The second wave of the COVID-19 pandemic did not prove to be as severe for the discretionary products category as the first wave as lockdowns were not as harsh as last year.
Products such as watches, eyewear and deodorants clocked better-than-expected sales during the second wave of coronavirus infections, quarterly updates by companies operating in the retail and FMCG sectors showed.
However, sales grew from the low base of the first quarter of the previous year, when a strict lockdown was enforced across the country.
According to Vineet Agrawal, CEO, Wipro Consumer Care and Lighting, the localised nature of this year’s lockdowns and the fact that some movement was allowed, the sale of discretionary products such as deodorants did not decline as much.
Companies find the trend encouraging.
High sales but on a low base
Titan Company reported over 280 percent growth in sales of watches and wearables in the April-June quarter of FY22, which coincided with the second wave, as compared to the first quarter of FY21.
“.... the recovery this year has been faster than that witnessed last year when footfalls in stores were very weak due to higher apprehension of COVID-19,” the company said in its quarterly update.
The company also reported about a 117 percent surge in sales of eyewear, while its fragrances and accessories business grew by three times over the last year.
Wipro Consumer Care and Lighting, which houses discretionary products such as deodorants under its Yardley brand, also witnessed 70-75 percent growth in Q1 FY22 as over Q1 FY21, Agrawal said. FMCG major Marico also reported a strong recovery in its premium personal care portfolio.
The companies, however, are yet to reach the pre-pandemic level of sales. The sales of Yardley products are 7-8 percent lower than the first quarter of FY20, Agrawal added.
According to Motilal Oswal Financial Securities Ltd., while discretionary companies would show extremely strong revenue growth year-on-year, this would still be far below the Q1 FY20 sales. The brokerage has projected a 30 percent and 51 percent decline in revenues for Asian Paints and United Breweries, respectively, in comparison to the first quarter of FY20.
Recovery on the cards
The way ahead for discretionary products in the financial years 2022 looks promising if a possible third wave of COVID-19 cases does not strike the country.
“With the ongoing gradual unlock and going by trends observed in FY21, discretionary companies are set to witness a strong rebound over the remainder of the year – provided a) India does not see a third COVID-19 wave, b) the vaccination pace remains healthy, and c) the pandemic’s impact on incomes or wealth is contained,” Motilal Oswal Financial Securities said in its report.
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