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Festival Cheers This Diwali?

Etailers are faring well, carmakers are offering best rates, durable firms are eyeing robust growth as well. Industry is cashing in on the festive mood to boost sales and sentiments

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On October 8, the DAY of Dussehra, luxury carmaker Mercedes-Benz India claimed it had sold 200-plus cars — 125-plus on Dussehra in Mumbai and 74 during Navratri in Gujarat. Tata Motors is offering benefits of up to Rs 150,000 on models such as the Nexon, Hexa, Tiago, Tiago NRG, Tigor and the recently launched Harrier. The Mahindra Group has launched a special edition of the Bolero called the Bolero Power+ this Diwali season. The group claims the Bolero is the largest selling utility vehicle in India (since its launch in August 2000) with the highest car park of almost 12 lakh happy owners. Maruti, Hyundai and other carmakers are also doing their bit to attract customers and boost sales in this festive season.

The industry is pinning its hopes on the festival season for robust growth in sales, despite rising concerns about a consumption slowdown. Companies have lined up new product ranges and are sweetening the deal with aggressive financing and promotional offers. Key industry players say they are eyeing a double-digit growth in sales.

High Hopes
In the e-commerce space, is aiming to bring the next 100 million customers online, says Manish Tiwary, Vice President – Category Management, Amazon India. Similarly, Kalyan Krishnamurthy, CEO of Flipkart Group says The Big Billion Day 2019 has proven that Bharat has moved closer to India in more ways than one. Kunal Bahl, Founder & CEO of Snapdeal, says: “The trends from the Diwali sale are an unequivocal confirmation that e-commerce is now a strong channel for buyers in smaller cities.”

Korean consumer durable maker LG India is aiming to generate revenue close to Rs 5,000 crore. “We are planning to close up to Rs 5,000 crore during this festive season with a growth of 30 per cent. During the first five days (29 September-2 October) of Navratra, we have seen more than 70-80 per cent growth in sales,” says Vijay Babu, Vice President (Home appliances) LG Electronics India. According to him, LG India is witnessing an exponential growth in sales.
“This festive season, we are expecting to clock double-digit sales growth across consumer electronics segment, including TV,” says Raju Pullan, Senior VP for Consumer Electronics Business of Samsung India, adding, “With more consumers preferring bigger TV screen size, we expect our premium segment to drive strong sales in the television category.” No specifics on numbers, targets, etc. is shared unlike previous years.

Chinese durable maker Haier India echoes similar sentiment. “The festive season is a vital period for us since it gives us the opportunity to enhance our customers’ experience through exciting offers on our latest innovative products,” says N.S. Satish, Senior Vice President (Sales & Marketing) at Haier Appliances India.

Gulbahar Taurani, President, Personal Health for Philips Indian Subcontinent, says, “Just like every year, this festive season we are optimistic about the growth in sales. We are looking at a growth of more than 20 per cent in sales and continue to reach out to our customers with attractive offers and promotions, with a special focus in the tier I and II markets.” He believes that the expansion in Philips’ product offerings — OneBlade for men and Hair Straightening Brush for women— in the personal grooming space will definitely bring some positive sentiments with increased consumer confidence.

In mid-September, Japan-based Panasonic India launched its ‘Dream More, Celebrate More’ festive offers, which basically presents consumers with an opportunity to win a grand trip to Japan to witness the Olympics Games Tokyo 2020 and a full-home makeover with Panasonic Appliances & Electronics on the purchase of selected Panasonic products. “These offers and promotions have been introduced to make the festive purchases accessible, affordable and durable for the consumers,” says Manish Sharma, President & CEO, Panasonic India and South Asia.
Panasonic’s Indian arm has been looking to turn a net loss of Rs 131.8 crore in 2017-18 profitable. The company’s revenue too fell 3 per cent in FY18 to Rs 5,409.2 crore from Rs 5,589.9 crore in 2016-17. (The financial numbers for FY19 were not available with the Registrar of Companies at the time of filing this report.)

While the Panasonic Group of companies in India had crossed Rs 10,000 crore in gross turnover in FY17. Panasonic India, the flagship entity, generated half the revenue, while the half dozen other Panasonic group companies together contributed the rest.

