Bumper festive season for e-comm firms; India's rich loosen purse strings

The month-long festive season, which kicked in with Navratri on October 7 and concluded with Bhai Dooj on Saturday, has reinforced the widening gap between premium and less affluent consumers in India after the pandemic set in.

The rich loosened their purse strings, lapping up everything big from cars, mobile phones, and televisions to washing machines and refrigerators.

The less affluent remained elusive. Amid soaring inflation, price hikes in various product categories, and a stretched household budget, these buyers continue to be conservative.

From Godrej Appliances and Vijay Sales to Hyundai Motor India, the trend of high-end, bigger-capacity models finding greater favour among consumers was evident across retailers, e-commerce firms, and manufacturers.

Kamal Nandi, business head and executive vice-president at Godrej Appliances, said: “The festive period saw 14 per cent volume growth over last year. Value growth was higher at 28 per cent -- a result of premium segments like frost-free refrigerators, fully automatic washing machines, and ACs seeing greater growth, coupled with the price hikes industry has seen.”

Nilesh Gupta, managing director at Vijay Sales, corroborates the trend. During the festive period, the largest retailers of home appliances and electronics saw 25 per cent growth in value terms even as the volumes were muted and advanced in low single digits as compared to last year.

“Be it televisions, refrigerators, or washing machines, shoppers chose larger-capacity appliances and high-end products over smaller, mass segments,” said Gupta. The price hike of 15 per cent across product categories taken by the retailers and manufacturers of consumer appliances hasn’t gone down well with the buyers in the mass segment, he pointed out.

Nandi said industry was still significantly lower than pre-Covid levels at about a 15 per cent lower value.

Overall, the season has been muted for consumer appliances. The growth rate more than halved to 5-6 per cent from 12-14 per cent in FY21, said Eric Braganza, president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA) “The festive season this year did not live up to the expectations,” said Braganza.

Bumper festive season for e-commerce firms

According to a report by RedSeer Consulting, “the gross merchandise value per shopper has grown by 1.04 times -- indicating an inherent aspiration in the shopper”.  

Overall, it has been a bumper season for e-commerce firms, with most claiming aggressive participation in smaller towns and cities. Amazon’s month-long Great Indian Festival 2021 and Flipkart’s The Big Billion Days, which started early October, have been a great success, said these firms.

Amazon recently said its month-long sales event had seen the biggest-ever shopping activity for its sellers and brand partners, bringing services to millions of customers. It saw participation in 99.7 per cent pin codes. There was over 55 per cent growth in new sellers this The Big Billion Days (TBBD) over 2020. About 57 per cent of these sellers hailed from Tier-2, Tier-3, and smaller cities

But not everyone had a good festive season.

Arvinder Khurana, national president of the All India Mobile Retailers Association, said it had been a “black Diwali for offline and smaller retailers”, with sales dropping by 30-35 per cent year-on-year.

According to Khurana, the early shopping festival and deep discounts by e-commerce firms have hurt offline retailers. He alleged the mobile handset makers did not offer the same schemes/discounts to physical stores.

“Brands and banks are working in collusion and giving instant cash back to online customers only on every purchase,” he alleged, citing an instance of Apple. It has been the most searched and highest-selling brand among all brands and categories as it was sold at very high discounts -- 20 per cent cheaper than the purchase price of offline stores.

Big is beautiful for car buyers too

Premiumisation gathered pace for auto companies too during the festive season. But did not translate into high sales due to chip shortage. High-end models and their top-end and mid trims come packed with tech features that consume more semiconductors or chips that have been in short supply globally.

Half of the total bookings received by Hyundai Motor India this festive season were for SUVs, said Tarun Garg, director (sales and marketing) at the local firm.    

The maker of the Creta and Tucson models has seen overall customer enquiries soar by 10 per cent against 2019 during the festive period. The retails saw a marginal growth rate of 2 per cent over 2019.

“The retails could have been much higher but for the supply constraints on account of the e-component shortage issue,” said Garg. Hyundai has a backlog of around 95,000 bookings and the demand momentum continues to be strong, he added.

SUV major, Mahindra is also struggling to meet demand. It has seen 100 percent growth this season in overall bookings and has close to 150,000 customers waiting for various models, said Veejay Nakra, CEO auto division at the firm.

Market leader Maruti Suzuki too has seen its retails drops Its deliveries during the festive period dropped to 150,000 units from the average 180,000-194,000 in the past years.

“Retails fell short compared to last year due to the shortage of semiconductors. Enquiries and bookings remained robust,” said Shashank Srivastava, executive director (sales and marketing), Maruti.