Mixed fortune for retailers this season

The festival season in October and November is what retailers and consumer goods companies look forward to every year. With bonuses in their bank accounts, salaried households make expensive purchases around this auspicious time.

This year, there is hardly any cheer in the market place, though three festivals - Eid, Dussehra and Diwali - have fallen in the month of October. Several consumer electronics, automobile, personal care products and food item retailers say sales are sharply down. Even new home sales are learnt to be lackluster.

"Customers are not spending on TV and refrigerators this year," say a Delhi-based consumer electronics retailer. "Our inventories are full as we expected good sales during the festive season, but till now our sales are down by 15-20 per cent against last year."

"This year, it does not look like the festive season at all. The Navratri festival did not bring the customers to our showroom and our sales fell 40 per cent compared with last year," say Sunil Arora, the owner of Shiv Motors, a multi brand two-wheeler retail outfit. Food products retailers are equally troubled as people have reduced their spending on dry fruits and biscuits. Retailers say sales have fallen at least 10 per cent.

Experts say this is the result of the current global financial uncertainty and economic slowdown, though about 4.6 million central government employees have received higher salaries and arrears in their bank accounts.

People have seen significant erosion in their wealth with the meltdown in the stock markets, making them cut down on lifestyle expenses. Banks have clamped down on retail finance after delinquencies have shot up.

"People expect job losses to happen here the way it is happening in the United States. So, they do not want to spend their money on something that is not urgent," say Technopak Advisors Chairman Arvind Singhal. To be sure, sectors like aviation, hospitality, retail and real estate, which had all emerged as large-scale employers in the last few years, are now learnt to be rather laying off people or going slow on recruitment.

At the moment, consumer electronics companies on their part are putting up a brave front. "We had planned to increase our sales between 30 and 35 per cent this festive season and have managed to do that," say LG Electronics India Director (marketing) V Ramachandran.

"Our sales are rocking as compared with last year's festive season. Sales of LCD and plasma screen are really encouraging this time. We hope to see a growth of more than 20 per cent this season as compared with same period last year," adds a senior functionary of another large consumer electronics firm.

However, experts like Singhal sound skeptical of such claims. "The consumer sentiment has fallen, loan disbursement from the banks for consumer electronics has come down by Rs 2,000 crore this year. The market for consumer electronics cannot be better like last year," Singhal says.

However, big multi-brand retailers like the Future Retail, Shoppers Stop and Vishal Retail say they have increased sales between 15 and 20 per cent during the current festival season.

"Our sales are up by 18 per cent this festival season against the same period last year. The consumer sentiment is down but we have managed to offer products at competitive prices and that is why our stores are witnessing increased footfalls," says a top Future Retail executive.

Govind Shrikhande, the CEO of Shoppers Stop, says that the sales of personal care products, accessories and apparels were up substantially as compared the same period last year.