Home / Companies / News /  Retailers pin hopes on festive demand to revive flagging sales

New Delhi/Mumbai: Amid the ongoing slowdown in consumer demand, retailers and brands across categories are pinning hopes on the festive season, which typically accounts for 20-30% of annual sales.

Retailers selling consumer durables, apparel and jewellery said they expect sales to be in line with the 2018 numbers. The festivities started on 1 September with Onam and will continue till Diwali in late October.

Appliance maker Philips, which sells juicers, air purifiers and electric shavers, among other products, said it has increased ad spends by 10-15% for the festivals. It has increased the line-up of new launches compared to the year-ago period, offering more choice to shoppers. The company will also woo consumers with attractive offers, which will be rolled out over the next two weeks.

“We will support the new launches with innovative and new campaigns," said Gulbahar Taurani, president, personal health, Philips Indian Subcontinent. “There will be a lot of spends from our side on the campaigns and in consumer offers."

Most durable product companies Mint spoke to said they were refraining from any price hikes. “Whenever there is depressed demand you will see aggressive promotions happening across the markets. You will continue seeing that this year as well," said Kamal Nandi, business head and executive vice president, Godrej Appliances.

Nandi, who is also the president of Consumer Electronics and Appliances Manufacturers Association (CEAMA), said Godrej is pushing products such as washing machines and refrigerators this festive season after a hot summer helped lift sales of cooling appliances in the first half of the year. Nandi is expecting sales to be driven by financing offers this season.

Jewellery retailers struggling with a surge in prices of the yellow metal are pushing marketing campaigns and rolling out exchange offers.

Kerala-based Kalyan Jewellers, for instance, has seen a 10% jump in exchange of old gold jewellery, which prompted the company to start an exchange offer in July. It will also roll out other lucrative offers and bridal campaigns from the last week of September to boost sales during the forthcoming wedding season. “Wedding shoppers will buy even if the prices are high. So, we are expecting the wedding season to be good for us," said Ramesh Kalyanaraman, executive director, Kalyan Jewellers.

Watch and jewellery retailer Titan Co., which reported 13.3% growth in income in its jewellery division for the quarter ended 30 June, said it had launched its annual exchange offer on gold in August. It is also promoting its diamond jewellery line. The retailer has seen healthy growth for the annual event.

“This year the number of shoppers availing the exchange offer have doubled compared to last year," said Sandeep Kulhalli, senior vice president, retail and marketing, jewellery division, Titan. “We have not cut down on our marketing spends, neither have we lowered our expansion plans, or stopped the introduction of new merchandise. We have continued with the discounts and offers that we usually do, and even our exchange offer which we roll out during this time."

Jewellers, however, maintained that consumers will buy lighter jewellery sets given the high prices.

To shore up demand among middle-income shoppers, 1-India Family Mart, a fashion and accessory retailer that sells clothes and footwear in small towns in India, is offering 500 gift vouchers on a purchase of 1,000.

“The market is looking a little dull, but we are also hopeful. That said, we are also prepared for the low quarter in terms of sales," said J.P. Shukla, CEO and co-founder, 1-India Family Mart. It has invested 50 crore to stock up with an expectation to generate 50-100 crore topline.

Companies may spend 20,000 crore on advertising this festive season, 10-12% over 2018, primarily led by e-commerce, FMCG, auto, jewellery, and retailers, Mint reported in August.

However, considering that the ongoing festive season comes amid a slowing economy with just about 5% GDP growth in the June quarter—the slowest in six years— concerns remain. But companies said the festivities could spur domestic demand given that the government has taken several corrective measures to shore up liquidity and increase consumer appetite.


Suneera Tandon

Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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