A mixed festival season awaits India's top retailers
4 min read . Updated: 25 Aug 2020, 04:28 PM IST
Premium- While electronics retailers expect a decent Diwali, some are even hopeful of clocking growth over the year ago period
New Delhi: After a tepid fist half of the year that was marked by protracted lockdowns and scare of the pandemic, retailers are eyeing the year’s most lucrative time -- the festival season that begins with Onam and Ganesh Chaturthi and continues till Diwali -- with mixed expectations.
India's festival season that begins in September and stretches till November is opportune for the country's apparel, jewellery and home appliance makers. For some retailers and manufacturers of consumer products the months of September, October and November contribute anywhere between 20% and 40% to their annual sales.
While electronics retailers expect a decent Diwali, some are even hopeful of clocking growth over the year ago period. Apparel retailers though have lowered their sales forecasts for the festival season.
With fewer occasions to socialize and restrictions still in place for large gatherings, apparel retailer Benetton expects this Diwali to be dull compared to a year ago with sales down at least 25%.
“Matching last year’s revenue will be very difficult, if the cases continue to surge the momentum will be no match to what we are expecting," said Sundeep Chugh, managing director and chief executive officer, Benetton India.
Chugh said any improvement in performance is comparable to June-July and not a year ago period given the situation retailers are grappling with. “We are unlikely to match numbers of the previous years, we may be 25-30% lower than last year," he added.
Apparel retailers are also going easy on buying inventory for the festive season. Even as Indian households are buying groceries, household appliances, laptops and mobile phones for work-from-home regimen, more discretionary purchases such as apparel, accessories and beauty categories have been deferred.
However, to attract customers, retailer Puma has been launching new products every month. "Given the trend of how things are improving compared to the previous months, we are very hopeful of a strong September and October. We hope this trend continues through the festive season and beyond," said Abhishek Ganguly, general manager, Puma India and Southeast Asia.
Value retailer V-Mart, meanwhile, expects some buoyancy at the end of the month as better farm income on account of sufficient monsoons is expected to help the retailer register better sales. The retailer is present in India’s small town and cities.
However, the numbers will be no match to the year ago period, the company’s chairman and managing director Lalit Agarwal said.
Electronics retailers, however, seem more upbeat. Consumers are shopping for laptops, upgraded television sets and kitchen appliances in the past couple of months. This demand is likely to continue into the festive season, said Nilesh Gupta, managing director at electronics retailer Vijay Sales. “It is no longer pent up demand, it is now normal, the demand will continue—more than buying only because it is festive season, consumers will buy these products because they need them," said Gupta. Vijay Sales typically registers 40% of its annual sales between September and November.
Some makers of home appliances and consumer electronics are currently filling up inventory for the festive season, given that disruption in manufacturing caused by the lockdown and the subsequent shortage of labour earlier this year yielded lower production.
“I guess we are not yet in great times in terms of buoyancy. But if supplies keep pace then I think we'll have anywhere between 10% to 20% growth over last year. But, on an annualized basis, we may not make up for loss of business registered earlier this year," said Anuj Poddar, executive director, Bajaj Electricals Limited.
For the company that sells juicers, electric cookers, ovens, coffee makers among other goods, production is currently at 70-80%, of its capacity “but we plan to take that up to 100-110% because we are running on low inventory," said Poddar.
“Electronics industry has witnessed an improving sales trend since mid-May 2020 reaching nearly equal to same month last year in June 2020. Further, with approaching festive season, we are expecting good traction in our consumer electrical and lighting business over the next few months," said Rakesh Khanna, MD and CEO, Orient Electric Limited. Khanna said "production ramp up is smooth" at the company’s plants at Faridabad, Kolkata and Noida.
However, retailers continue to remain wary of local lockdowns—those being imposed on weekends that they said disrupt supplies and movement of goods.
These could also meddle with the festival season demand and how retailers plan ahead for the season.
Companies also plan to go easy on discounts and offers as they hope to preserve cash in such a scenario.
“This time discounts will not drive sales, you cannot bring in the crowds. Plus companies are incurring higher costs because of labour shortage, logistics etc. So I don’t think demand will be driven by discounts but it will be driven by good EMI options and genuine need," Vijay Sales’ Gupta said.
