Mukherjee, The Economic Times
September 25, 2012
Consumers can look forward to some mouth-watering bargains this
festive season as white goods makers and lifestyle retailers ready
to dole out freebies and special discounts to prop up demand at
a time when sales have slowed down.
Durable makers like Panasonic, Samsung, Whirlpool, Godrej and
Videocon are bringing back sales promotion schemes after almost
four years as a last-ditch effort to boost sales in a period that
typically accounts for up to 40% of annual sales.
manufacturers have decided to hold onto prices despite a recent
appreciation in the price of raw materials.
"Promotional offers are expected to boost consumer sentiment,
which has been down so far this year," says Manish Sharma,
Panasonic India's managing director for consumer products. "There
was a brief period of jump in sales during May-June when air-conditioner
sales spiked due to extended summer, but the market after that
has become worse," he adds.
Panasonic plans to invest 70 crore on promotional offers and
marketing during the festive period.
As per industry estimates, sales of refrigerator and washing
machines have remained flat throughout the year, while growth
in air-conditioner sales fell by more than 10%. Sales of flat
panel televisions including LCD, LED and plasma televisions grew
marginally by 10% as compared to 80-90% growth during the pre-slowdown
days, albeit on a lower base.
Arvind Uppal, managing director, Whirlpool India, reckons the
weak consumer sentiment is more exaggerated than the ground reality.
"We expect demand will pick up during festive season, but
we have learnt not to live in hope. We are drawing strategies
to outperform the market to grow by 15-20% during this period,"
Both Whirlpool and Panasonic have lined up gifts with every purchase,
while Korean major Samsung is offering bundled offers with its
premium product range such as flat panel televisions and side-by-side
These marketers are also going easy on passing increased costs
in raw materials to the consumer. "We are holding onto prices
despite input cost pressure," says Mahesh Krishnan, vice
president, Samsung India; he expects consumer sentiment to improve
and his sales to grow by 25-30% during the festive period.
While the rupee has stabilized against the dollar, durable makers
say the pricing pressure on input materials is rising once again.
Godrej Appliances COO George Menezes says copper prices have firmed
up by 5% in the past one week. However, he adds, the industry
has no option but to keep price hikes on hold during the festive
"Prices have increased three times this year, making refrigerators
dearer by 7-10%, washing machine by 15-18% and air-conditioners
by 18-20%; this has played a big role in dampening sentiments,"
Godrej Appliances is launching a new range of refrigerators and
washing machines during the festive season. It has lined up gifts
with every purchase and even a trade promotion whereby dealers
can get up to one kg of gold based on their sales realization.
"It has to be a three-pronged growth strategy: product, trade
and consumers to win in this tough market," says Menezes,
who is a eyeing 25-30% growth in sales during festive season.
Analysts say the recent policy initiatives and reform on the
policy front are unlikely to work as immediate triggers to boost
consumer demand. "Hence companies have to create motivators
to move products off the shelves since consumers are resisting
any price hike," says Devangshu Dutta, CEO, Third Eyesight,
a consulting firm.
Meantime, retailers too have lined up special deals around the
festive season. Atul Chand, chief executive of ITC's premium lifestyle
retail format Wills Lifestyle, says it is currently working on
a consumer promotion scheme.
Shoppers Stop too plans to offer special discounts or gifts to
its loyalty card members, while India's largest jewellery retailer
Gitanjali is offering discounts on certain brands during the Durga
Puja festival in the east. Gitanjali has also made few design
changes to make the products more affordable.
"For instance, last year if a specific product had 4-5 grams
of gold, we have reduced it to 3-4 grams this year to make it
more affordable," Gitanjali Gems president Abhishek Gupta
(Additional reporting by Sagar Malviya from Mumbai.)