Consumer discretion is a term used to classify goods and services which consumers consider non-essential but desirable if they can buy enough of their income. Several companies said that weekly sales of discretionary consumer goods including ice cream, beverages, snacks, refrigerators and air conditioners have been down to 50 % sequentially, as a result of localized lock-downs, weekend & night curfews and social event restrictions compared to March-end.
Companies said even in states with no restrictions that stores fell, as people were afraid that they would get an infection and several offices returned to do work from home which affected their home consumption. RSS Sodhi, Manager at Gujarat Co-operative Marketing Federation Ltd, owner of Amul, added that ice cream, large packs of cheese and dairy products used by hotels, restaurants and caterers declined by nearly 30%-40%: “Health categories have been hit badly by localized restrictions.”
For home appliances such as refrigerators, air-conditioners and washing machines, sales have dipped by up to 50% as compared to the last week of March. “As compared to 2019, business has already dipped by 30-35% despite a good first week of April,” said Godrej Appliances business head Kamal Nandi. “The decrease in sales or retail openings is much more in the last seven days,” he said.
Carrier Midea Chairman, Krishan Sachdev said that the sales of April last week are decreasing by more than 10-15% sequentially. While the production of machinery in Maharashtra has been affected by the strict rules in which facilities are either closed or run at a capacity of 20-30%, companies have now begun to reduce production in different locations because of a drop in demand.
Manish Sharma, CEO of Panasonic India said that production in the enterprise has been cut by one-fourth as business uncertainty now exists. “Compared to March, business has dropped by almost 50%. Sales continue in the South and East, while we expected growth of 20-30% compared to 2019,” he said.
The loading of pantry for packaged food which in turn could lead to a lull in sales over the next few weeks as consumers sunk in their homes because of Covid restrictions on shopping in brick-and- mortar stores and have over-stocked essentials.
In addition, household-consumption categories and restaurants were most affected by announcements of a lockdown at the end of March last year.
However, the growth at pre-Covid level last quarter saw the opening of restaurants and increased domestic consumption including the packaged beverage market. “India is experiencing a rise in cases with localized lockdowns but we feel comfortable with our position and capacity to sail the environment both as a company and as a system, since we start spending the hardest periods in the last year,” Coca-Cola Chief Financial Officer John Murphy told investors on Tuesday.
The segment could now be reduced to over half the annual sales in the packaged drink sector in more than Rs 20,000 crore, coinciding with the largest quarter of April-June in many states.
