As the country gears up for the festive season, consumer goods makers are pulling out all stops to try and recoup some of the profits forsaken till now because of a sluggish market this year. Although sales during Onam, which marks the beginning of the 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 this season and manage to rake in almost 40 per cent of the annual sales during these few weeks. White goods makers 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 also envisage festive advertising to grow at 10-12 per cent over 2018 to touch as much as Rs v20,000 crore this year. “We have not seen any slowdown at a category level, but definitely, people want to try out new products. Millennials want more varieties, they are switching to cookies from traditional glucose biscuits,” said Sumit Ghorawat, co-founder of ShopKirana, a B2B e-commerce retail platform. Brands, he said, are actively looking to re-invent the way they enter 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.
FMCG majors believe 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, reporting a steady slide in consumer sentiment.
The third quarter, analysts say, 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 initiatives to improve liquidity in the banking sector could see rural consumption, which accounts for nearly 40 per cent of the FMCG market, come back strongly this quarter and next,” said Deloitte consulting partner Rajat Wahi.“We are confident that the recent measures taken by the Centre will progressively accelerate a virtuous cycle of investment growth and employment,” said an ITC spokesperson.