Mumbai: From online stores and high-street boutiques to appliance makers and auto manufacturers, no one is sparing any effort to get Indian consumers to spend this festival season.

The big boys of Indian e-commerce, Flipkart, Amazon India and Snapdeal, lined up extensive sales to attract shoppers in what could be a defining battle for the leadership of India’s online retail market.

Consumer durable makers such as Videocon Industries Ltd and LG Electronics India Pvt. Ltd are launching new products and offering generous freebies.

Auto makers have stocked their dealers with inventory on a scale not seen in recent years.

And it’s no coincidence that Apple Inc. is launching its new iPhone range in India on 7 October, just when the festive fervour picks up in earnest.

All the ingredients seem to be in place for a bumper festive season.

After two consecutive years of drought, India has received normal rainfall in the June-to-September south-west monsoon and is set to reap a record kharif (summer) crop.

The government has rewarded a million civil servants and retirees with generous increases in pay and pensions.

And consumer durable makers and retailers are expecting two years of pent-up demand to boost sales.

With consumer price inflation decelerating to 5.05% in August, the Reserve Bank of India (RBI) has greater leeway to reduce policy rates.

The central bank cut its key repo rate by 1.5 percentage points between the start of 2015 and April 2016, when it hit the pause button.

“With an overall positive customer sentiment, consumer durables companies expect to increase their sales by almost 15-20%," Manish Sharma, president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), told Press Trust of India.

India’s festival season typically starts in September with Ganesh Chathurthi, devoted to the elephant-headed Hindu god of good luck, and Onam, the harvest festival celebrated mainly in the southern state of Kerala.

In October falls Navaratri, dedicated to the worship of the Hindu deity, Durga, and Dussehra, a festival that celebrates the triumph of good over evil.

The festival of lights and fireworks, Diwali or Deepavali, which is celebrated to honour the return of the Hindu deity, Lord Rama, from 14 years of exile, falls on 30 October this year.

The days and weeks preceding and immediately following the festivals generate as much as 30% of yearly sales for sectors such as consumer durables.

Hindus believe the period is auspicious for shopping.

Auto sales have been expanding at a brisk pace for most manufacturers in the fiscal year that began in April.

Cumulatively, sales at India’s top passenger-vehicle makers led by Maruti Suzuki India Ltd advanced 15% in August to 253,007 units.

After a gap of five years, passenger-vehicle sales are set for double-digit expansion in the current fiscal.

An upturn in rural demand following normal monsoon rains is expected to boost sales.

“We expect this festive season to be the best in three years due to improvement in rural sentiment," said Abdul Majeed, partner and national auto practice leader at PricewaterhouseCoopers.

Even two-wheeler makers—Hero MotoCorp Ltd and Honda Motorcycle and Scooter India Pvt. Ltd (HMSI)—have been on an overdrive, stocking dealers much ahead of a season that only peaks in October.

HMSI started stocking its dealers as early as in the June quarter, as against the usual practice of doing so in the September quarter. A Hero MotoCorp dealer in western India said his showroom was holding two months of inventory and that this may go up to three months, closer to Navaratri, which begins on 1 October.

The dealer, who didn’t want to be named, said he expects to achieve 40% of his annual target in the festival season.

For the consumer durables sector, the signs so far have been mixed, but industry executives expect sales to gain momentum in October-November.

Onam, which was celebrated in the second week of September, saw industrywide sales growth of 5% from a year ago, said Anirudh Dhoot, a director at Videocon, a television and refrigerator maker, who is hopeful of sales growing by 30% in the next two festive months.

To spur consumer spending, Videocon is giving away smartphones worth Rs5,000 with the purchase of its high-end television sets.

Depending on the region, the company is handing out freebies such as rice cookers, food processors, mixer-grinders and microwaves on purchase of large appliances such as refrigerators.

In August, for the first time, LG did nationwide roadshows meeting with its 800-1,000 dealers; typically, it stages one trade show in Delhi for its dealers.

