Consumer durable cos set their sights on Christmas, New Year to bolster sales

Companies are hoping there will be a leg-up in sales of home appliance

Makers of products such as refrigerators, washing machines and television sets are turning to the Christmas and New Year periods to drive sales as a weak Diwali leaves many scrambling to achieve their targets.

On an average, Christmas and New Year give companies about 10-12% of their full-year sales. Diwali is comparatively bigger contributing about 30-35% to a company's topline. While companies such as LG and Samsung say that they had good sales during the Diwali season this year seeing growth in excess of 20-25%, industry executives and retailers say that the uptick was largely seen in technology-led categories such as smart phones, tablets and flat-panel TVs especially light-emitting diode or LED TVs.

"Home appliances suffered because of a combination of factors," said George Menezes, chief operating officer, Godrej Appliances.

He said, "A major deterrent was the steep increase in price of home appliance products thanks to the fluctuation in the rupee-dollar exchange rate. Secondly, the replacement cycle for home appliances is getting extended, which means that consumers are opting not to change their products too soon."

If the replacement cycle earlier was around two to three years depending on the product they brought, now consumers are opting not to go for a change even four years after purchase, Menezes explained. For white goods, the problem is even more acute because prices shoot up year-on-year unlike flat panel TVs which see an erosion in price because of technology advancement.

This year, refrigerator prices were up by 10%, while air conditioners, micro-wave ovens and washing machines were up by 15%, say retailers. In comparison, the price differential between LCD and LED TVs is rapidly diminishing, making it attractive for consumers to go for the latter, Nilesh Gupta, managing partner of Mumbai-based consumer durable chain Vijay Sales said.

For instance, a 32-inch entry-level LCD from Samsung costs Rs 28,000 to Rs 29,000, while an LED of the same screen-size from the company costs roughly about Rs 3,000 more at about Rs 31,000 to Rs 32,000. The scenario is no different with other key manufacturers such as LG, whose price differential between LCD and LED TVs has come down dramatically in the last one year. Sony is the only key player, whose price differential between LCD and LEDs, is about 25-30%. But technology advancements, say company executives, is making LED TVs affordable, turning it into an attractive draw in the process.

Manufacturers admit that the demand for mobile phones, tablets and flat-panel TVs especially LEDs is not likely to recede during Christmas and Diwali too since they are attractive gifting options. Home appliances, on the other hand, are likely to be pushed with the help of discounts and offers. "Christmas and New Year is particularly strong in the south and west. So yes, there will be offers to drive sales during that period," a Samsung spokesperson said. Godrej and Videocon executives said they were putting final touches to the offers they proposed to offer, while LG executives said they had not lined-up anything for the moment.