Expect heavy discounts this festive season as companies clear excess stock | News
In a marketplace shaped by shifting consumer trends and economic uncertainties, the upcoming festive season is poised to be one of the most competitive yet. Companies, eager to capture consumer attention, are expected to ramp up discounts and promotional offers across product categories, according to a report by The Economic Times (ET).
India’s festive season, which stretches from Onam to Diwali and includes Navratri, Durga Puja, and Dussehra, is the country’s largest consumption period. This time of year typically contributes 20-30 per cent of annual sales across various product categories.
But behind the glitter of sales events lies a deeper story of inventory buildup and cautious demand recovery, which is being dampened by weaker demand from low- and mid-income consumers and for entry-level products. This subdued demand was especially apparent during last month’s Independence Day sales, the report noted.
Rising inventories ahead of festive season
India’s festive season kicks off with Onam on September 15, and companies, from carmakers to smartphone manufacturers, are dealing with rising inventory levels. According to industry reports, unsold car inventories reached approximately 421,000 units by the end of August, up from 410,000 at the beginning of the month and 300,000 at the start of the financial year. However, dealers estimate the actual number to be over 700,000 units.
Similarly, Counterpoint Research reported that smartphone inventories at the end of August stood at around ten weeks’ worth of stock, significantly higher than the usual four to five weeks. Quoting Tarun Pathak, Research Director at Counterpoint, the report stated that brands would likely introduce aggressive offers during the festive period, as October alone usually accounts for more than 20 per cent of annual sales for many brands.
Focus on clearing the auto sector pile-up
Sellers are negotiating with brands for deeper discounts and exclusive smartphone model launches, ET claimed, adding that the focus this year is on clearing out inventory. This means that deals are expected to be particularly appealing, especially when combined with additional bank discounts.
Major online retailers Flipkart and Amazon are expected to begin their festive sales—Big Billion Days and the Great Indian Festival, respectively—a week before Navratri, likely around September 25-26.
In the automotive sector, manufacturers have already started adjusting production to align inventory levels with demand. Wholesale volumes fell for two consecutive months, with a 2.5 per cent drop in July followed by a 3 per cent decline in August. The industry is preparing to offer some of the steepest discounts of the year during the festive period.
While SUVs, which account for about 60 per cent of sales, are showing growth, entry-level cars, sedans, and vans are facing sluggish demand, leading to inventory build-up. He added that despite a positive monsoon, which could boost festive sales, the high inventory levels at dealerships are unlikely to be fully cleared during the season.
On Monday, Maruti Suzuki, India’s largest car manufacturer, further reduced prices for its entry-level models, the Alto K10 and S-Presso, in response to market conditions.
Electronics and apparel prepare for demand surge
Despite the challenging market conditions, most electronics and apparel companies are continuing with their festive production plans, concentrating on premium models in case demand unexpectedly surges. This happened earlier in the year when supply shortages during a heatwave affected air conditioner sales.
Companies are also considering reducing production after Diwali, depending on the level of unsold inventory, in the face of unpredictable market demand after the festive season.
First Published: Sep 03 2024 | 10:33 AM IST
