Anticipation of lower GST rates and higher prices deterred consumers from purchasing household appliances during Pongal this year. States such as Tamil Nadu and Kerala, which usually record high sales in January when the festival is celebrated, witnessed lackluster sales across categories such as televisions, air conditioners and refrigerators compared to last year.

For instance, LG India witnessed the lowest growth for its single-door refrigerators during the harvest season this year.

“Our biggest category of single-door refrigerators de-grew by 10 per cent, both in volume and value, during Pongal. Volumes were also flat for washing machines, while sales of air conditioners also faced de-growth between 3-4 per cent, as the trade was confused about energy ratings. New consumers were also deterred by the high prices, which led to de-growth during Pongal over last season,” said P Sudheer, Senior Regional Business Head, South, LG India.

Sales fall again

In fact, last Pongal, LG had registered a 40 per cent growth after demonetisation, and sales were rebounding after the cyclone and demise of Tamil Nadu Chief Minister J Jayalalithaa.

“Sales had improved in January last year after the loss witnessed last December due to the cyclone and death of Tamil Nadu Chief Minister. But this January it has dropped by 18 to 20 per cent compared to last year during Pongal,” added Sudheer.

Godrej Appliances also witnessed a similar trend. “There was low consumer demand as sales did not pick up during Pongal this year. Consumers were postponing their purchases hoping GST rates would drop from 28 per cent to 18 per cent as prices have been going up steadily in the home-appliance categories,” said Kamal Nandi, Business Head, Godrej Appliances.

Morover, changes in energy labelling norms for categories such as air conditioners (for which the season is just starting) has also taken a toll in terms of increased prices.

Godrej Appliances witnessed almost 6-10 per cent drop in sales in categories such as air conditioners during Pongal over last year, while refrigerator sales were down by 3-4 per cent. “During Januaryour sales have been flat certain categories. The slide in sales has been happening since demonetisation as energy labelling in categories such as air conditioners has shifted, making its more expensive,” added Nandi.

The cost of raw materials, such as steel, copper and foam have also escalated, and coupled with the GST impact, has led to a fall in consumer demand for the home-appliances categories.

“The price of a single-door refrigerator now equals the price of a double-door refrigerator five years ago. This has impacted new consumers from entering the category. This has been reflected in Pongal sales this year,” added Sudheer.

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