With little to cheer, companies cut festive spend

Production cuts will be most in premium product portfolio as companies expect consumers to curb discretionary spending as the impact of the Covid-19. Manufacturing orders fall by up to 40% year on year as they expect much of current stock to remain unsold till then, company executives said.

Companies across apparels, shoes, refrigerators, air-conditioners and smartphones are cutting manufacturing orders and sourcing of components for this year’s festive season by up to 40% year on year as they expect much of current stock to remain unsold till then, company executives said.

Production cuts will be most in premium product portfolio as companies expect consumers to curb discretionary spending as the impact of the Covid-19 pandemic and the extended nationwide lockdown to contain it has affected all segments of the economy including household incomes, they said.

Most companies start their festive sales planning now.

“We have lost three months of active trading due to the lockdown, considering June will also be partial sales, and hence (we are) cutting order book,” Arvind Fashions CEO J Suresh told ET. “We won’t be making any order for autumn while for winter season it will be 60% of the normal,” he said.

Puma India MD Abhishek Ganguly said the brand will shift some production and launches beyond the festive season.

SSIPL Group, a contract manufacturer for brands such as Puma, Asics, Lotto and Power, expects its orders to be cut or postponed by 30-40% as most retail businesses are likely to see that much drop in their revenue, its managing director Rishab Soni said.

Market tracker IDC India said it will further downgrade India’s smartphone sales forecast for this calendar from its earlier projection of 135 million against 150 million units sold in 2019. While brands expect festive season to be good, it won’t make up for the lost sales in previous quarters, IDC India research director Navkendar Singh said.

Smartphone makers Xiaomi and Realme said they will adjust their portfolio for the year, which industry executives said will affect production plans accordingly.

Xiaomi, the country’s largest smartphone brand, said Diwali will help the smartphone market resume normalcy. However, the expected increase in average selling price in the wake of a rise in GST rates and the rupee depreciation might not take place, it said.

Electronics brands, too, expect a slowdown in sales, especially in the case of premium appliances and televisions.

Carrier Midea India MD Krishan Sachdev said the company is not placing any fresh component orders for festive season since it has huge inventory with summer sales completely gone.