Double-digit growth in Jan for consumer electronics, cars & lifestyle retail chains

07 Feb,2012

By Sarah Jacob, Writankar Mukherjee & Neha Dewan

 

Sales of consumer electronics, cars and lifestyle products bounced back in January after a tough quarter, raising hopes of a revival in consumer sentiment in 2012.

 

Companies, including Samsung, Nokia, Hyundai Motors and Reliance Retail, have reported up to double-digit sales growth in products such as flat-panel televisions, smartphones, cars and fashion garments in January, as aggressive discount offers on the back of a recovering stock market and appreciating rupee lured shoppers back to the main street.

 

“Not just consumer but overall economic confidence has also picked up in January due to a host of factors such as rupee appreciation, stock market and some policy-level changes like single-brand FDI,” said Adi Godrej, Godrej Group Chairman.

 

“So the fear of declining stock market and rupee depreciation has been replaced by positive consumer sentiment, which is interlinked and is reflecting in healthy consumption,” he added.

 

Shantanu DasGupta, durable maker Whirlpool’s VP (corporate affairs & strategy-South Asia), stated that sales increased across product categories in January. “While demand has been bullish across the country, certain pockets in the north and west performed exceptionally well. The summer looks positive,” he said.

 

Carmakers too are upbeat after a tough 2011 when sales rose just 4.24 per cent. Companies are optimistic that new models and stable interest rates on loans could bring back the boom.

 

“The new year seems to have started on a positive note,” said Arvind Saxena, Hyundai Motor India Director (marketing and sales). Hyundai saw a 12 per cent jump in sales to 33,900 cars in January.

 

But marketers are still cautious. Several segments are still growing on the back of heavy discounts and end-of-season sales. Consumer sentiment not clear ye

 

Analysts say consumer sentiment is not clear despite the positive signs. “The environment is still challenging. Interest rates are high and consumer sentiment remains uncertain,” said Anand Ramanathan, associate director at management consultancy KPMG.

 

Sandeep Kulhalli, VP-retail and marketing at Titan Industries’ jewellery chain Tanishq, said: “Much of the positiveness is because the whole market is on discount offers.” In January, Finance Minister Pranab Mukherjee said this fiscal would be challenging.

 

With GDP growth forecast being tempered to 7.2 per cent from 8.6 per cent, the economy had been wrestling with high commodity prices, sharp increases in interest rates and the Euro zone crisis, which dampened consumer confidence in the third quarter.

 

All eyes are now on the Union Budget over whether the growth momentum in January will sustain over the next quarter by increasing disposable incomes or moves to boost demand.

Rupee impact

The rupee’s gain in January after a downward spiral in the second half of 2011 helped stabilise prices of consumer durables and electronics products, which require imported raw materials, and boost demand.

Korean electronics maker Samsung’s flat-panel television sales grew 50 per cent over last January and more than 85 per cent compared with December 2011. “The rupee stabilising against the dollar is one factor for higher sales,” said Mahesh Krishnan, Samsung India VP-home appliances.

Rupee depreciation had prompted several companies to increase prices by 5-10 per cent in several tranches late last year. The personal computer market bounced back to low double-digit growth in January compared with November-December when it shrunk around 15 per cent.

Several brands also reduced prices that brought back the market into shape, said S Rajendran, Acer India chief marketing officer. New launches too helped boost demand. The country’s largest phone maker, Nokia India, launched five new devices under Lumia and Asha series that boosted sales in January, both over last year and compared with November-December.

Sunil Dutt, MD of Research in Motion India, which makes BlackBerry smartphones, said smartphone sales increased 40-50 per cent since the second week of January compared with a flat November-December 2010. “The market is back to its natural growth momentum.”

Bijou Kurien, president and CEO of Reliance Retail-lifestyle, said good performance of export and IT firms in the third quarter had a rub off on consumer confidence in terms of bonuses and increments. “This will help the upward trend continue through February and March,” he said.

Reliance Retail’s lifestyle division posted an upswing in retail sales since January 7, reaching its peak over the Republic day weekend. J Suresh, MD and CEO of Arvind Brands and Retail, which makes Arrow, Flying Machine and US Polo in India, however, cautions that it would be best not to get carried away by performance in the end-of-season sales period just yet.

Pushpa Bector, senior VP of another New Delhi-based mall, DLF Promenade, said: “People are getting far more conscious today. If they get a good deal, they tend to stock up.”

– With inputs from Chanchal Pal Chauhan

 

Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

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