Godrej to rework strategy to boost sagging sales

Slower sales in the peak of summer coupled with fewer consumer finance options has compelled Godrej Appliances to rework its sales strategy for remaining part of the year.

The company plans to focus on institutional sales for air conditioners as demand for the product is expected to rise helped by investments in infrastructure projects and continued expansion of retailers in metros and smaller cities.

“We plan to leverage the synergy of Godrej & Boyce, which is heavily into business to business segment to grab a bigger market share,” Kamal Nandi, vice-president (sales & marketing) of the company said. The company recently bagged big orders for automated teller machine units.

According to industry experts air conditioners are likely to grow by 10 per cent by way of direct consumer sales while growth through institutional and infrastructure sales is pegged at 40 per cent for the remaining financial year.

“During the summer, frost free refrigerators sales were slow mainly as banks and finance companies, hurt by rising delinquencies, curbed loans for consumer durables. For air conditioners, however, it was the weather conditions that reduced demand,” Nandi,

Godrej also plans to target lower rung of the premium level to boost sales. Going by the strong growth it has witnessed for its entry level frost free refrigerators the company aims to provide consumers more choice at entry level price points. This will help the company push its high end range and give consumers a chance to upgrade.

“In every segment we are trying to give consumer a choice of upgrading. For a consumer with a budget of Rs 7,000 for a refrigerator, we want to give portfolio that ranges from Rs. 6000 to Rs. 8000 in the frost free range to give him the choice to upgrade,” explains Nandi.

Godrej has also introduced 5 Star energy labeling for its entry level products to make it a value added proposition. “It is the bottom rung that is worried about electricity bills and not the top end. Hence, it is important to give better technology but it needs to be relevant to the need and lifestyles of the consumer,” he adds.

However industry experts expect the company’s strategy of hedging themselves, may help boost sales temporarily, in the long run this may take away the focus from its premium products. “It may create a down-trading effect in the long run. This may cause a set back to premium end sales as it may take away from the unique proposition at the top-end,” says sector expert Harish Bijoor, CEO, Harish Bijoor Consults Inc.

Meanwhile, the company which is entering the television segment from September – ahead of Diwali- this year views the category as its future growth engine.