Consumer sales swell as demand crowds unlocked markets

From groceries to smartphones, refrigerators and cars, sales of essential goods and discretionary items in the first two weeks of July rose at the fastest pace in a year, as concerns over the pandemic eased and most states — including several in the south — unlocked their markets.

Sales of these categories increased 30-40% from the same period of June, manufacturers and dealers said. These also expanded 10-20% despite a strong base last year, when pent-up demand after a long lockdown had driven up sales.

At India’s largest biscuit manufacturer, Parle Products, sales recovered fully in July, with the company even facing inventory shortage as demand exceeded expectations, senior category head Krishnarao Buddha said.

“All channels are also building up stock for big sale days like Independence Day. We are yet to see any impact of fuel price hike on demand since consumers are saving on other avenues like office commute and entertainment,” said Buddha.

Sales have been strong in large-ticket or discretionary products as well, from mobile phones and home appliances to cars.

“The passenger vehicle segment is back to pre-pandemic days,” said Vinkesh Gulati, president, Federation of Automotive Dealers Association. Sales grew over 50% compared with the first two weeks of July in the previous two years, he said.

The recovery after the second Covid wave was more secular geographically, said Shashank Srivasatva, senior executive director at car market leader Maruti Suzuki. “There is a quick turnaround in sentiment from the depth of panic in April to resilience shining back in July. The bookings, retails and deliveries are all moving in a positive direction and the supply side is also smoother, barring a few variants on component supply challenge,” he said.

Demand remains strong despite price hikes in most products, as companies across FMCG, appliances, smartphones and automobiles passed on higher commodity costs to consumers.

Sales at LG grew 20% in the first two weeks of July over a year earlier, which the company attributed to high demand for air-conditioners and refrigerators due to delayed monsoons in the north and opening of the southern markets. This has led the country’s largest appliance manufacturer to change its outlook on the Indian market.

“From cautiously optimistic, we are now in an optimistic scenario, even though most purchases by consumers are actual need-based rather than discretionary,” said Deepak Bansal, vice-president (corporate planning) at LG Electronics India.

In the FMCG market, sales grew 30.3% during July 1-14 from the same period in the prior month, according to a study by sales automation firm Bizom. While it was driven by strong stocking across categories, commodities that were impacted earlier due to steep price hikes recovered sharply, with 68% growth after prices were revised.

“FMCG sales indicate that consumption has recovered completely from the pandemic-driven impact with a strong start to second quarter,” said Akshaya D’Souza, chief marketing officer at Mobisy Technologies, which owns Bizom.

Electric equipment company Havells said its sales increased steadily every week this year after the Covid wave, compared with last year, when the demand growth was sudden.

“However, if we average it out, it is actually better than last year,” said its chairman, Anil Rai Gupta.