HEAVY DISCOUNTS, MARKET RALLY BRING BACK BUYERS

Revival Hopes Take Wing as Shoppers Throng Street

Consumer electronics, automobile and lifestyle retail chains see double-digit sales growth in Jan

Sales of consumer electronics, cars and lifestyle products bounced back in January after a tough quarter, raising hopes of a revival in consumer sentiment in 2012. 

Companies, including Samsung, Nokia, Hyundai Motors and Reliance Retail, have reported up to double-digit sales growth in products such as flat-panel televisions, smartphones, cars and fashion garments in January, as aggressive discount offers on the back of a recovering stock market and appreciating rupee lured shoppers back to the main street. 
"Not just consumer but overall economic confidence has also picked up in January due to a host of factors such as rupee appreciation, stock market and some policy-level changes like singlebrand FDI," says Godrej Group Chairman Adi Godrej. "So the fear of declining stock market and rupee depreciation has been replaced by positive consumer sentiment, which is interlinked and is reflecting in healthy consumption," he adds. 
Shantanu DasGupta, durable maker Whirlpool's VP (corporate affairs & strategy-South Asia), says sales increased across product categories in January. "While demand has been bullish across the country, certain pockets in the north and west performed exceptionally well. The summer looks positive," he says. 
Carmakers too are upbeat after a tough 2011 when sales rose just 4.24%. Companies are optimistic that new models and stable interest rates on loans could bring back the boom. 
"The new year seems to have started on a positive note," says Hyundai Motor India Director (marketing and sales) Arvind Saxena. Hyundai saw a 12% jump in sales to 33,900 cars in January. But marketers are still cautious. Several segments are still growing on the back of heavy discounts and end-of-season sales. 
TRIGGERS FOR REVIVAL 
Rupee gains 7.45% against US dollar in January, its best monthly gain in 17 years Sensex rises 11.3% in January, its highest gain in January in 18 yearsForeign funds' net inflows at $2.1 b after net outflows of about $500 m in 2011 RBI cuts CRR from 6% to 5.5% Inflation falls to 7.5% in December from 9.1% in November, food inflation in negative zone 
Consumer durables makers stabilise 
prices on lower commodity costs Heavy discounts across categoriesApparel retailers advance end-of-season offers to lift waning salesConsumer Sentiment not Clear Yet 
Analysts say consumer sentiment is not clear despite the positive signs. "The environment is still challenging," says Anand Ramanathan, associate director at management consultancy KPMG. "Interest rates are high and consumer sentiment remains uncertain," he adds. Sandeep Kulhalli, VP-retail and marketing at Titan Industries' jewellery chain Tanishq, says, "Much of the positiveness is because the whole market is on discount offers." All eyes are now on the Budget over whether the growth momentum in January will sustain over the next quarter by increasing disposable incomes or moves to boost demand. 
RUPEE IMPACT 
The rupee's gain in January after a downward spiral in the second half of 2011 helped stabilise prices of consumer durables and electronics products, which require imported raw materials, and boost demand. Korean electronics maker Samsung's flat-panel television sales grew 50% over last January and more than 85% compared with December 2011. 
"The rupee stabilising against the dollar is one factor for higher sales," says Samsung India VPhome appliances Mahesh Krishnan. Rupee depreciation had prompted several companies to increase prices by 5-10% in several tranches late last year. The personal computer market bounced back to low double-digit growth in January. Several brands also cut prices that brought back market into shape, says S Rajendran, Acer India chief marketing officer. 
NEW LAUNCHES TOO HELP 
The country's largest phone maker, Nokia India, launched five new devices under Lumia and Asha series that boosted sales in January, both over last year and compared with November-December. 
Sunil Dutt, MD of Research in Motion India, which makes Black-Berry smartphones, says smartphone sales increased 40-50% since the second week of January compared with a flat November-December 2010. "The market is back to its natural growth momentum." Bijou Kurien, president and CEO of Reliance Retail-lifestyle, says good performance of export and IT firms in the third quarter had a rub off on consumer confidence in terms of bonuses and increments. J Suresh, MD and CEO of Arvind Brands and Retail, however, cautions that it would be best not to get carried away by performance in the end-of-season sales period.