The Hindu Business Line : Strong consumer demand spells cheer for industry: FICCI survey

The rising demand in the festive season has brought back the cheer for retailers and manufacturing companies, many of whom are in fact revising upwards their year-end targets.

Domestic sales have increased across sectors, from automobiles to consumer durables to FMCG products. This is according to a market survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI).

This situation has vastly changed from last year when marketers were faced with a precarious situation of falling sales and declining revenues. The survey conducted amongst dealers and retailers in select markets in the National Capital Region and direct feedback from companies points to a higher domestic consumption demand.

FICCI’s interaction with dealers of automobile, consumer durables and FMCG brands shows that September saw a substantial jump in sales for products across the segment.

Retailers who took part in the survey reported a 45 per cent jump in footfalls while sales have gone up by 30 per cent.

Most of them concurred that the trend is expected to continue.

Many of the retailers mentioned that September to December is the peak season for them and the start seen in September this year augurs well for the next few months.

Stimulus impact

Companies too continue to remain upbeat about the sales performance in the current festive season.

Automobile companies displayed the highest degree of optimism. The survey says that many of the companies have reported a sales increase of up to 25 per cent in the current season. According to representatives of auto companies, the stimulus package announced by the Government to rev up the economy has had a definite impact on their sales.

The lowering of the excise duty gave a boost to auto sales.

Further, the launch of new models, lowering of interest rates by banks on auto loans, reduced loan processing fee and award of the Sixth Pay Commission were some of the other reasons which are contributing to higher sales in the auto segment.

Companies have reported that while last year interest rates on auto loans were in the range of 12 per cent to 15 per cent, today this has come down to 11 per cent to 12 per cent.

Moreover, nationalised banks have become very aggressive in the auto loan space and are actively trying to enhance their auto loan portfolio.

According to auto dealers, the highest demand in the market today is in the mid-sized segment and many of the new customers are looking for value buys in this category.

The survey reports that the FMCG sector also confirms the buoyancy seen at the retail level. The food industry expects a rewarding Diwali this year with consumers thronging the market.

All major food manufacturers such as Nestle, Cadbury, Coca-Cola, Pepsi, Dabur, amongst others which include leading sweetmeat manufacturers such as Bikanervala and Haldiram are expecting a sales growth of around 20 per cent in their food products during the Diwali season.

Dabur is already observing an increase of around 15-20 per cent in their sales volume of fruit juices through gift packs launched specifically for the festival. Similarly, sweet houses too are expecting a 20-25 per cent increase in sales volume.

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