Getting into festive act: Consumer durables eyeing 20% sales growth on new product launches

Kolkata: Expecting to garner over 20 percent growth in sales during the festival season, consumer durables manufacturers are focusing on new launches, higher spending on marketing and innovative offers.

"The industry is optimistic as companies on average have increased their marketing budgets by as much as 10 percent this year. Consumer durable companies hope to increase their sales by almost 15-20 percent," said Consumer Electronics and Appliances Manufacturers Association (CEAMA) President Manish Sharma.

A journalists walks at the Samsung booth during a media preview day at the IFA consumer electronics fair in Berlin

Festive sales usually comprise around one-third of the annual turnover and none of the companies can ignore this segment.

"In general, festive sales contribute 35-36 percent of the annual sales for the industry. We spend five percent of our turnover on marketing. Since the quantum of sales rises during the festival season in comparison to other periods of the year, the share of the marketing budget for this season is also significantly higher," said Godrej Appliances' Business Head and Executive Vice President Kamal Nandi.

Sharma said e-commerce players too were trying hard to get maximum traction. "They have decided to cut their commissions from large and preferred sellers by 30-50 percent," he said.

The festive season starts with Onam in Kerala in September, continues through Ganesh Chaturthi in Maharashtra and Durga Puja in West Bengal, and extends till Diwali in October, jacking up the propensity of customers to spend.

"With a good monsoon and implementation of the Seventh Pay Commission's recommendations, the second half of the year will witness higher growth compared to last year, which can result in 30 percent growth this year," said Panasonic India's Sales and Service Head Ajay Seth.

"With the expected growth, our target sales for this financial year are Rs 10,800 crore ($1.6 billion). For mobiles, we are expecting the sales to grow to Rs 2,500 crore this year from Rs 1,800 crore last year. Our sales target for the festive season is Rs 1,200 crore," Seth told IANS.

Primarily an air-conditioner maker, Carrier Midea India, which had launched a range of home appliances last festive season, also plans to unveil new products during this year's festivals.

"Festive season is the best time to launch and showcase products because the demand reaches a peak. We are expecting festive sales to contribute 25-30 percent of the annual sales in our home appliances category," said Managing Director Krishan Sachdev.

Targeting a Rs 4,000 crore top-line in the current fiscal, Godrej is also focusing on new launches now. "We are looking at a growth of more than 20 percent during the festive period. We have recently launched two new products in the washing machine category and the all new Godrej Eon range of fully-automatic washing machines will be launched during the season," said Nandi.

Samsung India, a major player in the consumer electronic space, is also pinning its hope to mop up more sales by "developing new categories" with more innovation and "driving affordability".

"Through this period there is a strong shift towards consumer electronics, home appliances and mobile devices. We have been achieving growth through product innovation and latest technology across categories. We are growing strong in 2016. We are expecting double-digit growth during the festive season," Vice President (Consumer Electronics) Rajeev Bhutani told IANS.

LG Electronics India too is "betting big" on festive growth. "This year's festive season brings all the more growth opportunity. We are ready to leverage this opportunity with our premium and superior technological products," said Niladri Datta, Head, Corporate Marketing.

Several companies in the Rs 50,000 crore consumer durables industry have been offering freebies, discounts, exchange offers and schemes.

Explaining innovative offering with consumer preference, Pradeep Bakshi, Voltas Ltd's President and Chief Operating Officer (UPBG & MCED - Unitary Products Business Group & Mining & Construction Equipment Division), said: "Consumers have developed a preference for energy-efficient inverter ACs, which are now the fastest-growing category in the industry. This festive season we have announced an exchange offer, wherein customers can bring in their old split AC, and get a new inverter AC at an attractive price along with free installation."

The positive sentiment on the industry is reflected in the stock market. The S&P BSE Consumer Durables Index that measures the performance of these stocks, rose 3.25 percent to 12,881.21 points as on 3 October, 2016, from 12,475.53 points on the corresponding day of the last month. An upward trend was also noticed in the stocks during the last month.

On a year-on-year basis, the index rose 18.11 percent on Monday.

Updated Date: Oct 08, 2016 13:50 PM

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