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Firms Crack The Diwali Code: Double-Digit Growth In Consumer Goods Sales

Diwali has brought much-needed sparkle to companies and retailers in an otherwise weak festival season. The crucial Dhanteras to Bhai Dooj period — stretching from Friday to Tuesday — saw automobile retail sales increase by high double digits, while consumer durable sales grew 6-8 percent over last year, led by metro markets and large-format stores.

Credit-driven sales were also high in consumer durables this Diwali, with around 70 percent of sales in urban areas coming from finance schemes and cashbacks from players such as HDFC Bank, ICICI Bank, and Kotak Mahindra Bank.

“Categories such as television sets, mobile phones and even appliances, both small and large, did well in the five days between Friday and Tuesday,” said Nilesh Gupta, managing partner, Vijay Sales. “HDFC Bank, in particular, was aggressive with cash backs on mobile phones and television sets. The offers were available on both credit and debit cards. This way more consumers could avail of credit,” he said.

While the window for durable sales was down to the Diwali weekend this year, car purchases had a longer lead time, said company executives.

Yet, in the auto market, the last leg, which started with Dhanteras, said Ashish Harsharaj Kale, president, Federation of Auto Dealers’ Association (FADA), saw the conversion rate for two-wheelers and passenger vehicles (PVs) improve substantially. According to FADA, the overall sales have advanced 15-30 percent for PVs and 10-15 percent for two-wheeler companies. While this will release some stress in the marketplace for durables and auto makers, the road to recovery, especially in the auto sector, remains long.

Shashank Shrivastava, executive director, sales and marketing at car market leader Maruti Suzuki India, said, “If one compares the festive period this year, which started with Navratra on 29 September and ended with Bhai Dooj on Tuesday, the trend is positive as compared to last year. The spike was even bigger from Dhanteras to Bhai Dooj and what aided growth was positive sentiment in addition to the effort put by all to lure consumers back into showrooms.”

Shrivastava also said Maruti’s retail sales advanced in single digits during this festive season over last year’s, while the Diwali and Dhanteras sales have grown in high double digits.

Vikas Jain, national sales head at Hyundai Motor India, said, “Our retail sales during the one-month period have seen an increase of 10 percent over the last year. Within that, the Diwali period (Dhanteras to Bhai Dooj) was better with an increase of up to 13 percent.”

Jain as well as auto experts attribute the sequential expansion in car sales to on-ground events by financiers such as loan melas, aggressive sales offers and discounts by manufacturers and dealers. “Moves like a lower interest rate (on car loans) and a waiver of processing fees brought the fence sitters back into the market,” he said.

Kamal Nandi, business head and executive vice-president, Godrej Appliances, is circumspect. “The sale window was down to the last weekend of the festive season and this does put pressure on the ecosystem. However, it is still good news that consumers did make their way back to the marketplace, even though this was mostly in larger cities and big stores.”

Avneet Singh Marwah, chief executive officer, Super Plastronics (brand licencee for Kodak and Thomson smart TVs), said, “The market began picking up with the mega online shopping festivals from early October. Later, just ahead of Diwali, offline players, especially the large-format retailers also picked up. Easy financing options have also increased the average screen sizes; now 40 and 43 inches are the most sold category as it has overtaken 32 inches by volume.” Business Standard

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