Sales of durables plunge as cash dries up

COMPANIES ARE NOW TRYING TO PUSH SALES WITH DEALS AND OFFERS

After a Diwali that saw sales spike by as much as 20%, consumer durables companies are staring at a lacklustre November as the government’s demonetisation of ₹500 and ₹1,000 currency notes has all but wiped out demand.

The government on Tuesday night scrapped ₹500 and ₹1,000 currency notes, and while banks opened for business on Thursday and ATMs on Friday, customers can only withdraw ₹4,000 and ₹2,000 respectively per day.

There was a rush of customers to buy mobile phones, TVs and refrigerators on Tuesday night, as the people looked to reduce their holdings of the demonetised notes, but retailers say that sales have dropped since.

“Sales have slumped since Wednesday…We are hardly seeing any business right now, with people busy trying to get their money exchanged in banks,” said a consumer durables retailer here.

Manufacturers and retailers of consumer durables — broadly white goods such as refrigerators, airconditioners, televisions and mobile phones — say that while a lot of people are now buying durables on loans or via credit cards, 30-40% of the business is still cash-driven. In smaller towns and rural markets the percentage is even higher.

“November is anyways a low purchase month, post-Diwali. We were banking on wedding demand to support sales, but that too will get hurt now due to the restrictions. We see 15-20% sales drop in November,” said Kamal Nandi, executive vice president, Godrej Appliances.

“There will surely be an impact on sales. The impact will be felt more so in smaller towns, where almost 40% of our sales happen in cash,” said Anirudh Dhoot, director, Videocon Industries.

Videocon was also expecting a sales boost due to the wedding season, but Dhoot said the usual excitement has vanished in the wake of the government move.

Companies as well as retailers are now trying to push sales through deals and offers.

“We are working on a few offers like buy now and pay later, free gifts with product purchases etc. We will roll these offers in the market soon,” said Dhoot.

According to Nilesh Gupta, managing director of Vijay Sales, sales are going to be lowkey for at least the next few days. The retailer said already more than half of its sales happen via finance schemes and through credit cards. While it was also accepting cheque payments, consumers can now also make direct fund transfers to bank account.

“It is too early to say how things will pan out, but we believe purchases via credit cards and EMIs will pick up,” he said.