Slump in consumption takes sheen off durables

Sale of durables yet to pick up beyond major urban conglomerates

Midway into the festive season, sale of consumer durables is yet to pick up across the country. Makers of popular household products like refrigerators, television sets, and washing machines who see a spurt in sales during the weeks spread between Onam and Diwali, are witnessing subdued sales as consumers beyond major metros stay away from purchasing large-ticket items.

While the end of the current festival season is less than a fortnight away, most large-scale manufacturers are yet to register healthy growth in primary sales (from manufacturers to dealers and distributors). Company executives and market experts this newspaper spoke to said the ongoing consumption slowdown may have played a key role in lower sales this season.

Kamal Nandi, president of Consumer Electronics and Appliances Manufacturers Association (CEAMA), and vice-president, Godrej & Boyce, said sales of durable and consumer electronic items are yet to pick up beyond large urban centres like the National Capital Region, Mumbai, and Bengaluru. “Growth is missing in smaller cities, and especially in tier two and three towns,” he said.

“Demand is muted in the marketplace. This is partly linked to the slowdown in the market. Consumers are also postponing purchases; waiting for the economic climate to improve,” said Eric Braganza, president, Haier Appliances India.

According to a top executive from a renowned manufacturer, the company is observing down trading in the market across regions. “Ticket sizes of

purchases are shrinking. So, growth rates this festive season are likely to be lower,” the official said.

Y V Verma, an expert on the industry, said, “Primary sales have been muted this year for the festive season. Dealers are not picking up as much stock from manufacturers because they are not sure whether there will be enough sales at their end.” Verma, too, predicted that secondary sales (from retailers to consumers) growth could be flat or may dip this festive season.

While the overall muted sentiment among consumer is a primary factor that has impacted sales this season, one of the key factors for the disparity between growth figures between large urban centres and smaller towns, companies and experts said,

has been due to the capacity of the retailers to attract footfall.

While large-format retailers like Croma and others have done relatively better, smaller, standalone retail stores have fared poorly. “Large retail chains have the capacity to pull consumers through customised promotional schemes and offers and this has so far helped them post better sales. But standalone, small outlets, most of whom don’t have that capacity, have struggled,” said Nandi.

Croma Retail, which operates 140 electronic retail outlets, has so far observed over 20 per cent year-onyear growth. According to Ritesh Ghosal, chief marketing officer, Croma, over half of the items priced over ~15,000 it has so far sold were through consumer finance.