Consumer goods orders swell as brands bet big on festive season - The Economic Times

Consumer goods companies across sectors are placing over 10% higher orders to manufacturers for the upcoming festive season compared to last year, signalling they are gung-ho about a revival in consumer spending by then, industry executives said.
Most companies undertake their festive season stock planning in May-June and place orders so that production can commence in June. "I feel in the forthcoming quarters...in a month or two, things are going to look up significantly," said Atul Lall, managing director of Dixon Technologies India, one of the largest electronic products contract manufacturers.

Things are looking better as the industry is heading towards the festive period, he told analysts at the company's March quarter earnings call last week.

Order book for mobile phones "is very, very healthy" with a large order from Motorola, there are healthy orders from Airtel for telecom devices, and "very, very good" orders for hearables and wearables with one client going to double capacities, Lall said.

Demand for discretionary products such as consumer electronics, mobile phones, apparel and fashion has been muted after last year's Diwali as consumers shied away from spending due to high inflation, increase in interest rates, job losses in some sectors like IT, and slow economic growth.
Upbeat Sentiment
Companies across sectors have been reporting 15-30% year-on-year fall in sales in recent quarters partly due to high base effect in segments such as apparel and fashion as consumers refreshed their wardrobes last year as offices, schools and colleges reopened after the pandemic.

Now, marketers are upbeat that discretionary spending will bounce back by the festive season, buoyed by easing of inflation and interest rates, the government's capital expenditure push that is expected to boost job creation and private investments, and the weather office's prediction of a normal monsoon that would drive rural consumption, among other factors.

Improving purchasing capability
"Inflation should come down more, improving purchasing capability in small towns and there would be a feel good factor in the economy in October-December quarter due to elections round the corner then," said Lalit Agarwal, managing director of small town-focused apparel retailer V-Mart Retail.

V-Mart is placing 10% higher merchandise order for the festive season as compared to last year. Agarwal said the company usually gives 5% higher orders than the previous season. Clearly, it is more upbeat than usual this year.

Departmental store chain Lifestyle chief executive Devaranjan Iyer said the festive orders it is placing now are in keeping with a double-digit sales growth as it expects business to revive in a big way.

New Models
Smartphone brand Realme's president (international business) Madhav Seth said after a V-shaped decline in smartphone sales post pandemic due to increase in replacement cycles, "We expect demand should revive around this festive season as brands launch new models and consumers upgrade their handsets."

Electronic contract manufacturers DBG Technology and Optiemus Electronics said festive orders are robust. DBG, for instance, has orders of 20 million smartphones this fiscal year compared to 11 million in 2022-23, with most to come during the festive season. Optiemus director Nitesh Gupta said orders for the festive season are higher than last year.

Chief executives of Aditya Birla Fashion and Retail, Devyani International that operates restaurant chains KFC, Pizza Hut and Costa Coffee, and Jubilant FoodWorks that operates Domino's Pizza and Dunkin' Donuts, too, in their recent earnings calls said the situation looks more stable than few months ago and that discretionary spending should revive by the festive season.

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