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Brands, retailers bank on festive sales to make up for low demand for electronics this year

Brands, retailers bank on festive sales to make up for low demand for electronics this year
Photo Credit: Pixabay
8 Sep, 2022
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Consumer electronics firms, and online and offline retailers, are looking to make up for an altogether tough year so far through the upcoming festive sales. The industry as a whole is hoping that deep discounts during the festive season, along with new launches, and consumer’s looking to upgrade to 5G phones, will help make up for the sales they’ve lost during the first half of the year, owing to supply constraints, and a drop in consumer demand.

In addition, industry sources also said that retailers and brands are looking to get rid of 4G smartphones, which have accumulated through the year, owing to lesser demand. 

“With the 5G auction complete and telcos announcing plans to roll out 5G services, we believe this festive season will be a defining moment for 5G device adoption in India,” said Muralikrishnan B, president of Xiaomi India. He added that festive season sales are going to be “very different” from the last two years this time.

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“We had a tough H1. We want to reverse all that with the festive sales and ensure that we exit the year on a high note,” he added. Xiaomi a new 5G smartphone called Redmi 11 Prime 5G in the Rs 10-15k segment earlier this week, which is the “sweet spot for 5G adoption,” according to Muralikrishnan. 

He said that the company plans to offer big discounts, exchange offers, and cashbacks to consumers during the festive sales. In addition, it is talking to telcos to bundle data plans with 5G devices, hoping to make them more appealing for consumers. Smart TVs and smart home products, too, will get discounted.

Xiaomi isn’t the only one either. Fellow Chinese compatriot Realme, too, is planning to offer big discounts. On September 6, the company announced plans to offer offers worth ₹700 crores during the Realme Festive Days sale, which starts on September 8.

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Deep discounting may work too. According to Tarun Pathak, research director at Counterpoint Research, “There is some pent-up demand as many consumers held onto their devices during that time.”

“This time OEMs will go big on financing. There will be upgrade offers around 5G, where users can buy 5G phones in exchange for 4G devices,” he added.

Brands aside, retailers also want to cash-in on the festive period. “We expect this to be our biggest Big Billion Days sales and beat even last year’s record,” said Bharath Ram, senior vice president, of user activation and retention at Flipkart. According to Ram, Flipkart has made design changes and added new features to its mobile app to lift the user experience during the festive season sales. It has also revamped the ‘My Accounts’ page so customers can access credit options easily.

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On the offline side, Nilesh Gupta, director at electronics retail chain Vijay Sales, said that sales the company ran during the Independence Day last month, have driven expectations for “the best festive season sales” this year. 

He added that while discounts offered are more or less the same in online and offline channels this year, consumers can expects longer EMI tenures for buying offline. The company expected 7-10% growth during the festive season sales, as compared to 2019. “It should translate into 25-30% growth in value as prices have also gone up by 18-20% since then,” he added. 

Interestingly, the industry expects better value from this year’s sales, they don’t actually expect volume sales to go up. This is because average selling prices (ASPs) of electronic products have gone up in India through this year, because of supply chain constraints and more. At higher prices, companies can drive more value out of lower volumes.

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According to a quarterly report by the International Data Corporation (IDC), average selling price (ASPs) of new phones rose by 15% in the quarter ended 30 June from a year earlier. The firm said that ASPs reached around ₹17,000 this year from around ₹13,500 last year.

“In our projections, we are seeing that volume will decline by 6% as compared to last year, but the value will grow by 6 to 7%,” said Counterpoint’s Pathak.