PHOTO: Associated Press
The economic slowdown has not upset the festival shopping plans of Delhi-based lawyer, Sophia Mustafa. Only she is now waiting for some discount and combo offers to buy home appliances as prices have risen with the rupee depreciation. "I've kept aside Rs 8,000 as my budget and I'm eyeing the festive offers on home appliances," she says.
Some others have deferred plans to buy luxury brands this festive season. "I would avoid buying a pair of jeans or watches that I don't need now," says Sambit Priyadarshi, HR officer with a multinational bank in Ahmedabad. He, too, is now looking for smart bargains. "I would prefer e-commerce sites such as Flipkart.com and Myntra.com to get better deals and save some money," he says. Priyadarshi and his friends are pooling savings for group purchases to avail discounts, both online and at malls.
There's a slowdown and job cuts are becoming commonplace. Then, devaluation of the rupee against the dollar is also making imported raw material and finished goods costlier. It may not impact consumer spending in a big way this festive season. Consumers, though, want more bang for the buck - they are doing bargain hunting and are avoiding buying high end products.
For instance, the jewellery business is likely to be hit by the economic downturn. "At a time when buying gold as investment is not the order of the day, people are postponing purchases," says Ramesh Kumar Sharma, COO, PC Jeweller. The company is offering discounts to push sales. It is also launching light weight jewellery to woo shoppers looking for affordability.
Some other jewellers are hoping for the best. Kiran Dixit, Group Head-Marketing at jewellery chain Tribhovandas Bhimji Zaveri believes that consumers still consider gold purchases as an investment that will appreciate over the long term. "I feel that with the beginning of the festival season the consumer mood will be upbeat because we're entering the biggest festival season in India," says Dixit.
Consumer electronics/durables companies such as Sony India and LG India have set mega sales target this festive season as usual despite the weakening rupee raising prices of their products. Korean consumer electronics major LG expects 20 per cent growth while Japanese electronics giant Sony India is targeting a growth of 30 per cent over the corresponding period last year.
The currency fluctuation is a major challenge for the consumer electronics industry because the imported content is high.
"As manufacturers, some absorb the maximum increase in cost but after a certain point it becomes mandatory for us to pass on a fraction of this hike to the consumers. The impact of the price hike would be seen in all LG home appliance and home electronics products by 3-5 per cent initially," says Sanjay Chitkara, Head, Corporate Marketing. But LG is betting big on its flagship products to drive sales and offset the impact of a sliding rupee. "Festivals such as Onam, Ganesh Chaturthi and Diwali give consumers a reason to make their discretionary purchases by upgrading their home appliances and consumer electronics products and this year will be no exception," adds Chitkara.
Camera maker Canon is also raising prices of its products and is betting on its digital SLR (DSLR) category to drive growth.
"I don't recall increasing prices before the festival time since we launched the camera business here ten years ago," says Alok Bharadwaj, Executive Vice-President, Canon India. The company plans to aggressively market its DSLR category. It is offering customers discounts ranging from 10 to 40 per cent on combo offers for its DSLR bodies and lenses. Bharadwaj expects the segment to grow by 20 per cent in the next three months but expects no growth at all from its entry level compact cameras as they are being cannibalised by smartphones.
Sony India has announced its business plans for Durga Puja, the biggest festival in Eastern India. It plans to sell 85,000 units of Bravia LCD TV during the period, August-November, gaining 42 per cent share of flat panel display market in east India. Sony plans to launch a slew of promotional offers for its customers across all product categories including Bravia, Xperia, VAIO and Cyber-shot. "Eastern region is important for Sony. We have received tremendous encouragement from our consumers here and now it's our chance to provide them with an interesting mix of offers across categories," says Sunil Nayyar, Head, Sales, Sony India.
Dinnerware and cookware companies too have started offering attractive offers and discounts to boost sales.
Himanshu Jhunjhunwala, Business Development Manager at La Opala, Kolkata, a dinnerware company, says, "We have introduced a dinner set for two people at Rs 595. We have also repositioned our premium dinner set, previously priced at Rs 2,000 for six people, at Rs 1,295 for four people." Jhunjhunwala too is awaiting the Diwali season for a hefty discount on a MacBook Air for himself.
Nilesh Gupta, Managing Partner at electronics retailer Vijay Sales, feels that consumer spending will remain robust this festive season because of aggressive promotional schemes such as the 0 per cent EMI model on credit cards. "The consumer who is buying a product for Rs 30, 000 gets an EMI without paying any additional interest," says Gupta, adding that the scheme started by mobile manufacturers is spreading and more product categories will adopt it. "Now you see a lot of cameras with this theme and this Diwali expect a lot of LCDs and LEDs to adopt it as well. Most of the companies will tie up with credit cards for this scheme," he says.
It is apparel and footwear which will sell the most during this festive season, say e-commerce sites such as Myntra.com.
"We are expecting a 20-25 per cent jump in our sales this festive season as people do their family shopping online rather than just buying for themselves," says Ashutosh Lawania, Cofounder, Myntra.com, Bangalore. The website is offering attractive promotional schemes - for instance those who buy more than a certain value of goods are offered freebies.
Hypermarket chain Big Bazaar is confident people will continue to shop at its stores, particularly for apparel and smaller electronics goods. "One of the key things is that when markets are not doing too well, consumers do not go and buy high-end stuff but they still go and buy smaller things," says Akshay Mehrotra, Chief Marketing Officer, Big Bazaar.
Festivals change the consumer sentiment, according to Ankur Bisen, Vice President, Retail, at research firm Technopak. "Consumer brands would be focused on improving sales in this season given the muted sales that we witnessed for the last six months, or a year," he says.
Meanwhile, malls are working overtime to lure more customers during the festive season. For instance, Neptune Magnet Mall, located in Bhandup, Mumbai, plans to have shopping and food festivals. "Footfall is never an issue in any mall in India and seeing the current market scenario you need to be a little bit more encouraging in terms of offers," says Surjit Singh Rajpurohit, CEO, Neptune Magnet Mall, who expects a footfall of about 10 lakh customers per month for the four months starting September.
Some other malls at prominent locations in Mumbai expect the month of October to be the prime sale season.