Consumer durables makers are turning their attention to the next big consumption occasion after a difficult summer this year. Most companies are gearing up for the upcoming festive season, that kicks off August onwards and extends right up to November, and the ODI Cricket World Cup, to be held between October and November in India.
“The summer season this year was tough because of unseasonal rain,” said Kanwaljeet Jawa, chairman and MD, Daikin India. “More than consumer demand, it was weather uncertainty that led to a sales decline. The festive season in my view will be better because there will be pent-up demand,” Jawa said.
Nilesh Gupta, director, Vijay Sales, a consumer durables retailer who has stores in the west and north of India, said retail traders will begin stocking up for the festive season from early August.
“This is because the inauspicious Adhik Maas period, which begins in mid-July, will conclude in mid-August. After that there will be buying for the upcoming festivals,” Gupta said.
Companies are expected to begin their marketing and sales promotional activities aggressively once the Adhik Maas period concludes to capitalise on the festive momentum. The ODI World Cup may see durables firms line up big spends, said media industry experts, since the June quarter was a washout.
“Since durables firms were not able to capitalise on sales due to unseasonal rain during the summer season, they may look to the festive period with optimism. Properties such as the Cricket World Cup may see aggressive sponsorships from them since it is happening during the festive season,” Sachin Bobade, vice-president, research at brokerage Dolat Capital, said.
Like the summer months from April to June are a big sales period for cooling products, the festive season is important for most consumer durables firms. The season begins with regional festivals such as Onam in Kerala, moving to Ganeshotsav in Maharashtra, Navratri in Gujarat, Durga Puja in the east and Dussehra and Diwali across the country. The festive season this year may also see some revival in rural markets, which have been muted due to inflationary pressures.
“The second half of the year is expected to be better than the first half as consumption begins ticking due to the festive season. Rural markets, which have been slow over the last few quarters, may see a gradual revival during the festive season,” Anuj Sethi, senior director, Crisil Ratings, said.
For perspective, almost 50-60% of annual sales for categories such as air conditioners, coolers, fans and refrigerators come during the summer season. These categories derive another 40-50% of their sales from the festive season. While electronics makers such as TV, audio and mobile phone manufacturers as well as kitchen appliance makers derive around 50-60% of their sales from the festive season, the balance is scattered over the year.
Data from retail intelligence platform Bizom show that while the January-March period saw a sales growth of 11.8% for durables firms, April and May both saw sales declining. The decline was nearly 18% in April and 12.1% in May.
June, on the other hand, has reported a marginal growth of 2-3% due to a low base and an extended summer, according to industry experts. But this has hardly helped the June quarter, which saw an overall sales decline of 20-25% due to weather-related issues.
“At the industry level, the overall AC and refrigerator sales this summer have fallen by around 30-40% versus last year. The north market has been bad on account of rain spells through April and May,” said Kamal Nandi, business head and executive vice-president, Godrej Appliances. “This is definitely a cause for concern because the summer season is important for manufacturers of cooling products,” he said.