E-tailers drive festive season sales for consumer goods makers

Defying negative sentiment, the country’s leading manufacturers of consumer goods have managed to regain growth momentum this festive season.
 
After nearly two years of pandemic-induced disruption and poor economic activities, sales in all key consumer categories have spiked since early October, primarily driven by the online channel.
 
From packaged foods to home appliances and personal electronics, most consumer goods categories have registered 10-15 per cent growth over last year, when sales remained flat.
 
While this time sales through physical outlets remained higher year-on-year, unlike in 2020, when sales had declined, it is e-commerce channels that recorded strong growth.
 
According to consultancy firm Redseer’s estimates, online sales have grown almost 25 per cent — to Rs 32,000 crore from Rs 26,000 crore last year —between October 2 and 10.
 
The figure is 68.4 per cent higher than in the pre-pandemic days in 2019.
 
As consumers cotton on to online shopping during the pandemic, sales in categories like fashion and apparel, appliances, and electronics items other than mobile handsets have grown significantly.
 
According to Avneet Singh Marwah, chief executive officer of Superplastronics, sales of its smart TVs and washing machines have grown more than 50 per cent this festive season, primarily through leading e-tailers like Flipkart.
 
“Indian consumers are showing an increasing intent towards discretionary spends in anticipation of the upcoming festivities like Dussehra and Diwali. Online sales will play an increasingly important role as the pandemic has seen a significant shift towards online shopping, and online festivals like the Amazon Great Indian Festival and Flipkart Big Billion Days offer attractive discounts to customers,” said Porus Doctor, partner and consumer industry leader, Deloitte Touche Tohmatsu India.

 
While consumer goods makers expect the festive buying spree to continue till Diwali in early November, early signs indicate sales growth is skewed towards premium categories. According to large appliance and electronics makers, a large chunk of festive purchases is taking place owing to consumers upgrading to larger and costlier items, while sales in lower price bands are flat. The sales growth of automatic washing machines, both top-load and front-load, is in high double digits, while those of semi-automatic items are in single digits.
 
In the smart TV category, sales of 43-55-inch ultra-HD sets are the fastest, followed by the 65-inch category.
 
Sales of refrigerators larger than 350-litre are growing 20 per cent against direct cool models (smaller then 200L), which are increasing at about 5 per cent.
 
In the packaged goods space, industry executives have captured similar trends. According to Mayank Shah, senior category head at Parle Products, sales of premium items are growing fastest in the essential categories.
 
Most leading makers of consumer goods are, however, hopeful that as the festive season advances, sentiment in the lower strata would also lift.
 
“It is an important time for PepsiCo India. We are hopeful of an added push for in-home consumption in addition to out-of-home consumption as restrictions ease,” said a PepsiCo India spokesperson.
 
In anticipation of better sales and “with an intent to entrench deep in the markets”, this time the firm has launched region-specific, limited-edition festive packs in West Bengal and Gujarat for Durga Pujo and Navratri, respectively.
 
According to Adarsh Sharma, executive director (sales) at Dabur India, with improved mobility and expanding vaccine coverage, consumer sentiment will improve as the peak of festivities is nearer.
 
“Food and beverages are likely to lead demand growth this festive season, which is expected to be higher than in the previous year,” he said.