Consumer goods companies clocked robust festive season sales as they shrugged off subdued demand in the weeks leading up to Diwali.
Retailers of home appliances, fast-moving consumer goods (FMCG) and apparel said customers flocked to the showrooms ahead of Diwali.
Electronics retail chain Vijay Sales reported growth in volumes as well as value in this festive season, compared to last year, with consumers buying larger television sets, microwaves, mobile phones and laptops. Sales grew for both entry level and premium electronics and home appliances, said a top executive.
“Overall, this festive season has been extremely good. We have seen growth of nearly 15% in sales. After a long time, we’ve seen growth in volumes as well at 10-11%. Only two categories, air conditioners and refrigerators, were flat primarily because of the weather. Barring these, all other categories have grown and have done very well,” said Nilesh Gupta, director, Vijay Sales.
Most buyers used the option of easy monthly instalments even as companies doled out promotions such as cashbacks and freebies, Gupta added.
Packaged foods company Parle Products reported 6-7% rise in sales volume this festive season, primarily due to people making renewed purchases after two years of covid-induced lockdowns and subdued festivities, said Mayank Shah, senior category head, Parle. “Consumers were in the mood to rejoice and we saw strong demand in numerous food categories that increased by 10-12% (value growth) in September-October, compared to the previous year October-November (the Diwali period). Volume growth was 6-7%,” he added.
To be sure, demand for consumer goods was muted as inflation impacted household budgets. Companies are also reeling under high raw material cost, which is hurting margins.
Last week, packaged consumer goods company Dabur India said it had ample stocks of gift items such as Real juices, honey and Chyawanprash leading up to the festivities. “Inventory levels in the trade have gone up and trade has been receptive to that inventory,” said Mohit Malhotra, chief executive, Dabur India.
Retail technology company Bizom, which tracks sales of packaged goods within stores, reported an uptick in consumption of sweets and savouries, along with special festival foods, leading to a surge in commodity sales during Diwali. However, personal care and beverages witnessed a sequential decline in sales.
“Festive food consumption and gifting has helped shore up sales for FMCG products in the festival season. We’ve seen consumers exhibit revenge festivities which has helped drive FMCG sales up despite headwinds of inflation keeping their non-food discretionary spending relatively under control. We’ve seen stronger growth among urban consumers who definitely had a stronger urge to go out and celebrate compared to rural folks,” Bizom said in a note on festive season demand.
But following the festive season, consumers will return to controlled spending till inflation softens, said Akshay D’Souza, chief of growth and insights at Bizom.
Early data from Retailers’ Association of India indicated an uptick in demand for apparel, electronics and footwear. “In the 10-15 days before Diwali, retailers reported 20-25% growth over 2019 levels. Garments have done well, jewellery has done okay. Sale of electronic items also picked up just before the festival. Some home items did not do as well,” said Kumar Rajagopalan, CEO, Retailers’ Association of India. He, however, added that concerns around high inflation still persist. India’s retail inflation touched a five month high of 7.30% in September.