Like last year, demand for consumers appliances, two-wheelers, cars and apparel remains dismal this festive season. Buyers are slashing their festive budgets due to the unrelenting economic slowdown.
To be sure, business enquiries and outlet footfalls are up. But they are simply not converting into actual sales which is disappointing, said industry players.
Automakers are the worst hit. Having pinned their hopes on the festival season, they have nothing to cheer. “The demand was not at all as per our expectations. It has been a slightly slow start to the festive season,” said Nikunj Sanghi, dealer of Mahindra and Mahindra (M&M) and Hero MotoCorp for the north Indian market. “Two-wheeler sales were flat, while car sales were slower compared to last year.”
Inventory level is expected to rise as most manufacturers pushed stocks to dealers in September in (somewhat irrational) anticipation of increase in demand during the Dussehra-Diwali season.
Sameer Jani, MD of Shivam Autozone, a Mumbai-based Maruti Suzuki dealer, said that enquiries and footfalls were encouraging on the day of Dussehra on Sunday. “We did almost 100 deliveries across our dealerships, much higher than the previous months. However, sales are not as good as previous festival seasons.”
“We were not expecting this festival to be better. However, the movement was good,” said Pravin Shah, CEO, M&M’s automotive division.
The consumer sector has not fared any better than the auto sector. Eric Braganza, president-India, Haier Appliances, said that though there has been a slight uptick in demand, overall, the festiva season so far has not seen any significant growth.
Worse, even though the consumer sector has doled out freebies and discounts, footfalls have not increased as expected. Increased prices of consumer durables and a cut-down on discretionary spends are posing major challenges. Several electronics majors have increased prices by three times this year.
Similarly, the apparel sector has witnessed a tepid start to the festival season. Rajesh Jain, CEO, Lacoste India, said, “Even though we have managed to do well, the overall industry growth has not been encouraging. Demand has been more or less same as last year, but we are hoping to see strong incremental trend from Diwali onwards.”
Not everyone expects fireworks in terms of sales come Diwali. Rising prices and persistently high inflation have forced consumers to cut their festival season budgets. An Assocham survey shows that 72% of respondents from middle- and lower-class families were planning to cut their Diwali budget by 40%.
Out of the 72%, 57% said they will buy only if there are ‘sale’ events or discounts; 12% said they will buy fewer gifts; and 3% said they will buy a group gift.
The survey said the value of savings has gone down by almost 15%, so consumers were left with no other option but to curtail spending. A ZyFin Research on consumer sentiment in September showed that the overall outlook was at its lowest level in the past two years. Even though the spending outlook has improved on-year, it has inched up by only 3 points, ruling out any significant improvement.