As the country gears up for the festive season, consumer goods makers are pulling out all the stops to try and recoup some of the profits forsaken till now because of a sluggish market. Although sales during Onam, which marks the beginning of the festive season, hasn’t boosted consumption yet due to incessant rains, retailers are banking heavily on pre-Diwali purchases to revive their fortunes.
“The overall consumer durable industry saw strong growth from the appliances category in the first quarter, particularly from the AC segment. While TVs saw a slump, we expect that with the upcoming festive season coupled with positive consumer sentiments, will bring in revival,” said Manish Sharma, President and CEO, Panasonic India and South Asia.
Typically, the top-selling categories during the festive season include apparel and accessories, furniture and home décor. However, white goods are also big sellers in this season and manage to rake in almost 40 percent of annual sales during these few weeks. Brands such as Samsung, Panasonic and LG have launched products across categories leading up to the festive season. “This along with consumer-centric offers and exciting schemes will lead to positive growth,” believes Sharma. Industry observers envisage festive advertising to grow at 10-12 percent over 2018 to touch as much as Rs 20,000 crore this year.
Companies are also actively looking to re-invent the way they enter into the market and are tying-up with new-age digital go-to-market channels to reach retailers and consumers faster to get quick feedback on products, schemes, and promotions, said Sumit Ghorawat, co-founder of distribution tech firm, ShopKirana.
“We have not seen any slowdown at a category level but definitely, people want to try out new products. Millennial want more varieties, they are switching to cookies to traditional glucose biscuits,” he added.
FMCG majors have indicated that the impact of the market slump is more evident in rural India and that in geographical terms, the north is the worst hit. Analysts say lower liquidity in the market and slower wage growth, has hit not only big ticket consumer durable purchases but also small-ticket items such as soaps, biscuits and other daily essentials suggesting a steady slide in consumer sentiment. The third quarter ergo will be critical for a turnaround in the consumption trajectory.
“The government has taken initiatives around easing FDI in various sectors, and the increased FDI inflows to boost consumption. These, along with a tranche of initiatives to improve liquidity in the banking sector could see rural consumption, which accounts for nearly 40 percent of the FMCG market, come back strongly this quarter and next,” said Deloitte consulting partner Rajat Wahi.
Kamal Nandi, business head & executive vice-president, Godrej Appliances, and president of Consumer Electronics and Appliances Manufacturers Association further pointed out that this year, the festivities are slated to last for only about 45 days due to an earlier Diwali as compared to over 60 days in 2018. This reduces the sales window for the industry impacted by pronounced economic slowdown.
Companies such as Hindustan Unilever, ITC and Dabur, however, expect the second half of the fiscal to be better than the first. “The upcoming festive season indeed provides opportunities for consumption growth to expand. We are confident that the recent measures taken by the government will progressively accelerate a virtuous cycle of investment growth and employment,” opined an ITC spokesperson. The company has launched 25 products in the last quarter and will continue to launch innovative offerings that could drive category penetration, the spokesperson added.
Dabur is also stepping up product launches to sell only on e-commerce platforms, as it looks the leverage increasing sales from the channel. Market research firm Nielsen estimates e-commerce contributes about two percent to the country’s Rs 3 lakh crore FMCG business, up from 0.4 percent in 2016, and its share is expected to increase to 11 percent by 2030. New Indian Express