“The home appliances category has led the growth within the consumer durables industry during the first quarter, and we believe that the trend will continue in the coming months. We are expecting a double-digit growth this festive season, which will be driven by our new range of products across the refrigerator and washing machine categories,” says Sharma, who had earlier talked about crossing the Rs 12,000-crore mark in turnover in FY20.  

Auto Bonanza
The festive season is perhaps the best time in the entire year to go for that special car you were planning to buy for a long time. This is the time when the market is flooded with luring offers, discounts and bonanza thrown in by the carmakers, their dealer networks and channel partners. Maruti is offering a 5-year warranty on diesel cars. “There is a confusion about transition from BS-4 to BS-6 and also with announcement of smaller diesel vehicles being discontinued. Customers is uncertain about the continuity of vehicles. Customers had a feeling that the Vitara Brezza and S-Cross models, which are currently available in diesel only, will be discontinued. This made them hold back their purchases,” says Shashank Srivastava, Executive Director, Marketing & Sales, Maruti Suzuki India.

“To boost sentiments of customers and faith in brand, Maruti Suzuki rolled out a comprehensive 5-year, 1-lakh km warranty on India’s four most loved diesel powered cars: Dzire, S-Cross, Swift and Vitara Brezza. The company also cleared the confusion and assured that it will continue to offer support to these models. In fact the company plans to introduce the petrol variant of both the Vitara Brezza and S-Cross models,” informs Srivastava.

Market leader in the passenger car segment, Maruti Suzuki India says it is encouraged to see an increase in the enquiry levels, especially during festivities across the country. “With the launch of new models in the new BS-6 compliant range, we see positivity during the festive time. Of course customers are making the best of the attractive promotional offers on our full range of cars,” says Srivastava.

Maruti has been witnessing the worst drop in car sales this year. In fact, the automaker saw a reduction of over 3 per cent marketshare in the April-June period. Therefore, Maruti had been lobbying hard for a reduction in the GST rates (not accepted by the government). It is offering an additional Rs 5,000 rebate over and above the festival offers, discounts, etc. once the Centre announced a cut in the corporate tax rate in September.

Asked to elaborate on the steps taken to attract more customers to its showrooms, Srivastava said, “We have taken several steps to boost sales. For example, pushing attractive promotional offers up to Rs 100,000. Then, there was the ‘price cut’ announcement. Aligning itself to the Centre’s initiative to review the market, Maruti Suzuki decided to share the benefit from corporate tax cut with customers. The company announced a price cut on the Alto 800, Alto K10, Swift Diesel, Celerio, Baleno Diesel, Ignis, Dzire Diesel, Tour S Diesel, Vitara Brezza and S-Cross models,” he says.

Rival company Tata Motors is offering benefits up to Rs 150,000 on selected models. “The offers are tailor-made to suit customers of all segments and profiles. Apart from exciting cash benefits, there are offers for customers who exchange their old cars for a new Tata car. Besides, there are specific schemes for government employees and corporates. Tata Motors has also tied up with multiple banks and financial institutions to offer up to 100 per cent on-road finance and low EMI finance packages for their products in this festive season,” says SN Barman, Vice President—Sales, Marketing & Customer Support, Passenger Vehicles Business Unit, Tata Motors.

“The start of the festive season is an exciting time for us, as we get to be a part of our customers’ celebrations by providing them various offers and benefits. Our offerings this year are bigger and better than the previous year and by far the best in the industry. We have received a tremendous response from customers in Onam and Ganesh Chaturthi, and as the festive season spreads to the entire country, the ‘Festival of Cars’ campaign should help in bringing the much-needed cheer among our customers, against the backdrop of the current market conditions,” adds Barman.

Festive time also brings cheers to the used automobile market. For example, the business numbers achieved by, a leading online marketplace for buying and selling used cars, bikes, scooters, bicycles, aeroplanes, etc., during the 2018 festive season was huge. “We did Rs 1,741 crore gross merchandise value sales in the 2018 festive season. With an array of attractive deals, and larger budget allocated for this festive season, we are confident of clocking 40-60 per cent growth even in light of the volatile market conditions,” says Sandeep Aggarwal, Founder & CEO, Droom. This festive season is offering the ‘best’ deals to customers. For example, the company is giving one bike/scooter everyday at Rs 999 or a car every week at Rs 9,999 or one luxury car every month at Rs 99,999, added Aggarwal.