LG is offering customers express deliveries; appliances will be installed in their houses within four hours of purchase. The South Korean company is also adding more staff at its 1,800 retail stores spread across the country. “Earlier, such services were offered only in the metros and mini-metros," said Niladri Datta, corporate marketing head at LG Electronics, who is betting that consumers who have been holding back on upgrading and buying larger-ticket items in the past two-to-three years will spend this year. “These 45-60 days during the festive period account for 20-25% of overall sales," said Dutta.

Even packaged consumer goods makers such as Coca-Cola India Pvt. Ltd and Dabur India Ltd are boarding the bandwagon.

To be sure, the festival months are not as important for this sector as consumer demand for packaged food and beverages, soaps, detergents and cosmetics is stable through the year or dependent on the season.

For instance, soft drinks and ice creams sales peak during the summer and cold cream sales in the winter. But companies are now focusing on selling gift packs.

“There is a tradition of gifting during the festive season," explained Lalit Malik, chief executive officer, Dabur India.

Packaged consumer goods companies are also trying to become a part of the festive occasion.

“Festivals have become occasions to become relevant to the consumer," said Ajay Bathija, director–colas, Coca-Cola India.

In the past 20 years, the company has built the refreshments category for summers, with consistent advertising like ‘Thanda matlab Coca-Cola’ (cold means Coca-Cola). It is extending that, plugging Coke as the refreshment of choice to be served when guests come home.

Festive promotions also allow Coke to take part in regional celebrations with promotions.

For instance, in east India, during the Durga Puja festivities, when consumers visit local community pandals (tents) to pray to the goddess, they also stop to eat. Coca-Cola has come up with combo offers on which customers get Rs5 off if they buy a Coke along with a snack at a restaurant.

For retailers, this festive season could be one of the best in 3-4 years. For one thing, e-commerce marketplaces have had to curb deep discounts and find other ways to attract customers because of government regulations. That could benefit brick-and-mortar stores. Retailers also cite the positive consumer perception of India, the world’s fastest growing major economy.

“We expect to have one of the best Diwali sales this year, nearly after 3-4 years," said Nilesh Gupta, managing director, Vijay Sales, an electronics and consumer durables retail chain in western India.

His optimism is based on the fact that sales on the Independence Day weekend and during Onam were encouraging. Product categories such as laptops and mobile phones, in which sales were shrinking in the past four years due to large discounts available online, are once again expanding, Gupta said.

A 30-35 day period during the festive season contributes about 30% of overall yearly sales at Croma, a consumer durables and electronic appliances retail chain operated by Infiniti Retail Ltd, a unit of Tata Sons Ltd.

Consumers shopping during the festive season are quality-conscious shoppers with deep pockets and not bargain hunters, unlike those who shop on Independence Day or Republic Day weekends, said Ritesh Ghosal, chief marketing officer, Croma.

Across sectors, from food and groceries to apparel and lifestyle, retailers are expecting double-digit sales growth this festive season.

“We saw 30% year-on-year growth during Onam and hope that it is the same for Durga Puja and Diwali," said Kishore Biyani, chief executive officer, Future Group, which operates retail chains such as Big Bazaar, Central, eZone and Easyday under different listed companies.

Some brick-and-mortar retailers have gone online to compete with e-commerce companies. These are backed by large conglomerates with deep pockets such as the Tata group, Aditya Birla Group and Reliance Industries Ltd.

“There is a natural surge that takes place during Diwali and Dussehra. This month could be as big as 20% of our overall sales, especially for us as we sell electronic appliances as well," said Prathyusha Agarwal, head-marketing of Tata CLiQ, an e-commerce website from the Tata group.

The portal has earmarked 50% of its annual marketing budget to be spent during the quarter, a substantial part of which will be used in running a month-long sale called Festober when it will stage flash sales and offer freebies as it seeks to be recognized by consumers as “best priced" in categories such as televisions, cameras and large appliances.

Last year, daily gross sales at e-commerce companies increased four times to $144 million, driven by a jump in average order value, from $33 on a usual business day to $48 during the festive season, according to a report by RedSeer Consulting, a research and consulting firm, which predicts that gross sales at domestic e-commerce companies in October could touch $1.5-1.8 billion.

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