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DA hike, Productivity-Linked Bonus leads to rise in sales during festive season
Sale of products such as TV, home appliances, FMCG food and apparel etc from offline and e-commerce channels have recorded almost 8-10% volume growth.
Updated : Oct 17, 2022, 07:03 PM IST | Edited by : Maitry Kothari
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While the rest of the world fears a recession, the International Monetary Fund (IMF) has recognised India as a "brigh star" nation. In India, sales have soared during the holiday season, cheering the consumer goods sector at a time when consumer spending is slowing down globally. The trade association CAIT projects that sales and service will inject up to Rs 2.5 lakh crore into the market, as early trends point to strong channel-wide sales.
Consumers are willing to spend despite inflationary concerns as evidenced by the volume growth of sales of products like TVs, home appliances, FMCG food and non-food, apparel, etc. from offline and e-commerce channels over the festive season of the previous year, which was almost 8% to 10%. Onam is the beginning of the festive season, which continues through Durga Puja, Dussehra, and Diwali.
Encouraged by early signs, traders' body CAIT expects an "infusion of about Rs 2.5 lakh crore in the markets by way of shopping and sale of goods and usage of service" during the Diwali festive season. Furthermore, a recent 4% increase in dearness allowance (DA), which will benefit 6.97 million pensioners and 4.18 million central government employees, will serve as a catalyst.
The Confederation of All India Traders added that the Productivity-Linked Bonus (PLB), which is given to non-gazetted railroad workers and is equal to 78 days of pay, will also aid consumers in their spending (CAIT).
"It will certainly trigger the market and the economy. These two decisions of the government will pump thousands of crores of rupees into the economy," said CAIT Secretary General Praveen Khandelwal, adding a good agriculture crop is also expected to bring money in rural India.
Consumer Electronics and Appliances Manufacturers Association (CEAMA) predicts that sales will peak around Diwali after picking up after Navratri. Sales of LED TVs, washing machines, and refrigerators are gaining strength in the sector.
"Retail sales have picked up. We are expecting 8 to 10 per cent volume growth for the industry and 25 to 30 per cent by value," said CEAMA President Eric Braganza.
Echoing similar views, Dabur India Executive Director-Sales Adarsh Sharma said: "We expect consumer sentiments to improve as we move towards the peak of the festive season. Food and Beverages and Personal Care are likely to lead the demand growth this festive season, which is expected to be higher than the previous year."
Manish Aggarwal, director of Bikano, stated that he has already noticed a spike in sales and anticipates that it will continue through Diwali.
"We have seen a hike of approximately 15-18 per cent and we are hoping the company's gifting demand will increase this time by approximately 20?25 per cent, and it will be the first satisfactory time in the past years as the pandemic majorly affected our sales in the past two years. We are growing 18 per cent year-on-year post-pandemic," he said.
According to the most recent survey conducted by the Retailers' Association of India (RAI), sales at retail establishments in India as a whole increased by 21% in September 2022 compared to pre-pandemic levels in September 2019.
RAI CEO Kumar Rajagopalan said, "This festive season is expected to be a return to cheer season. There is a sense of thankfulness and well-being and also a sense of fulfilment of aspirations and luxurious cravings."
Growth is also being experienced by Super Plastronics Pvt Ltd (SPPL), which holds licences for popular international brands like Blaupunkt, Thomson, Kodak, and White-Westinghouse.
Avneet Singh Marwah, CEO of SPPL, claims that Thomson has grown by more than 100% during this holiday season.
"We have seen a major spike in large screens. Our Qled google TV was sold out on day 1, another category where we have seen growth is front-load washing machines. The market for the mid and premium segment is growing faster than entry-level currently for Thomson," he said.
However, there are some worries as well, and according to CEAMA President Braganza, sales of goods from the entry-level mass segment have not increased this holiday season.
"What we are seeing is that entry-level has got affected this festive season and sales of middle and high-end products are better," he said adding though the average selling price would be up, the numbers would be impacted from rural areas.
BNP Paribas India in its latest report on consumer durables said the festival season, which began with Onam "failed to sustain momentum as demand started to taper gradually".
"We expect the softening raw material prices to provide some cushion to brands as they might pass on some benefits through discounting to lure customers back," said BNP Paribas India Analyst (Consumer Durables & Capital Goods), Nilesh Bhaiya.
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