Festive stocking fires up consumer goods sales in September

Sales of consumer products from pulses and edible oils to refrigerators and smartphones improved sequentially in September, after reporting a drop in August, according to the latest data from market trackers and industry estimates. This has raised corporate expectations of buoyant festive season demand, the peak sales period in India.

Sales of daily groceries and essentials expanded 1.1% in September, reversing the trend last month when it fell 14.5%, according to Bizom, which tracks 7.5 million retail stores across the country. The month-on-month growth was driven largely by commodities after kiranas stocked more staples and edible oils in anticipation of strong festive demand.

Even on a year-on-year (y-o-y) basis, the categories have grown in September. As per Bizom, FMCG sales grew 29.7% y-o-y. For appliances, the sales volume growth has been 2-3% considering that last year the pentup demand had continued into September, the industry estimates.



For smartphones, volume growth is at 4-5%. In 2020, the new iPhones were launched later in October. Year-on-year value growth for electronics and smartphones will be higher in September due to a 10-15% price hike as one of the reasons.

Home appliances have seen 5-8% volume growth over August as per industry estimates, driven by sales during Ganesh Chaturthi and Durga Puja shopping, with companies rolling out early promotional offers, even though sales in the north were muted due to the shraadh period. Growth could have been more if not for product shortages, companies said. Smartphone retailers said September was better than August, led by new launches including premium models such as Apple's iPhone 13 series and Samsung's Galaxy Fold and Flip handsets.

'Supply Chain Disruptions on Mind'
In fast-moving consumer goods, demand was led by both hotels, restaurants and caterers as well as end consumers as September is a period when they overstock for the festive season that lasts for two months, said Angshu Mallick, chief executive of Adani Wilmar, which owns the Fortune and Aadhar brands.

"Consumers also fear that there could be supply chain disruptions or stock out of these essentials and would rather load their pantry early, which also could result in November witnessing a slowdown," he said.

While growth in personal care and packaged foods fell 7% and 5%, respectively, during the month, experts said a rise in social interactions during the festive season could boost sales for these segments.

"The control measures imposed by local state administrations during festivals will be key to driving FMCG consumption as India walks the tightrope between celebrating festivals and controlling the pandemic," said Akshay D'Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom, adding that there is increased traction in confectionery and beverages due to gift pack stocking.

Positive Indicators

CEOs said consumers are waiting for the big festive period sales in October. Amazon and Flipkart will start theirs this weekend itself, earlier unlike previous years, and all indicators are positive for good sales over the next two months, they said. This is despite price hikes in categories such as electronics, laptops and smartphones.

"Consumer sentiment, macroeconomic indicators are good, so are Covid indicators led by high vaccinations, low infection rate. Chances of the third wave impacting the economy is low. Hence, the recovery in September bodes well for the festive season," said Kamal Nandi, business head at Godrej Appliances.

Growth in value was more than that in volume in September, said Deepak Bansal, vice president of corporate planning, LG Electronics, India's largest white goods manufacturer.

"On a year-on-year basis, we grew sales by 10% led by more premium products and price hikes," he said.

Chandu Reddy, director of south India’s largest cellphone retail chain Sangeetha Mobiles, said smartphone volume sales in September grew 3-5% over August and 11% by value. “We expect higher growth in the next two months,” he said.