While in bigger towns and cities, pent up demand has been exhausted and consumers have diverted their expenditure to travel and eating out, for consumers in smaller towns and rural areas, overall inflationary pressure has eaten away their discretionary spends.
“Discounts have made a comeback and will continue till the festive season since brands have to create demand and grow their business,” said Pradeep Jain, managing director of Jaina Group, which retails Karbonn and Sansui brands.
Discounts had disappeared during the peak Covid years when supply had been severely impacted by supply chain disruptions , several industry executives said. The normalisation of supplies had been accompanied by an increase in consumer demand. But, sales of smartphones and televisions have slowed down since the January-March quarter, while appliances like refrigerators and air-conditioners have registered a slowdown in sales from mid-May.
“Online discount will be high till festive season with several brands under severe sales and inventory pile up pressure,” said Avneet Singh Marwah, chief executive of SPPL, which manufactures Kodak, Thomson and Blaupunkt brands.
Industry executives said Amazon and Flipkart have lined up a few sales till August with Amazon’s flagship Prime Day sale expected next month-end. The first and biggest online festive season sale is expected in the last week of September.
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Smartphone and electronic products will be the focus segment during the sale period, industry executives said. Even in the on-going monsoon sale, discounts on these categories have made a comeback. Emails sent to both Amazon and Flipkart remained unanswered.
However, executives such as Jaina group’s Jain, caution that brands too are under pressure due to high input cost and prolonged period of discounting may not be sustainable.
Haier India president Satish NS said there has been a drop in sales after April when the heatwave drove demand. “It (sales dip) is most acute in entry and mid-segment with some impact on the premium end too which still is doing reasonably well. But discounts are back since platforms are under pressure to drive numbers in a dull period,” he said.
Researchers like IDC are estimating the smartphone market will either post flat or low growth in January to June, while Counterpoint Research has revised its annual shipment growth projections from 14% to 10% during the same period.
Tarun Pathak, research director at Counterpoint, said smartphone brands at present have around 8-9 weeks of inventory which is 30% higher than normal levels ,driving brands to clear inventory ahead of the crucial festive sales.
IDC India research director Navkendar Singh said to enable even mid-single digit growth of the smartphone market this year, there needs to be decent growth in the second half of the calendar year. This, he says, will be possible only when brands push discounting and other affordability schemes.
India’s largest smartphone maker, Xiaomi India spokesperson said the company has created various sales events over the years which it will continue to build upon. The person said the supply chain disruptions since the pandemic have impacted the pricing of the products since components like chipsets, battery, memory chips, have seen a constant increase in price.
