Optimism on consumer durables sales

Retailers and companies expect 25-30% rise in turnover in the week to the new year but also have fingers crossed

The metaphorical Santa Claus, synonymous with joy, cheer and playful banter during Christmas, is likely to put a smile on retailers' faces this season, despite the general mood being sombre.

Christmas and New Year - big in terms of consumer durables and electronics goods sales in the south and parts of the west - is likely to see growth of  25-30 per cent this year, as retailers clamour to liquidate stocks. Last year, sales growth during Christmas and New Year was 15-20 per cent.

Categories likely to lead the charge are flat-panel television sets, mobile phones, refrigerators and washing machines, said Paras Jain, managing director of Bangalore-based Adishwar, a chain of popular electronics goods stores in Karnataka and Andhra Pradesh. Jain says his chain has begun promoting the week-long festival aggressively. Hansraj Giria, member of the founding family of Girias, a key consumer durables retailer in the south, says their chain would offer price-offs, freebies, exchange schemes and easy financing to boost sales.

While discounts might not be as deep as those offered during Dussehra and Diwali, retailers say it is attractive enough to draw footfalls into stores. "Typically, a combination of price-offs, freebies and exchange schemes works out to a tidy sum," says Nilesh Gupta, chief executive officer, Vijay Sales, a Mumbai-based retailer. While Christmas and New Year are retailer-driven initiatives, with consumer durables and electronicx companies supporting the endeavour, retailers appear to be goading consumers this year to take the plunge rather than defer purchases.

Consumer durables as a category has struggled this calendar year, on account of inflationary and interest rate pressures. The rupee's depreciation by a little over 20 per cent between April and September didn't help, as manufacturers were forced to raise prices by eight to 10 per cent to bridge the gap caused by the rupee's fall.

Predictably, consumers witheld purchases of white goods such as refrigerators, washing machines and microwaves which saw much of the pricing action this year. Retailers in the south and parts of the west appear to be pitching this Christmas and New Year as consumers' last resort to get hold of fairly cheap inventory before prices are revised next year.

Shantanu Dasgupta, vice-president, corporate affairs and strategy, Asia-South, Whirlpool, says he is hopeful of a sales uptick but remains cautious in his optimism. "The demand scenario has been challenging this year. We should get a sense of sales offtake after Christmas and New Year are over," he says.

LG and Samsung executives also struck a cautious note, saying they would rather wait and watch. Brands said to be in demand include LG, Samsung and Sony in flat-panel TVs and Whirlpool, Godrej, LG  and Samsung in appliances, said a cross-section of retailers in the south. Brands with less demand-pull are expected to resort to heavy discount pricing, they added.