Diwali: Consumer durables firms to see high sales

This festive season is expected to be a happy one for consumer durables companies, with most expecting to clock a sales growth of 40 per cent - double the amount achieved last year.

LG Electronics National Sales Head Amitabh Tiwari says: "This festive season will see us do business of 40 per cent in the region. I am excited about it."

Samsung India Deputy Managing Director Ravinder Zutshi says: "Business has been brisk. I expect to do double of what I did last year."

Last year, sales growth has stood at 15-20 per cent, primarily because consumers were reluctant to spend freely due to the tension they felt on account of the economic slowdown.

"During the festival season last year, the economy was just beginning to recover," says Amitabh, secretary general, Consumer Electronics and Appliances Manufacturers Association (CEAMA). "Growth was sluggish," he adds.

But this year, with the economy having recovered and estimated to grow at 8.4 per cent – up from 7.2 per cent last year – consumers are returning to the market. Consumer durables companies say this is a result of pent-up demand.

Higher disposable incomes, liberal bonus and increments are all contributing to this phenomenon, says LG's Tiwari.

Godrej Appliances Chief Operating Officer George Menezes says: "Normally, there is a dip in sales after Dussehra. But the momentum this year has been on even after Dussehra. This will continue till Diwali, running for four or five days after that."

Tiwari says almost all categories – from television sets to washing machines, refrigerators to air conditoners – are seeing a sales uptick.

The most striking feature this year, however, is the visible uptrading by consumers, who are choosing flat-panel TVs (commonly called LEDs, LCDs) over plain colour TVs, automatic washing machines over semi-automatic ones, frost-free refrigerators over single-door fridges and split ACs over window ACs.

High aspiration levels, the need to be at the fore-front of technology, besides economical pricing, are driving this need for premium products, says Onida Vice-president (sales, marketing and service) K Sriram.

Sample this: According to Tiwari, the likely growth in flat-panel TV sales this festive season is likely to be close to 110 per cent - way above the projected mark of 75 per cent.

Frost-free refrigerators is likely to overshoot its estimated growth mark of 35 per cent to over 50 per cent. Automatic washing machines (both front-loading and top-loading put together) is likely to go past the earlier estimate of 30 per cent to 45 per cent.

Companies are offering freebies to leverage the boom. Godrej is running a Har Din Lakhpati offer, where consumers can win up to Rs 1 lakh on their purchase. Samsung is giving offers that save up to Rs 50,000 on home entertainment products. LG, meanwhile, is offering freebies with its LEDs.