GST has indeed been a game changer in the consumer durables market. With the introduction of the tax, the consumer durables market has taken a hit in terms of sales in the festive season.
Sales surged prior to the introduction of GST on July 1, when a slew of offers were made by top brands to attract customers in a bid to clear pre-GST stock.
Since July 1, Panasonic India, Usha International, Godrej Appliances and Lloyd India, among others have faced a relatively slow season. This is due to the fact that customers are under the impression that prices have gone up as consumer durables like ACs, refrigerators and TVs are placed in the highest slab of GST at 28%. But in reality the prices have gone up just by 2%-3%.
Now, with Diwali around the corner, the consumer durables industry is expecting a surge in sales that was absent in the past few months. Products like 4K smart TVs and washing machines are expected to shine. There is pent up demand from the past months which is expected to result in expensive and large purchases.
A senior official from Lloyd India said, “Consumer durables sales in the market have taken a hit in the last few months since the introduction of GST and has gone down by almost 20%. We, on the other hand,have recorded an increase in sale by 15% during the same period as compared to last year. ”
The industry expects customers to come to the market at festival time no matter the country’s economic status. Industry players predict a growth of 30% every festive season as they offer attactive deals, discounts and combo offer to lure the consumers. Gift cards, extended warranty and other freebies are also offered to woo customers.
“Overall festive sentiment is high, but there was a Diwali-like boom in sales in the last week of June. It was like a mini Diwali before the GST was introduced on July 1. Now, people are inclined towards high-end products across all verticals. Brick and mortar mobile sales are doing well. But this Diwali may not see a double-digit growth unlike previous years. This is because the sales growth got distributed this year. Generally, we never witness such huge sales in June,” said P.K. Das, business head of Pai International, Andhra Pradesh and Telangana.
Other factors that are expected to play a part in driving sales are the good monsoon that has resulted in a good harvest and the implementation of the 7th pay commission.