It is the season to be merry for consumers, but for brands in consumer durables, garments and food, the festive months are no holiday.
Sure, new sale occasions are created all year round by retail chains—such as the Independence Day sale from Big Bazaar and the New Year’s day sale by Chennai-based Vivek’s. But the festive season, particularly Diwali, is still an opportunity no brand can afford to miss.
In the case of durables, Diwali alone accounts for 30% of annual sales. Paint companies get 30-35% of their revenue, while premium branded apparels get a third of their sales this time of the year.
Coming after a less-than spectacular year, the branded apparels category in particular has a lot riding on Diwali 2009.
Selling time: Durables companies are pushing high-end products to premium consumers ahead of Diwali.
The year saw practically every brand indulge in unprecedented levels of discounting, with discounts reaching the almost absurdly high levels of 70%. Growth in organized retail in the premium category declined to a mere 18-20% from a heady 35%.
Some argue that Diwali is perhaps the wrong horse to bet on for the industry, since consumers are likely to have already finished their festive shopping when just about every brand was going for a song.
But many players in branded garments are hoping that fresh stock in stores and the age-old tradition of new clothes at Diwali might bring consumers back, even if there are no discounts or promotional offers to sweeten the deal.
According to Ashish Dikshit, president, Madura Garments, “The category’s fundamental values are fashion, product innovation and better styling. A lot of our efforts are around building more fundamental value instead of any large promotion or below-the-line activity.” However, it seems unrealistic to expect that consumers will pay full price for products they’ve been getting at a bargain.
Sunil Alagh, founder of the consultancy SKA Advisors Pvt Ltd, recommends, “Apparel firms would have lots of stock which did not get sold. Here’s an opportunity: if they’ve got a new range now, they should use the old stocks as promotional items. ‘Buy two new shirts and get one free’ for instance. And the free shirt should be from the older inventory.”
Durables make it to the festive season after a much better year, a slow first quarter notwithstanding. Both LG Electronics India Pvt. Ltd and Samsung Electronics India Pvt. Ltd expect a 45% increase in sales over Diwali 2008. And just about every durable company worth its salt has its eyes set on the premium consumer. Samsung is aggressively pushing its high-end LED television sets. It’s throwing in a free 22-inch LCD TV set with every LED model above the 40-inch mark. The costliest sets in this range carry a tag well above Rs3 lakh.
The “buy one get one free” strategy is being pushed across the company’s portfolio. LG has already started off a high decibel campaign that encompasses its entire range of products—from LCD TV sets to cellphones. Philips hopes to build buzz around new launches—Blu-ray home theatre and high-end cinema systems all above the Rs1 lakh range.
Old favourites such as “scratch and win cards” and “assured gifts” such as digital cameras and watches are very much in vogue, but many firms are driven by the desire to better integrate the offers with the products being bought.
Ravinder Zutshi, deputy managing director, Samsung India, observes that the customer is more brand oriented and puts a greater value on quality and technology: “If we give him something that complements his purchase—a DVD player free with a TV, or a smaller LCD TV with a larger LCD TV, he feels a lot more comfortable.”
Consumers are looking for a value in the purchase beyond gifts, which are almost taken for granted, according to Vivek Sharma, chief marketing officer, Philips: “They understand that the value of the gift can never make up for the long-term value of the product.”
Firms across the board have raised ad spending in the hope of meeting their ambitious sales targets. Campaigns flogging Diwali offers are out even before Navratri is over and done with. Of course, not all the money is being spent on mainstream media. Britannia is using “Diwali Mela”, an initiative to take the brand closer to customers who have problems physically accessing it across select markets in North India such as New Delhi, Chandigarh, Kanpur and Lucknow.
Besides, according to Shalini Degan, category director—lifestyle and delight, Britannia, “We spend a lot more money on creating the festive mood in stores rather than above-the-line communication. It’s a fair percentage of the overall business—6% to 7% of Rs 20 to 24 crores.”
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