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Consumer Durable Industry Targets Rs 20,000 Crore Sales This Festive Season
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The consumer durables industry is banking on the festive season to prop up growth. The industry expects demand to resume with the onset of the festive season. Consumer expenditure likely to record a 25-30 per cent growth as the consumer durable market sales is expected to be around Rs 20,000 crore this festive season.
The economic reasons were also cited for the upsurge in sales: good monsoon, gold prices falling, inflation expected to fall further, companies are expected to give good bonuses and so on.
“Positive sentiments are back into the market so the consumer spends on gold, durables, auto, food items, clothes will go up,” says Nitin Mathur, Research Analyst – Emerging Markets Consumer, Société Générale.
As festive season in India is very vital to the consumer durable companies because around 60 per cent of the consumer durable product sales happens during this up beat selling season. Around 30 per cent of the total sales will happen during the festive season of the consumer durable market. In 2015, the industry expects a growth rate of 20-25 percent with a sales target of around Rs 20,000 crore.
High-end durable products across categories of durables sell maximum (up to 60 per cent sales) during the festive season. Firms like Videocon, LG, Samsung, Sony launch their new products during this time of the year. “With the beginning of Dusshehra, we will launch our new models about 45- 50 models on the LED category- Liquid Luminous loaded with festive goodies such as three year warranty and life time subscription free,” says C M Singh, chief operating officer at Videocon.
The company will spend around Rs 25 to 30 crore in its festive season marketing activities out of the total marketing budget of Rs 250 crore this year. Singh said the company will come up with discount offers and lucrative financial schemes on the products this season.
LG India has recently launched its OLED TV and Smart TVs, the promotional activities of which will be buzzing during the festive along with the company’s regular discount offers and freebies. Fiat Chrysler India is planning to launch Punto Abarth, under the price of Rs 10 lakh. It will hit the Indian market during the festive season this year.
With rural market comprising 70 per cent of the total market, the “festive season sale” concept is largely for the urban market. For the rural consumer, major purchases of electronic items, farm equipments happen after harvesting period and during weddings, companies with heavy promotional activities in the Tier I, II and III cities have no such proposition for the rural market. “So the marketer loses out on the rural consumer during the festive season sales on the big ticket items like a TV or two wheeler. With its savings the rural consumer would shop for clothes and food items essentially during festive,” says Pradeep Kashyap, CEO of rural marketing agency MART.
With companies expected to shell out festive bonuses, there would be irrational purchasing decisions as the sense of getting an additional income above the salary in a few months would stimulate and help plan of their purchases in advance. “It is the sense of euphoria that settles in which induces to spend before the actual bonus amount comes to the account of the consumer,” says Mathur.
In consumer durable the consumer buying is a lot more spread out throughout the year especially of the premium category of products but much bigger demand and market still caters to the mass product. Seasonality in consumer buying behaviour has changed in the past few years as premium or even middle-class consumers are no more waiting for the festive season purchasing or offers on the premium goods but instantly buy it as per their needs. But consumers of mass products such as direct cool refrigerator or a flat screen TV for instance will wait for offers and the auspicious time to purchase the product especially in the tier II and III cities.