Consumer durable firms and retailers are seeing a lull in sales even as the festive season begins this week with Ganesh Chathurthi, followed by Onam next week. Buyer queries are down by at least 50-60% in markets such as Maharashtra, Goa, Karnataka and Kerala, conversations with retailers and durable firms indicate. Most consumers are waiting for GST rates to reduce before making purchases, they say.
The government has proposed reducing GST to 18% from 28% on air conditioners, flat-panel TVs above 32 inches and dishwashers. The anticipation of a GST rate cut, though, has prompted a slowdown in sales across categories, from ACs to TVs, washing machines to refrigerators and dishwashers and other kitchen appliances.
Buyers hold back purchases
“There is a standstill in the market at the moment. Most consumers are waiting for the new pricing to reflect on products before they can begin buying,” Kanwal Jeet Jawa, chairman & MD, Daikin Airconditioning India, said.
While the GST Council will meet on September 3-4 to formalise the new structure proposed by the government, the implementation of the new GST tax rates will be likely around September 22. However, industry is likely to take a couple of weeks more to get inventory with revised pricing in place at retail outlets in time for Dussehra-Diwali.
Festive demand could revive momentum
“Buyer queries are down currently,” said Nilesh Gupta, director, Vijay Sales, a consumer durables retailer. “But hope is alive that brands will cover some ground during Dussehra-Diwali when inventory with revised pricing will be in retail outlets,” he said.
The festive period typically sees over a third of industry sales, prompting companies to roll out aggressive discount schemes, sale programmes as well as consumer and easy-finance offers to take advantage of the consumer sentiment.
This financial year has been challenging in the April-June period for cooling product makers such as air conditioner and refrigerator manufacturers owing to unseasonal rains during the period. Offtake for TVs and other electronic and home appliance items, however, are typically strong during the festive period. But some companies anticipate some caution now owing to the GST overhang.
“This phase is a temporary one, where the industry does anticipate some slowdown in ACs and TVs,” NS Satish, president, Haier Appliances India, said. “While this is off-season for ACs, the industry does expect to see a strong bounce back as far as TVs are concerned once the new GST rates kick in,” he said.