Consumer durables retailers see major growth in sales, thanks to zero downpayment EMI schemes, while electronic accessories makers have done brisk business through online sales
Mumbai: No-cost and zero-downpayment equated monthly instalment (EMI) schemes have helped boost festive season sales of consumer durables this year, retailers say.
“Festive season has picked up and by the end of the sales, we will probably be up 10-15% (growth in sales year on year)," said Nilesh Gupta, managing director of consumer durables retail chain Vijay Sales. “This is an incredible number given that we also had pre-GST sales," he said.
In the run-up to the implementation of the goods and services tax (GST) on 1 July, retailers had organized sales to liquidate old inventory,Mint reported on 7 July.
“All categories across the board have done well, although high-end television sets, including UHD (ultra HD) and 4K, have done extremely well," Gupta said. “Laptop sales were a bit subdued."
Gupta said the biggest contributor to sales growth were the EMI schemes that brands, retailers and banks had introduced for consumer durables purchases.
“This idea of a zero downpayment EMI all came first from mobile phone brands, which were then extended to consumer durables," Gupta said. “About 30-40% sales have come from EMI purchases. It is easier for a customer to buy something worth Rs40,000 when he knows he only needs to pay Rs2,000 a month."
Electronic accessories makers have done brisk business via online sales.
“We were 3-4 times of last year (in sales)," said Sumit Chauhan, vice president - lifestyle, Harman India Limited, the makers of audio accessories brands like JBL. “The online sales channels were exceptional for us. We were designated the number one brand on e-commerce websites (during their sales)."
While Harman Kardon offered discounts on its entry-level brand JBL, it also offered cashback schemes on its premium brands including Harman Kardon and AKG. Bluetooth speakers and headphones made up 75-80% of the company’s revenue, Chauhan said.
“For some SKUs (stock keeping units) we were sold out in the first 20 minutes online," Chauhan said, adding that 60% of the festive season sales came from online channels. Both Amazon India and Flipkart have been running the Great India Sale and the Big Billion Day Sale during the festive season.
Fashion and accessories also enjoyed brisk sales growth despite having advanced end-of-season sales right before GST was implemented.
“Sales have picked up very well from last weekend and are overall 25-30% higher than last Diwali," said Mukesh Kumar, senior vice-president of Infiniti Mall. “The biggest categories are fashion, gifting, footwear and ethnic apparel. Consumer durables haven’t done as well because I think people are buying more of those online."
Mall owners say pre-GST sales have not eaten into festive season sales.
“A lot of people are feeling this but I’m not seeing this in the mall," Rajendra Kalkar, president-west, Phoenix Malls, said. “The last two weeks have been very good for all the malls, including those in Pune and Bengaluru. Electronics, apparel and fashion accessories have all picked up very well," he said. “F&B (food and beverage, or dine-in restaurants) have also been doing very good business. The footfall rise would have been 15-20% year on year for the last 10-15 days and in topline terms, as compared to last Diwali, it is up 10%."
Not all categories have been doing brisk business. Sales of large packaged foods and personal care firms were affected as wholesale channels, particularly in rural areas, struggle to return to normalcy after implementation of GST.
“Post the kind of concerns and slowdown we have seen in the last 12 months, with demonetisation and GST, there was expectation that there will be revival of consumer demand during this (festive season) time," Mayank Shah, category head of biscuits and chocolates at Parle Products Pvt. Ltd, said. “This has now happened and our sales have been good. We have been grown by 10-12% (in sales, year-on-year) during the season," he said. P
Parle Products makes biscuits including Hide & Seek and Krackjack. “I think most consumer companies have been affected because almost 80% of semi-wholesalers or wholesalers went out of business. Net net, had it not been for that and had semi-wholesalers and wholesalers been around, we may have seen growth of around 15%," he said.
The company has been relying on its network of authorised dealers to help make up for the gap left by wholesalers, Shah said.
Similarly, Mondelez India Pvt. Ltd, makers of Cadbury’s chocolate and Oreo cookies, said sales were marginally affected during the festive season because of struggling wholesalers, Mint reported on 11 October. Rural demand also didn’t pick up to the level the company had expected, sales director Hemant Rupani said in an interview with Mint on 11 October.