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Last Updated : Sep 06, 2019 09:39 PM IST | Source: Moneycontrol.com

Festive sales: Appliance firms to offer credit card-led discounts to boost spending

Given the lukewarm response to additional spends, white goods firms will offer cashback, free accessories and discounts on paying by credit card

M Saraswathy @maamitalks

The economy may be seeing signs of a slowdown, but white goods firms want to ensure that their customers are ready to spend during the festive season sale. Sources told Moneycontrol that the focus will be on discounts linked to purchases made through credit cards.

"Customers want to buy appliances but are reluctant to spend a large chunk of money from their own pockets. Hence, we want to encourage customers to use credit cards," said the head of sales at a mid-size consumer durables firm.

What's the offer?

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White goods firms will enable customers to buy a majority of appliances at no-cost EMIs when the credit card is used. No-cost EMI is one where the interest rate payable for availing EMI facility is offset by offering a discount. This will purely be for customers using a credit card

Apart from the EMI facility that will be available, deeper discounts will also be offered in the form of cashbacks. The cashback amount will depend on the price of the goods; higher prices will mean higher cashbacks.

"Customers paying through credit cards will be eligible for extended warranty at no additional cost. Also, they could be given accessories for free. For instance, a customer buying an induction cooktop will be offered kitchen utensils if they pay by credit card," said the India CEO of a global appliance maker.

Similarly, products complementing the goods purchased will be offered at a 20-25 percent discount, if a credit card is used. For instance, the complementary products for a dishwasher could include dishwasher-safe kitchen utensils, or in the case of television, it could be a home-theatre system.

Why is festive sale crucial?

The white goods market in India, currently valued at about Rs 50,000 crore, is growing at about 15 percent every year. Of this, almost 70 percent of sales are booked between August to December when India celebrates festivals like Eid, Onam, Dussehra, Diwali, and Christmas.

While there is no slowdown yet in the sales of white goods (except televisions), there is an impending fear that the festive season in 2019 will be lukewarm due to drop in customer ability to spend. At this juncture, the firms are looking to cash in on the captive premium audience who are not price-conscious.

Significant price cuts to boost sales would impact revenues, as was seen last year. Firms had cut prices by 10 percent to offset the taxation impact after a GST cut. On the other hand, a rise in the price of fuel and rupee depreciation coupled with a rise in import duties had hit the balance sheets and the companies were not able to sustain the discounts.

On the other hand, price cuts also did not immediately translate to higher sales since there was no rise in the disposable incomes of individual customers.

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First Published on Sep 6, 2019 09:39 pm
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