Post Chennai flood, consumer durable sales to see 20-25% growth

Retailers bouquet products to attract customers

The recent flood in Chennai has washed away the valuables of the people in the city, including white goods like television sets, refrigerators, washing machines and others. The rain, which started beginning of November and  resulted in the flood in early December, was the worst in the last 100 years.  It has slowed down the sales of consumer durables in retail outlets initially, but the segment is expected to see at least 20-25% growth in near future, according to industry experts.

Almost a week has passed after the flood waters hit the entire city and its suburbs filling water even to the first or the second floor of many buildings, many of the people are returning to their houses and are currently in the process of cleaning up, removing the unusable materials. The damages include loss of their lifetime savings and basic consumer durable products, which are part of their daily lives.

While there might be a growth in the consumer durables and white goods market, how much it would grow depends upon how much the people are affected and how the relief measures and insurance claims work out, which is yet to be known, says Kumar Rajagopalan, chief executive officer of Retailers Association of India.

"Almost 25% of the retail sector business has been hampered by this natural calamity. There might be a growth in near future in terms of demand, but we have to wait for another 10 to 15 days to know how much it would be. I would expect a 25% growth in sales for consumer durables and white goods in the near future in Chennai," he added. The growth could even grow double if the individual retailer or wholesaler is aggressive, he added.

The increase in demand would also depend upon the financing schemes offered by various retailers and financiers, he added.

"The devastation is now reflecting in a drastic dip in the consumer buying sentiments. Our primary focus is on the safety of our employees and rehabilitation of Chennai citizens. We are hopeful that the market situation and consumer sentiments will be back to normal soon and we will witness the upsurge in demands," said Sajeev Rajasekharan, Deputy Divisional Managing Director for Channel and Retail, Panasonic India.

Consumer electronics major LG India said that sales of the company, which has a presence in around 250 stores across Chennai, got affected in December when the deluge brought everything in the city to a halt.

"It is early days yet. People will first assess what they really need and we expect the demand to rise once people have recovered from the initial shock of the crisis that hit them. Our only desire right now is to see people resuming their normal life and getting over the trauma of what they had to suffer. We do expect to see a surge in the demand for consumer durables once that happens," said Niladri Datta-Head Corporate Marketing, LG India.

"The market has not picked up yet, but is expected to grow soon. People cannot live without watching television. Similar is the case of other consumer electronic products," said H VasanthaKumar, founder of Vasanth and Co, a retail chain of consumer electronics which has around 61 showrooms across Tamil Nadu and other States.

He said that his retail outlets would start giving offer price for a package of consumer durable products, which would include television, refrigerator, washing machine and others, in next few days.

However, considering that many have lost their wealth and would require money for other basic requirements immediately, the sales is expected to pick up over a period of next few months. There would be growth in sales during the year end, considering the offers during the Christmas, New Year period and also during the most celebrated regional festival of Pongal during the middle of January, 2016.

"The sales is expected to double owing to the floods. Many may look at repairing their electronic products, but one has to see how many units could be saved through repairing," said Sankaran Menon, proprietor of Jainsons Jansons, a wholesaler of home appliances. The low cost products are expected to see faster movement in the market, he added.

Retail sources also said that the consumer durable manufacturers could think of some offers at least for the customers who purchased their products in the last one year, during replacement.

Tamil Nadu Chief Minister has asked for liberal soft loans by the Banks for purchase of vehicles, educational loans to continue to fund the education of children, and personal loans of an amount up to Rs 5 lakh to finance essential domestic durable assets.

She also urged the Centre to bring down the prices of domestic durable goods to an affordable level and asked duty exemptions for white goods and kitchen equipments, which will be sold in the flood affected Districts, till March 31, 2016.