Disruption in LED TV Space
With smart LED TV technology reminiscent of a smartphone, the LED TV market is in for a shakeout as smartphone giants try to redefine the pricing and rules of games, thus squeezing the already thin margins of incumbents, as per a report by Prabhudas Lilladher, one of the country’s leading research-based financial services organisation. The report states that in less than two years, since its launch Xiaomi has become the market leader (39 per cent market share) in smart LED TVs by bundling the latest features at the most accessible price points.

“Prices, this festive season, have halved on the back of higher channel inventory, declining component cost and competitive intensity. Lloyd’s LED TV plans have gone haywire as Xiaomi with its aggressive pricing has filled the void, which Lloyd was planning to cater to. The report remains sceptical on Lloyd’s TV fortunes as increasing competition, pace of technology change and aggressive pricing will erode its existing share in the business (22 per cent of Lloyd sales),” it states.

It adds that the entry of Xiaomi, OnePlus, Motorola, etc. in the smart LED TV space seems to be a natural extension for these brands as they aim to grab the maximum share of the user’s viewing time. “The LED TV industry is in for a shakeout as smartphone players try to redefine the pricing (30-40 per cent discount to market leaders) and rules of games in this market, thereby further squeezing the already thin margins of incumbents. Xiaomi since its launch in India (less than 2 years) has sold over 2 million MI smart LED TVs and currently leads the smart TV market with 39 per cent,” the report says.

Xiaomi India, part of the Xiaomi Corporation, claims to have sold 535 devices per second or over 5.3 million devices during the festive season sale period on e-commerce portals like Flipkart and Amazon. Xiaomi earlier announced an industry milestone of having sold over 250,000 Mi TVs in the first few days across platforms. Last year, Xiaomi sold over 2.5 million smartphones during the same interval, a growth of over 50 per cent YoY.

Raghu Reddy, Head of Categories and Online sales, Xiaomi India, says: “This festive season has been astounding for Xiaomi and we are thrilled that over 5.3 million people decided to celebrate along with us. Every year, we try to make it joyous for our consumers by offering newer products and attractive offers. The love from millions has humbled us, and the fact that over 3.8 million came to buy a Xiaomi smartphone and over 250,000 customers ordered a Mi TV warms our heart. We hope these Xiaomi purchases usher in the festive cheer for everyone and the festive cheer will continue to spread as we extend attractive offers across the entire Dussehra/Diwali period across online and offline.”  

Advertising & Marketing Moolah
Dentsu Aegis Network CEO - India Anand Bhadkamkar says around 40 per cent of advertising budgets are typically spent during the festive period. “Due to the economic slowdown and weak consumer demand, we have seen advertising spends impacted across multiple sectors this year. However, with the government’s efforts to tackle slower economic growth, backed by a good monsoon should help improve consumer demand during this festive period. Festive season spends will accordingly see a moderate growth during this period,” he adds.

RS Sodhi, Managing Director, GCMMF (Amul), had tweeted earlier: “Amul achieved a 26 per cent growth in the last five months. Where is the slowdown?” Some industry reports claim that marketers together will end up spending a bit over Rs 26,000 crore in the two-month festival period. Of course, this will include all spends coming in from big and smaller, national and regional players across India. Asian Paints, a brand among all leading paint companies, waits for the festive season as the demand for painting is sky high across states. This time that is not the case though, feels Amit Syngle, COO, Asian Paints. He expects the festive season to be ‘short’, where the company does not expects any ‘fireworks’. Most listed FMCG companies have not fared well in the past few quarters. Many listed entities, in fact, over 60 per cent, seems to have missed their respective profit forecasts for the first quarter. Many are said to have performed below ‘market expectations’ in the second quarter that ended on 30 September, believe analysts.

