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Journalism of Courage
Salaries are up, bonuses are fatter and fundamentals seem stronger, but consumer durables sales have failed to boom. Blame discounts, competition, lower margins and special offers for the missing sparkle in consumer sales.
But in the expanding ranks of consumer durables players — where the likes of Haier, Kores and Hyundai now compete — talk is about a 30 to 35 per cent rise in festival sales. While some of the newer firms could well see hefty growth rates on small bases, the overall picture is dull. Simply put, Diwali has failed to deliver for consumer good firms. Expectations were high. Last Diwali, the Indian consumer did not have the confidence to open up her purse. This year was supposed to be different, and consumers were bombarded by round-the-clock advertising. But consumer confusion, the general shift towards around-the-year shopping, and sales attrition thanks to mobile phones and cars hit consumer durable sales.
THE NUMBERS
Even the hottest-selling durable commodities — colour TVs, for instance — are expected to sell a lowly 13 per cent more this year than the last. Saysc ICRA, around 0.8 million units sold around last Diwali, estimated to go up to 0.9 million this year. This, despite the shift to flat screens, plasma and projection TVs.
Says Vineet Nigam, assistant general manager of rating firm ICRA, ‘‘At the most you can expect a 5 to 10 per cent rise this Diwali.’’
Even Nilesh Gupta, managing partner, Vijay Sales, among the largest retail consumer electronic chains in Mumbai and Thane believes this year’s Diwali sales, will stick to last year’s performance. ‘‘I don’t see any extraordinary figures here in terms of value,’’ he said. However, the ‘‘small’’ drop in prices for some products may end in a boost in quantity terms. Finance schemes and special offers have managed to bring customers back to the showrooms and the problem, it appears, is one of plenty.
TOO MUCH, TOO MANY
It’s a problem of plenty, says Harminder Sahni, principal, KSA Technopak. ‘‘A whole lot of new MNCs are foraying into India at the same time. With high decibal ad campaigns and loads of money pumped into marketing, the impact is to create a highly fragmented market, with very confused customers,’’ says Sahni.
Besides, automobiles are driving away with most of the profits that went to consumer durable players until last year. ‘‘The auto sector is very aggressive this year. In fact they can give even the established players a very tough time.’’ ‘‘I see a 16 per cent hike in overall market size,’’ Sahni says.
Exceptions remain. Yatinder Nath, deputy head of sales at Sony India is not letting numbers dampen optimism. ‘‘In value terms, compared to last year, we are expecting a growth of 90 per cent,’’ he said. CTV sales, Sony’s cash cow, are up nearly 100 per cent, compared with last Diwali. ‘‘We had 80 per cent more sales in all categories three days before Diwali, compared to Diwali time last year,’’ claims Nath.
TOUGH BATTLE AHEAD
Others say slow sales have picked up later. ‘‘We are bang on target,’’ claims Girish Rao, head of sales at LG Electronics India Ltd. LG’s turnover in October 2003 was Rs 500 crore, but expects to rake in close to Rs 1,000 crore in October and November 2004. ‘‘We expect to grow at least 40 per cent over last year,’’ Rao said, adding that most of his sales are in rural and semi-urban areas.
Some companies are keeping figures closer to their chest. ‘‘We cannot say how much we are doing this year, but last year we did a robust 30 per cent,’’ says Gautam Dalal, brand manager, Philips India Ltd. One fact is now increasingly getting clearer. The white goods sector will witness another shakeout soon. Some of the old companies will find the going tough now.
