When Mr B. Dwarakanath ambled into an electronics shop at mid-day in T.Nagar in Chennai, little did he know that it would take him a good quarter of an hour to even get the attention of the sales person. The shopper knew it would be crowded on New Year's eve, but not to this capacity.

Mr Dwarakanath was not the only one surprised — even those manning the sales counters were. After all, with cyclone Thane, leaving behind a trail of destruction in Puducherry and Cuddalore to the south of Chennai, retailers had been worried about customer sentiment being affected.

Reason to pop the cork

However, after tepid consumer spending almost the whole of last year, the 2012 ‘New Year Sales' gave durables retailers in the South a valid reason to pop the cork. Retail outlets in major cities and towns were seen bursting with shoppers during the last 2-3 days.

Part of the reason was the lavish freebies being given away. “I got a DVD player free,” said Mr Dwarakanath, proudly flaunting the disc. He bought a 40-inch plasma TV that day.

Major retail players including Viveks, Vasanth & Co and Girias lured consumers with discounts and offers such as ‘Pay Re 1 and take home your TV.'

There was at least 20-25 per cent growth over last year's ‘sale' – driven predominantly by flat panel TVs, said Mr Kothandarama Setty, chairman, Viveks. “Almost all our 46 stores - including eight in Bangalore - reported good sales this year,” he said.

Mr Nitesh Giria of Girias Investments that runs a chain 25 retail stores in Karnataka and Tamil Nadu reported the same trend.

Mr Vasanthakumar of Vasanth & Co said there was 30 per cent growth over last year. According to him, flat panel TV, followed by refrigerators and washing machines, drove the sales this year. Vasanth & Co has 51 stores across Tamil Nadu, Puducherry and Bangalore.

This growth was despite the lack of financing options for consumers after big players such as ICICI Bank, City Finance and GE Countrywide pulled out of the market a couple of years ago. Currently, only Bajaj Finance and Shriram offer finance. Bajaj, this year, gave pre-approved credit vouchers to its customers (based on their track records), said Mr Setty. But he said majority of the business came from credit card or cash sales.

Mr Giraj Sharma, a brand consultant, warned against reading too much in the surge in New Year's sale. “According to me, overall durables industry growth is not up to the expectations.” The first six months of 2012 are expected to be a little gloomy, and consumer sentiment is not too good, he said.

Industry sentiment

The common industry sentiment too is pessimistic. Spikes in food, rent, electricity and fuel are expected to leave little room for any big increase in consumer spending in 2012.

> rravikumar@thehindu.co.in

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