t know about the rest of the industry, but we created great propositions for customers on regular basis and saw triple-digit growth in TVs in those months,” said Sandeep Sharma, head of eZone at Future Retail.
“We have not seen any degrowth in any segment in this fiscal on an overall basis, and don’t expect it in the coming months as well. The inventory flow also has been quite consistent,” added Sharma.