Many consumer durables and infotech (CDIT) chains had only half the growth they expected for Diwali, an important buying season, despite aggressive advertising and marketing campaigns. Rising inflation, volatility in stock markets and a rising burden of monthly installment payments (EMIs) held customers back, say retailers and analysts.
Next Retail, the country's largest CDIT chain which runs 611 stores, saw a 15 per cent annual growth in its Diwali sales, versus nearly 40 per cent growth last year. It had been expecting 100 per cent growth during Diwali compared to last year. “Many customers did not turn out for shopping,” said K S Raman, director of Next Retail, a unit of the Videocon Group.
Nilesh Gupta, chief executive of Vijay Sales, a Mumbai-based chain with 40-odd stores in Maharashtra and Gujarat, expects a two to three per cent growth in the CDIT segment in metro cities. “The sentiment was bad. Looking at the overall market environment, the growth was not bad,” he said.
The chain, one of the biggest spenders on tabloid ads, managed a growth of three to four per cent in value terms and six to seven per cent in quantity, he said. Last year, it saw a little over 10 per cent growth during the Diwali season.
“The frenzy of buying for festivals like Diwali, Onam, Puja is gone. Half of India's population is young and they do not have a major inclination for festival buying. They are mostly impulsive buyers,” says Sunil Sinha, chief executive, Sharp India, a unit of the Japanese durables maker, Sharp Corporation.
“The organised segment is still a small part of the whole market...Overall sales were not good and I think the same applies to the organised segment. I think inflation has taken a lot of discretionary income from consumers, which is why there is a drop in growth,” says Arvind Singhal, chairman, Technopak Advisors.
However...
The picture, though, isn’t uniform, with some saying they’re reasonably satisfied. Croma, promoted by Tata Sons, and Vivek's, a CDIT chain based in Chennai, say they posted nearly 30 per cent growth in Diwali sales compared to last year. Croma’s average cash memo size rose a little over 50 per cent during Diwali compared to year-to-date figures, says Ajit Joshi, chief executive of Infinity Retail, which runs Croma stores.
“Compared to the market trend, we have done well. Our cash-back schemes have done very well,” he said.
Croma had a tie-up with ICICI Bank for a cash-back scheme wherein card holders got five per cent of the price back, subject to a cap of Rs 1,000 per transaction.
“Almost all segments have done well,” Joshi adds. He says the chain has sharply cut its advertising spending in print and focused on radio and bus hoardings.
Ravinder Zutshi, deputy managing director of Samsung India, says the company saw a 25 per cent growth in sales during this Diwali, compared to 28 per cent last year. “All durables companies have done well,” he says. “Diwali comes once in a year and people sacrifice something to buy what they want.”
Buyers are using the EMI route to buy products in the backdrop of rising inflation and lesser disposable income in their hands, retailers say. “Instead of buying one item, they are using the finance option to buy more items during the festive season,” says Joshi of Croma.
Nilesh Gupta of Vijay Stores says the chain saw a 10 per cent jump in sales via EMIs compared to last Diwali.
Flat TVs
Despite lower growth, most retailers say the sale of flat panel television sets have risen sharply. Gupta of Vijay Sales says the chain saw a five to seven per cent increase in sale of flat panels, including LCDs and LEDs. “Prices of LCDs and LEDs have come down by 10-15 per cent and smaller sizes have come. All these have helped,” he said.
Next and Croma also saw a jump in the sale of flat panel TVs. “The average selling prices have moved up by 30 per cent, which is a encouraging sign. People are upgrading to flat panels, which have higher prices than the normal ones,” Raman says.
