If the weekend rush in South Delhi?s upmarket Select City Walk Mall is any indication, the festive fervour seems to have taken the economy in its stride. That these numbers go beyond mere footfalls is an easy guess ? considering that most shoppers are loaded with carry bags, some even stumbling over them. However, to an analyst?s eye, things look different. ?This time the footfalls certainly are less and people might only spend for things which are at the top of their priority list. Still, the festive season will certainly see a relative increase in market activity than past few months and will help the economy,? shares analyst Sanjeev Gupta, KPMG. Gupta has the Nielsen Global Consumer Confidence Survey to back him. According to the survey, consumer confidence in India has jumped 13 index points with 74% Indians feeling bullish about their personal finances over the next one year, up from 62% in March.
Boom time
As economic slowdown bottoms out and consumer confidence rises, the retail brands already have reasons to celebrate. Samsung, for instance, is expecting to notch up sales of Rs 1,700 crore in the September-October period in its consumer electronics products section. In terms of growth, it implies a 40% rise in sales over the corresponding period last year. ?The festival season represents the peak selling period for us. The market pick up has been good and we are well on our way to achieving the targeted sales figure,? says R Zutshi, Deputy MD, Samsung India adding that its LCD TVs are expected to register a growth of over 100% in the festival period. New products, freebies and special consumer offers seem to have played the trick for Samsung. A new corporate campaign in place, the company is doling out assured gifts worth Rs 25 crore, besides making available triple zero finance offers.
The story is not so different for other brands, says Gupta: ?Companies are increasing their advertising and marketing spends anywhere between 10% to 60% anticipating 30-40% increase in sales during the festive period. LG electronics is spending Rs 110 crore this festive season on advertising and promotions, up by about 60% from last year?s spend at Rs 68 crore. Whirlpool India is planning to increase its advertising and marketing spend by 10-15% this time from Rs 45 crore last year.? Most consumer goods companies are expecting to record double digit growth.
And the corporate gifting segment is fuelling this trend. ?The size of the segment is estimated to be over Rs 500 crore and is definitely an attractive market to be in,? says Jolly Jose, Director, eYantra. His website , eYantra.com, serves as an online medium to search and shortlist the right gifting products. Netting a 60% growth, it is expected to cross the Rs 50 crore mark this year. It has already served more than a thousand corporate houses in India and also some of their subsidiaries abroad.
Asitava Sen, Director, Business Consulting Service, The Nielsen Company sees the festive season as an opportunity for electronics, paints, automobile and other allied segments to capitalise on the latent demand. ?The festive economy in 2009 is expected to be better than 2008. The economy as well as the job market is on the path of revival, consumer sentiments are bullish, stock market is doing well, industrial production is picking up and even the weak monsoon has not had a significant negative impact on FMCG sales. Over the past year, consumers had postponed purchase of large ticket items,? says Sen.
Consumer is the king
Consumer brands are leaving no stone unturned to make offers irresistible for the prospective buyers, driving them to spend more. LG has invested Rs 25 crore in marketing and sales promotion activities in household appliances segment during the festive season, targeting a 30% market share. Sony, for instance, has tied up with Bajaj Finance and is offering zero percent interest and processing fee on select products apart from credit card EMI offers. Pricing is playing a big role when it comes to footfalls translating into real sales. ?Customers have definitely become choosier when it comes to spending their hard-earned money. We are currently witnessing increased footfalls in our stores, the result of an aggressive communication strategy, consumer promotion programmes and competitive pricing,? says Masaru Tamagawa, MD, Sony India. He is hopeful of achieving the ?set target of Rs 4,000 crore for the financial year 2009-2010.?
Swarovski too feels that 2009 is looking better in comparison to 2008?s festive period. ?Though I cannot really comment on the projected sales at the moment, we hope for a 15% increase in sales during this festive season as compared to 2008,? says Sukanya Dutta Roy, Country Manager, CGB, Swarovski India. She further adds: ?Luxury or high-end gifting has not only become a trend, but it?s growing year-on-year. Corporate gifts are becoming increasingly stylish and the product categories are getting classy and luxurious but this does not mean that family gifting has gone down.?
Even travel agencies are trying to make the most of the festive season. Cox & Kings is offering up to 50% cash back on tours to Europe, Egypt, Sri Lanka, South Africa, Jordan, Turkey and Kenya. But traditionally, are Indians known to be holidaying during the festive season? ?The traditional festive holiday is pass?, where families visited their extended families in their native places or spent the holidays at home. Today?s families use their holidays as an opportunity to travel. There are just three to four festive days, while the holidays extend to around three to four weeks. Moreover, Indian travellers are going to find it hard to pass these offers by,? says Karan Anand, Head-Relationship and Supplier Management, Cox and Kings India.
The flip side
But whether this part of the year should really be credited as the festive season is a concern that Shalini Beriwal raises. After a lean quarter (post Holi) her designer gift packagaing boutique is seeing a flurry of activities, something that she expects to continue till March (Holi again). ?A lot of people are now giving gifts during Holi and new year instead so that their gifts don?t get lost in the sea of other gifts.? And she is happy with the response ? ?the number of people coming to us has not increased but their budgets and tastes definitely have.?
However, the realty sector hasn?t had it as good as it would have liked it to be. Though of late there?s been some amount of uptrading and upgrading, thanks to the economic recovery. ?People are looking for value for money this season and are reluctant to pay premium prices. Instead, they are looking for smaller and affordable houses. So, the developers are not being able to increase prices as the consumers just wouldn?t buy,? says Gupta. And as he foresees, the demand of gold too may drop as much as 50% ? courtesy the unbelievable Rs 16,000 level that it is expected to reach before Diwali.
Another segment that usually banks on the sweet tooth of people might also feel the pinch ? the chocolatiers. Interestingly, 2008 was fantastic for Geetanjali Achhra, CEO, Cocoa World. And this year? ?The orders are just not coming in from the corporates. Last year we got orders ranging from 500 to 5,000 boxes ? the minimum being Rs 400 per pack. This year the order size is smaller and we are expected to make boxes for just Rs 150. Earlier, people used to begin shopping a month before Diwali and now with just a week to go, the market?s still so damp.?Acchra?s predicament is understandable ? she specialises in hand-crafted gourmet chocolates and meeting orders for boxes with smaller denominations must be a challenge in itself.
?Pricing is always important. Recent pricing has affected volumes with budget being the same. Customers are spending more on the gift items but have limited it to only relevant people,? feels Chetan Gokal, Business Head, Patchi India. This year is definitely looking better than 2008. Patchi, which has otherwise recorded a year-on-year growth of 30%, is just targeting 25% increase this season. But both Acchra and Gokal point out that the demand for sugar free chocolates is definitely on the rise.
However, the bottomline remains that no one really seems to have much of a reason to complain.