Sales of consumer electronics and white goods have rebounded this Diwali season, growing 12-15 percent over last year, signaling the return of discretionary spending after 2 years.
Top manufacturers and retailers attributed the sales spike to factors including 10 percent cut in goods and services tax (GST) on appliances in July, e-commerce discounting, deeper penetration of consumer finance, and higher sales of premium products. Manufacturers like LG and Sony even said some of their super premium models have been stocked out.
“Premiumization drove sales, even for entry-level products and up-country markets, with prices lower by 4 percent as compared to summer,” said Godrej Appliances business head Kamal Nandi. He said there has been 10-15 percent growth in appliance sales this Diwali.
Marketers said the return of consumer discretionary spending was aided by easy availability of no-cost EMI, allowing consumers to upgrade their purchase. Financing contributed over 80 percent of purchases this festive season versus 60 percent last year.
ICICI Bank, HDFC Bank and Kotak Mahindra Bank focused on consumer durable financing this year, filling the gap of smaller non-banking finance companies shying away due to liquidity crunch, bankers said. Deepak Sharma, chief digital officer at Kotak Mahindra Bank, said card transactions have grown over 30 percent compared with last year, with higher growth from tier 2 and 3 towns, and UPI transactions have grown over 300 percent.
An ICICI Bank spokesperson said every four out of five of the bank’s (retail) transactions were non-cash. White goods sales — one of the last purchase decisions of consumers, driven entirely by surplus cash and consumer sentiments were impacted since demonetization in 2016, and last year Diwali, too, had reported flat sales due to prices going up after GST implementation.
Sony India MD Sunil Nayyar said the company had run out of the 55-inch TV stock even before Dhanteras. He said sales of large screen models, priced in lakhs, grew between three to 20 times as compared to last Diwali with Sony meeting its festive sales target of 20 percent growth in revenue.
LG India said it completely sold out side-by-side refrigerators priced between Rs 80,000 to Rs 5 lakh with sales doubling, while there was 50 percent growth in 300-litres plus refrigerators. LG’s sales of 4K and OLED TV — selling from Rs 58,990 to Rs 30 lakh — were up by three times. Overall television sales went up by 12-15 percent this Diwali with online-focused players such as Xiaomi, TCL, Vu, Thomson, BPL and Sanyo driving sales in 32-43 inch TV models, and Samsung, Sony and LG driving demand for larger screen TV.
Godrej’s Nandi said for the overall festive period — covering Onam, Durga Puja, Dussehra and Diwali — appliance sales have raised by around 7 percent even after the Kerala floods, increased fuel prices and negative sentiments around rupee-dollar rates. At Tata-owned retail chain Croma, average ticket size was up by 29 percent with overall festive sales up by 61 percent. “TV with 55 inches and above, side-by-side refrigerator and inverter AC, and premium laptops priced above Rs 75,000 boosted sales,” said Ritesh Ghosal, the firm’s chief of marketing.
Nilesh Gupta, director at Vijay Sales, said consumers purchased more by value this year with average billing value up by Rs 2000 despite price drops. “Samestore sales is up by 5 percent in spite of the impact of online discounting eating away sales in entry-level TV and smartphones,” he said. Flipkart and Amazon said they sold record number of televisions this festive season.
An Amazon India spokesperson said customers purchased more premium products this year such as OLED and QLED TVs of Sony, LG and Samsung. Bose headphones, DSLR cameras, gaming laptops, OnePlus 6T and Apple iPhone X, and Dyson home appliances.
The person said EMI transactions grew two times over last year with 70 percent customers who used EMI coming from tier 2 cities and beyond. Credit customer adoption grew 19 times. Axis Bank head (cards and payments) Sanjeev Moghe said the fear of insecurity over digital payments has gone away, which is driving higher volumes. “Moreover, the offers attached to every online purchase have made this space lucrative,” he said.—Gadgets Now