Ramesh Kaushik, Vice President (Marketing) for Blackberrys Menswear, agrees: “While the effect of the overall sentiments are being felt across industries and consumer spending has been cautious but, we are definitely expecting a surge during the festive season.” However, the brand is excited about the significant consumer response during Durga Puja. “Our marketing spends will be in line as compared to last year. Laying emphasis on consumer’s media consumption habits, we are launching our festival and celebrations campaign. We are confident that the festive season will be full of celebrations and in line with what we have been seeing over the years,” adds Kaushik. And that is all the marketers can hope for.

Dinesh Lodha, CEO of Rupa & Company, a major knitwear and winter wear brand, expresses his view of a potential good result in the season. He says,” We foresee a promising time ahead as the market is prepping for two consecutive major events- Festive and winter seasons. Our focused approach in marketing to consumer and trade, along with recruiting good talent on the ground has been showing good results. Festive season always bring more disposable income and we have witnessed a considerable jump in orders from retailers. We are hopeful that the market is finally stabilising. Though FY 20 has been challenging but owing to the steps taken internally we see a considerable increase in net sales in comparison to FY 19 September quarter.
Simultaneously, the winter season, which was estimated to be nearly Rs 16, 000 crore in 2018, is growing at 9-10 per cent annually. With these two major seasons ahead and considering our leadership position in the winter wear, we are confident of growing in double digits by the end of FY 19-20.”

What’s Up in Housing? 
Traditionally, the festive season in India usually translates into increased demand, sales and investments, with several banks and developers bringing out special offers that add on to the positives of making a well-charted buying decision. With various government interventions and proactive deal-sweetening by developers in place, the stage is hopefully set for the last quarter of 2019 to witness increased housing sales, feels Anuj Puri, Chairman, ANAROCK Property Consultants. The government’s recent measures for the housing sector, included the creation of a special window of Rs 10,000 crore for last-mile funding of distressed affordable and mid segment homes. Approximately the same amount of funds will be added by outside investors such as LIC, etc. Then in a bold step to help revive the economy, the government slashed the corporate tax rates to 25.17 per cent (inclusive of cess and surcharge) from earlier 30 per cent. “This could have a ripple impact on all sectors, including real estate, as it will encourage foreign institutional investors,” says Puri. To increase liquidity, an additional Rs 20,000 crore will be given to HFCs by the NHB, taking the total to Rs 30,000 crore. Further, the reduction in interest rates when banks link them to the repo rates may also be an incentive for buyers to consider home purchase in the near future, say various housing sector experts.

“The reforms introduced by the government and policy makers and the proactive steps taken by the real estate industry have successfully created an environment of trust between developers and buyers as they have increased transparency in the real estate sector,” says Anshuman Magazine, Chairman & CEO – India, Southeast Asia, Middle East & Africa, CBRE.

Will this increased transparency in the housing sector translate into higher sales this festive season? “Realistically, we can look forward to a minimum housing sales increase of between 5-7 per cent in the fourth quarter of 2019. However, that will still be far below the increase of 20-25 per cent witnessed during the boom years,” says Puri, pointing to the numbers clocked in the festive period in 2018. According to Puri, the top seven cities collectively witnessed rise in sales to the tune of 51 per cent in 2018, when compared to the festive period in 2017. In number terms, the sales in festive quarter of 2018 were 69,860 units, tells Puri.

Magazine feels that the consistent repo rate cuts by the central bank is bound to boost investments and improve consumption activity in the economy going forward. “The rate cut will also result in a reduction in home loan rates and therefore, act as a catalyst for the government’s affordable housing initiative, which has always had the potential to drive the growth of the residential segment,” Magazine adds. Experts point out that the government’s increased focus, particularly over the past two years, has resulted in various steps to ease both supply and demand side issues impacting the affordable housing sector in India. With the right sizing and right pricing of units, the industry is now gradually bridging the demand-supply gap, says Magazine.

It is imperative that the consumption cycle kick starts during the festival period in order to boost demand in economy. While India Inc. waits with bated breath, those who can shop, are shopping – both online and offline. Fingers crossed, a lot is dependent on the festive season this year, the outcome of which may turn out to be crucial for the overall economic climate of the country.  
(With inputs from Ashish Sinha, Shweta, Siddharth Shankar, Prabodh Dubey, Navneel Maji, and Avishek Banerjee) 

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