Traders pin hope on festive season sales, focus on cars, home appliances, low-value gold

Production and inventory levels are up. However, traders expect this season to see change in purchase patterns amid the pandemic and missing Chinese goods.

Shoppers in New Market area in Kolkata | Photo: Prashanth Vishwanathan | Bloomberg

New Delhi: After a dismal year characterised by plunging sales, companies and traders are pinning their hopes on the festive season for a revival in demand.

Firms have ramped up production levels, traders and dealers are increasing inventory and online platforms are announcing long festive season sales in anticipation of higher consumer spend.

However, from shift in purchase patterns to missing Chinese goods, this festival season will be unlike the previous years. Traders expect changes in spending patterns and are gearing up to meet the demands of the risk averse as well as home-bound consumers.

Automakers have ramped up production and dealers are stocking up anticipating a pick-up in sales. Traders are also hopeful of improvement in sales of white goods due to pent-up demand as well as some of the announcements by Finance Minister Nirmala Sitharaman to stimulate demand this week.

“The sales have been improving month on month over the last few months. September was better than August and August was better than July. Discretionary purchases are dependent on sentiment. Festival season brings positive sentiments and this year should not be any different,” said Shashank Srivastava, executive director, Maruti Suzuki India Ltd.

“Dealers have been stocking inventory levels in expectation of a good sale. But Covid continues to cause uncertainty and hurt sentiments and is one reason no one has given forward guidance,” he said.

Expectation of renewed growth

According to data compiled by the Federation of Automobile Dealers Association (FADA), at the beginning of this month, inventory for two-wheelers stood at 45-50 days and for passenger vehicles at 35-40 days, as dealers stock up expecting a surge in demand in the festival season.

“The month of October & November brings with itself the much awaited festival season of Navratri, Durga Puja & Diwali… With Banks and NBFCs also gearing up with various festival offers to woo retail customers, auto sales is expected to witness a renewed growth and may close at par with last year. Passenger vehicles and two-wheelers are anticipated to lead the way,” FADA said in a note dated 8 October.

Not only cars and two-wheelers, the demand for other consumer durables is also expected to pick up in the coming days. “This festival season is expected to bring positive changes in the business environment that could last up to 31 March,” said Praveen Khandelwal, secretary general, Confederation of All India Traders.

“Traders were already preparing themselves to meet the festive season demand. With the announcement by the Finance Minister, there is an expectation that sales will improve and address the financial problems faced by traders to quite an extent. Items like kitchen equipment, home decoration, readymade garments, footwear, furniture, electronic equipment and gift articles could see an increased demand,” he said.

Sitharaman announced a scheme earlier this week wherein government employees were allowed to use the cash equivalent of their leave travel concession and spend it on items that attract goods and services tax of at least 12 per cent, aimed at encouraging discretionary purchases of items like refrigerators, television sets and grinders. She also announced a festival advance scheme for government employees.

In anticipation of a pick-up in sales, there was a marked improvement in production of consumer durable goods in August, index of industrial production data released on 12 October shows. The segment showed only a 10 per cent year-on-year contraction in August as against a contraction of 47 per cent in the April-August period.

“Post-Shradh period, we have seen 5-7 per cent growth against last year. We are expecting good momentum starting this weekend as the Navratri season begins,” said Ritesh Ghosal, chief marketing officer, Croma-Infiniti Retail.

Amazon India has also announced its first month-long sale, marking a break in its usual pattern. It has also seen a 60 per cent increase in new merchants registered on its platform.

What is the homebound consumer buying?

There is a marked change in the purchasing patterns of the consumers this time around. With many people working from home amid the pandemic, the needs of the consumers have changed.

“Till July, we sold more laptops and home appliances whereas in August the sales of premium smartphones and large televisions started to get aggressive. This festive season could prove better than last season for certain segments such as home, kitchen appliances. People are not going out and are trying to make their home a comfortable place with a bigger refrigerator for more storage or bigger and smarter television for entertainment needs,” said Ghosal.

“Other categories such as robotic vacuum cleaners, mops, microwaves and OTGs are also expected to post an increase in sales,” he said.

This season, there will be another marked change in sale patterns. With the call for boycotting Chinese goods by local traders in the aftermath of the tensions between India and China along the Line of Actual Control, Chinese goods may be a rarity in the Indian market.

“Majority of stuff for festival season comes from China including Chinese toys, electronics, gifts and decoration lights. However, our retailers have boycotted the Chinese stuff and avoiding to promote them. Moreover, checking on ports for Chinese goods is also taking longer than usual,” said V.K. Bansal, national general secretary, Federation of All India Vyapar Mandal (FAIVM), a traders and retailers body.

Focus on low-value gold jewellery

Jewellers are also expecting some upward movement in demand but for relatively lighter weight jewellery as consumers may not favour making high value purchases.

“The mood is upbeat even though sales are low. We are trying to refill the missing stocks on the light weight category side. We expect low budget items to do very well ranging from 1 gm to 20 gm,” said N. Anantha Padmanaban, chairman, All India Gems & Jewellery Council.

“We are concentrating on those categories like nose pins, tops rings, bracelets, light weight necklaces and bangles. For light jewellery, we may increase a little more than normal stock,” he added.