Festive swing of CDIT market

Festive season is leasing fresh air to CDIT sales, as the customers, who are in the full spirit to celebrate, don’t mind to splurge money.

The three-month long festive season has started and is going to reach the pinnacle of celebration with Diwali.  This auspicious season, as per the Hindu beliefs, is right time to spend on wealth as it ensures gain. Gifting is one elaborate custom of this festival. Such activities send a very positive vibe to the markets. The markets are abuzz with new initiatives, new launches and new offerings.  As far as product category is concerned, CDIT (Consumer Durables & IT) segment witnesses a higher percentage of sales during this season.

In Kamal Nandi’s, Executive Vice President-Sales & Marketing, Godrej Appliances words, “Consumer durables market is growing at around 15%. Low penetration of appliances like refrigerators, washing machines, air-conditioners and micro wave ovens, even in urban areas, throw tremendous opportunity for brands. Main reasons for high growth are rise of living standards, easy access to finance, wide range of choice and growth of consumerism in non-metros, semi urban and rural areas. Growth of organised retail has also contributed immensely to the industry. The market for consumer durables is estimated at Rs 400 billion and is expected to reach Rs 600 billion by 2015. This is also visible in the spending pattern report that has been recently released by National Sample Survey Office (NSSO).  The share of expenditure on durable products has grown from 2.6% in 1999-2000 to 6.1 % in 2009-10.” “The market is expected to double in value over the next six years or so,” comments Sajeev R, Chief Operating Officer - Electrolux, PE Electronics Ltd.

Sales hike

Nilesh Gupta, Managing Partner, Vijay Sales Enterprises, informs that during Diwali the company sees nearly doubling of sales. The two-month long high sales see an average growth of about 50%.   During this three-month season, the CDIT industry as a whole sweeps through a 30% growth, as revealed by Manish Sharma, Director-Marketing & Sales, Panasonic India. For Godrej the season contributes to almost 35% of the annual sales in two months and hence has a significant impact on the total turnover. Kaff makes around 40% of the total sales during this festive season which stretches from October to November. “We will be investing around 40% of our total marketing budget, ie, Rs 20 crore during this season,” reveals Sanjeev Dayal, General Manager - Sales & Marketing, Kaff India Pvt Ltd. “Next Retail is expecting a 100% growth over normal time during this festive season,” comments KS Raman, Director, Next Retail India Ltd.

Spiked-up activities

Obviously, Diwali is considered the most auspicious day to buy new products, gold, electronics, etc in India, thus one notices spike in sales during this period. Hence, the season is the ideal launch pad for new products and initiatives. Brands play on this positive sentiment of consumers to come up with their best offerings during this period.

“Historically, Diwali is the season where demand has peaked vis-à-vis any other period of the year. Hence, Diwali should be the ideal time for launching a new product. Since new electronics or appliances would be top-of-the-mind during this season, it makes sense to appeal to them with some exciting value-adds or promotions to make their purchase experience more exciting and satisfying,” comments Brian Bade, Chief Executive, Reliance Digital.

Dayal of Kaff views, “The consumer durables segment relies on this period for its best returns. Throughout the country we have an atmosphere filled with celebration. Consumers look to re-invent their houses and this is where the brands come in with their attractive offers and products.” The same is reasoned by Raman of Next Retail: “Any product that is launched during Diwali obviously has the attraction of a new product launch, and the sale has a faster momentum due to Diwali mood.”

