N AS THE RUPEE STUMBLES...

Durables firms look Textile exports s for new ways to sell

SOMESH JHA
New Delhi, 22 August

GOOD TIMES AH
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India's textiles expo

SOUNAK MITRA & VIVEAT SUSAN PINTO

New Delhi/Mumbai, 22 August

With the severe fall of rupee value against dollar, a slowing economy and negative consumer sentiment, consumer durables companies (CDCs) are being forced to think of alternatives and supplements to their existing business models. Cost management becomes a key aspect; companies are also looking at increasing the penetration in markets beyond metro cities, tier-I and tier-II towns, essentially the ones that do not solely depend on the salaried class. These markets, mainly rural and semi-urban (likes of municipal towns), have low penetration and the marketing spend is comparatively less. While the key strategy for all CDCs is aggressive marketing, the implementation is different, said a senior marketing executive of a leading one. Better penetration For instance, South Koreas Samsung Electronics has decided to bombard the market with a number of products in each category, at every price point, from low to premium, so that every potential customer is covered. Besides, it is expanding the retail footprint in newer markets, the likes of municipal towns (with more than 50,000 population) and increasing presence in existing markets where there is scope. Japanese giant Sony has always positioned its products at the slightly highpriced segment. It has also announced plans to launch low-range Bravia televisions, starting at ~14,000, targeting tier-II and tier-III towns. According to retailers in north and east India, all companies are fighting for front display and some are making better offers and offering higher margins to retailers. According to officials at Samsung Electronics and LG Electronics, both companies are trying to ensure better display in each store, whether a modern retail outlet or a small one in a city. During tough times, efficient channel management is a must, said a Samsung spokesperson. Currently, CDCs get about 35 per cent of their revenue from the rural market, which is growing at a much faster rate in terms of volume, though on a lower base. However, home-grown Videocon has a different strategy. It gets 65 per cent of revenue from rural markets, quite the opposite of the trend. Besides a wide rural network, Videocon has another advantage. It still sells products like CRT televisions and single-door and direct cool refrigerators, which its competitors exited sometime earlier. These categories still

SELLING IN A SLOW MARKET

What consumer durables companies are doing to push products as spending falls
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Increasing reach municipal towns and rural areas, essentially where only the salaried class is not the one buying. Currently, only 35 per cent of revenue comes from the rural market for most companies Vying for better display in stores Launching products every month across categories premium to cheap at least one each month Letting customers pay in instalments

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sell well in rural areas because of the costing. As part of aggressive marketing strategy, all CDCs have been launching new products every month across categories, ensuring at least one product launch each month. On an average, companies are launching about 15 per cent more in numbers of products this year, according to industry sources. Affordability Prices of consumer durables have gone up and are likely to do so even more because of the rupee devaluation. During tough times, companies need to showcase desirability, affordability and flexibility to lure consumers, said Canon India executive vice-president Alok Bharadwaj. Canon has, for the first time, decided to offer zero-interest equated monthly instalment (EMI) options. EMI schemes, coupled with exchange offers, have worked well in India. The mobile handset category, for instance. After it started offering exchange offers linked with EMI schemes, Apples sales surged 417 per cent in India in the past year. Samsung, LG, Sony and BlackBerry are no exception. EMI schemes worked well in the handset segment, especially because it is credit card-linked and backed by exchange offers, said a Samsung spokesperson. EMI schemes make expensive products affordable for consumers as they dont need to pay the entire amount upfront. Sometimes, consumers also upgrade to the next level while buying a device. So, companies are getting better revenue, said a retailer in Delhi.
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The textile sector could see a jump of five to 10 per cent in exports this financial year on the back of a falling rupee and higher foreign demand, say exporters, who expect a turnaround after a bleak 2012-13. Last financial year, textile exports fell five per cent to $31.7 billion in from $33.4 billion the year before. However, textile exports rose marginally in the first quarter this financial year, signalling a change in the trend. In the April-June quarter, textile exports rose 0.3 per cent to $7.79 million, compared with $7.76 million in the year-ago period, according to the Foreign Trade Statistics of India. There should be a five to 10 per cent increase in overall textile export as a result of the falling rupee and also because we are becoming more competitive in this sector. Hence, there would be a turnaround after a gap of few years in the textile industry," said Amit Goyal, president, Confederation of Indian Apparel Exporters. The impact of the falling

Readymade garments Cotton textiles

Wool and woollen Silk Carpets Silk carpets Textiles (total) % Textile export to total exports

Note: item-wise break up do Source: Foreign Trade Statist

rupee, which had around five per cen quarter, has already ready-made garme where exports rose to $3.1 billion in Apr $3.4 billion a yea economists say, is a for a revival in tex Rupee depreciati to help the overall te

Peak season forei

NIVEDITA MOOKERJI
New Delhi, 22 August

Rajesh Magow, cochief executive of company, said: We Holiday plans for the peak sea- to be some fluc son that starts in October have demand for long-h already been hit. Indian trav- Europe and the U ellers bound for long-haul des- trend will only be tinations such as the UK, cated d Europe and the US durbooking ing the festival season travel have cancelled about 10 October to 15 per cent of bookings Decemb in the past few days, after But a the rupee breached Subhash record levels against the ident of RUPEE IMPACT dollar, the pound and the Associat euro, according to indusOperator try estimates. They could still own company, Stic holiday but for a shorter dura- already witnessed a tion, and perhaps to places like cent cancellations t Thailand, Singapore and also eign destination within India. Europe and the US Leading online travel com- day season startin pany MakeMyTrip said the The sector-wise im October-December period be similar, he said. would show up the impact of He indicated tra the rupee fall on outbound trips. also making adju