Still Recovering From The Tremors Of Demonetization

The consumer electronics and home appliances industry is yet to come out of the shock it received from the announcement made by the government on Nov 8, 2016 to withdraw the old Rs.500 and Rs.1000 currency notes from the economy. Air conditioners  escaped as they see low sales in the winter months.

Considering that pre-demonetization, 86 percent spending was in cash, the short-term impact was disastrous. A dip-stick survey reveals a 35–50 percent drop in sales for various brands in November 2016. While sales recovered marginally in December, primarily in the modern retail, large family chains, and brand stores, they remained down by 25–30 percent on a pan-India level. The retail counters in Tier-2 and 3 cities and rural areas continued to reel from the contraction in demand. Also, the consumer largely continued to hold on to the funds released by the Pay Commission.

While the retailers stressed over not being able to regain the business opportunity lost, the makers became cautious with their sales forecasts and toned down their growth plans.

January 2017 saw selective brands increase prices by 2–3 percent. With increase in component prices including LED panels, copper, and plastics, and stringent changes in BEE star rating and weakening rupee, some brands held back while others decided to bite the bullet.

Digital commerce is continuing its aggressive march across the retail landscape, disrupting traditional models in its path. It is now only going to get bigger, and the retailer will have to adjust accordingly. The need for retailers with brick-and-mortar locations to reinvent the in-store customer experience has never been more critical than now.

There seems to be uncertainty at the GST front. The rollout of the crucial tax reform, earlier expected to be delayed by more than 3 months from the April 1 timeline, now looks unlikely by July 2017. The industry anxiously awaits the Union Budget, rescheduled for February 1, 2017.

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