Reliance Digital is coming up with the latest offerings from all the leading brands.  Samsung Electronics Co. Ltd, for instance, will give out gifts worth Rs 150 crore during its 45-day promotion, “Samsung Smart Utsav”. The company is promoting its LCD and LED television sets by offering gifts like 50 blockbuster DVD pack, 3D titles, DVD and Blu-ray players, or a Samsung Soundbar. Assured cash back of denominations between Rs 200 and Rs 15,000 are also available on the purchase of goods such as washing machine, air conditioner, microwave, etc.   Electrolux is offering Electrolux Microwave Start-up Kit worth Rs 1799 absolutely free with every Electrolux Convection or Grill Microwave Ovens during the Diwali festival. Electrolux has also introduced amazing finance schemes and cash discounts such that the consumer lands up paying 0% interest, zero-processing fees and zero-verification charges. The finance schemes and cash discounts would however vary from product to product and model to model. As a part of festive bonanza, Panasonic will be offering a range of assured gifts on purchase of its products, such as travel bags, wireless keyboards for TV, rice cookers, memory cards for cameras with an additive set of bumper prizes, such as holiday abroad, sedan car, gold coins, etc. This festive season, Godrej Appliances is planning to launch its new range of washing machines in top load, front load and semi-automatic categories. Apart from this, in refrigerators, it will launch the highly successful Muziplay feature in frost free and upgraded models in both Frost Free and Direct Cool series. It will also be coming up with an exciting consumer offer of up to 100% cash back. Sony offers Sony Digital Photo Frame worth Rs 3,990 on purchase of 46” and above LCD or LED TV, Sony Clock Radio worth Rs 1,490 on purchase of 32” & 40” LCD or LED TV or 4 GB Sony Pen Drive worth Rs 480 on purchase of 22 & 26” LCD or LED TV.  The company also offers free Airtel TV (HD) connection with two months of subscription on purchase of 32 and above BRAVIA HD TVs. Sony has introduced the ‘Home Theatre Combo Offer’ which extends discounts of up to Rs 4,000 on combined purchase of any BRAVIA LCD TV along with select Home Theatre systems. Sony customers can avail free 4 GB Sony Memory card and Original Carrying case on the purchase of Cyber-shot camera. There is a free carrying case on the purchase of handycam as well. These offers are valid from Sep 19-Oct 31.

Can price correction be a pull factor?

With a rich experience in this domain, Sajeev feels that the most consumers are looking for value for money and lowering price is an important pull factor for the consumers, however, having said that consumers don’t mind spending a premium on brands that they are loyal to or have trust on. “In our space there is always a reduction in prices with better features,” confirms Gupta. Nandi suggests that the right practice should be on providing value added features and command a price for the same, rather than focusing on price cuts, since margins are under severe pressure in durables industry. This results in a win-win situation for both.” Corroborates Bade, “What customers seek is value-for-money, and not price correction per se.”  Raman too views that the number of offers from brands and retailers automatically corrects the price.

Lures for corporate houses

The season also sees corporate houses splurging money on gifts and CDIT is one segment that remains a favourite item for corporate buying or bulk buying.  Ajit Joshi, MD & CEO of Infiniti Retail, which owns the CDIT retail brand, Croma, comments, “Corporate buying is an important part of festive celebrations and we have attractive offers coupled with impeccable service to ensure that corporate houses get the maximum choices and value when they buy from Croma.” For the corporate dealing, Panasonic has a division called New Business Division (NBD). There are two- three verticals under NBD, such as corporate sales, institution sales, B2G and government sales.   Manufacturers and retailers introduce attractive discounts for corporate buying.  “Corporate buying depends on the quantum of buying a corporate does, and if it’s huge then we work out a good discount varying from 10 to 20% depending on the category of products he is buying,” informs Gupta. Reliance Digital comes with a unique ‘15-day lowest price guarantee’. “However, in exceptional cases, discounts can be offered depending on the volume of business,” reveals Bade. Both Godrej and Electrolux reveal that the extent of discount depends on the volumes, distance of shipment, and the product category.

Customer engagement and freebies

Though the season’s spirit remains high for soaring sales, the competition is bit too high that keeps the CDIT players on their toes.  Sundry ways for customer engagement, including freebie, come into play. Bade comments, “At Reliance Digital, enhancing customer engagement is not about the freebies, rather it is the experience that we provide during the shopping trip to our store. For example, ours is the only destination where a customer can experience different TV technologies at the ‘TV Experience Zone’. We have found this offering to be a big hit with customers.” However, Gupta opines that freebies works the best but along with easy payment options through credit cards also  attract customers. Sanjeev seconds him, “Past experiences have proved that offers or freebies always worked.  Value for money has always been a component for retaining the consumers who switch brands and opt for a more lucrative but reliable brands.” Nandi points out the uniqueness in offerings– “Innovations in marketing and communication can enhance engagement with the consumers during this time. For example, a brand-movie tie-up helps create a further engagement and gets the brand to be noticed by consumers. We did this in 2009 Diwali with the movie Aladin, where apart from the assured gifts, we had offered a chance to act in a movie and a chance to meet Amitabh Bachchan as an additional form of gratification.” “We have recently initiated a mela store project, where we offer up to 70% discount on certain products. This project is being done at 23 locations pan India,” informs Raman.

There’s the grand hailing of festive season by CDIT manufacturers and retailers. The head-turning offerings and marketing are too over-bearing for the customers to avoid. That’s the trick that keeps up the spirit.

Godrej inputs generated by Rajni Pandey