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Cold snap fires up weak winter sales across north, east India
A sudden cold snap across north and east India has significantly boosted sales of winter products. Health supplements, skin creams, winter apparel, and water heaters are seeing a sharp spike. This offers relief to retailers and companies after a slow start to the season. Industry executives report a 10% to 15% year-on-year sales increase.
Kolkata: After a slow start to winter season demand, a sudden cold snap across north and east India, and the Hindi heartland has triggered a sharp spike in product sales spanning health supplements, skin creams, and lotions to winter apparel, water heaters, according to companies and retailers.
Industry executives said sales have risen 10% to 15% year-on-year over the past week, with inventories moving faster now, offering a major relief after an early start to end-of-season discounts failed to clear stock.
The India Meteorological Department on Tuesday predicted that cold day conditions are likely to prevail over northwest and eastern parts of the country, with cold waves in pockets of Himachal Pradesh, East Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand, Rajasthan, Punjab, Haryana, and Chandigarh over the next few days.
"Demand has improved and this winter will be better than the last season," said Mohan Goenka, vice chairman at Emami, maker of BoroPlus antiseptic cream and Zandu Balm. "If this cold wave continues, the pace of growth will be much more," he said.
Dabur said in a recent investor note that while its health supplement Chyawanprash saw a muted December quarter, it is expected to gain momentum in January aided by an extended winter.
While winter had set in early this year, it didn't peak so far, with mild temperatures ensuring demand for winter products remained bleak. This had even forced retailers to advance their end-of- season sales by 7-10 days to the second week of December. However, from the last week of December, the cold turned harsher in several places.
At jacket manufacturer Woodland, sales grew over 15%, helping the company clear most of its stocks, said Harkirat Singh, managing director.
However, value fashion retailer V-Mart Retail MD Lalit Agarwal noted a delayed revival in winter wear sales unlike last year. "So, the spike now may even out to flat business in the full season," he said.
Electronics retailer Vijay Sales is seeing a 10% rise in water heater sales, said director Nilesh Gupta.
Retailers had fully stocked up on winter products by October as there were predictions of a harsh winter this year. However, temperatures dropped in several cities only in the last week of December.
Winter is a crucial period for FMCG and apparel companies selling seasonal products. For some, it accounts for 15-30% of annual sales. The effect of the sales is felt through two quarters - October to December and January to March. Cold-weather garments typically command higher price points than summer clothing, making the season crucial for margins and profitability.
"Primaries (sale from companies to retail) may not grow much since the channel is well stocked for most categories and consumers will buy winter products mostly till mid-February. However, secondaries (from retailers to consumers) are moving fast which means the trade will improve their working capital before spring-summer which bodes well for the next few months," said a senior executive with a leading appliance maker.
Companies had a washout summer sales last year due to cooler seasons impacting categories like air-conditioners, coolers, soaps, hair oil and talcum powder.
Industry executives expect goods and services tax (GST) cuts on several goods, low inflation, and improving macro indicators to support higher sales of winter products, if the season remains chilly.
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Source: EconomicTimes
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