Dhanteras this year will be celebrated on October 25, 2019. The popular festival of Hindus is a celebration of Goddess Lakshmi. People flock in large numbers to the market to buy gold, utensils and other valuable products to mark this auspicious day. Retail outlets all over India experience a surge in sales on the festive day. But in recent years, with the rise of e-commerce websites and online stores, local businesses have been losing out on their sales. The utensil sellers have been facing similar concerns with more consumers rooting for digital options. This year the situation seems to have taken a major dip.
With the GDP slumping to 5% in the first quarter of FY 20, businesses all across the economic spectrum have been badly affected. The manufacturing sector has been on a job cutting spree and the country is witnessing the highest unemployment rate in more than four decades. Private consumption has nearly collapsed. The owner of a home appliances and utensils chain informed BE that his sales volume in August 2019 was 20% lower than August 2018. But with ongoing festival season, the sales have slightly improved but are yet to reach last year’s figures.
Online sales gaining prominence
A local utensil seller in Bara Bazar, Kolkata, spoke to BE about the impact of online e-commerce on their business: “My family ran three utensil shops for the last 60 years. Last year, we had to close down one of our shops at Brabourne Road. Due to better discounts available on utensils on online platforms and swift delivery of goods, people have started buying maximum products online. Our space in the consumer market is shrinking with each passing day.”
Local stores believe that the e-commerce websites are taking advantage of digitisation processes. They provide lucrative offers and create a buzz on the internet by introducing festival sales to attract the consumers. Online purchasing of products is giving users the opportunity to order items in bulk with the advantage of doorstep delivery.
This year, e-commerce websites like Snapdeal have offered 80% discount on certain home and kitchen appliances. With such offers, these websites manage to grab the attention of the customers everywhere. Then what is keeping the retail owners from giving competitive discounts on their goods?
Vivek Sharma, a proprietor for C.D.Traders, a leading utensil chain in Kolkata, informed BE, “We also give discounts to our customers during the festive season. But it is less than the discount rates offered online. We are not able to compete with the online market because of the size of our businesses. With limited products and individual logistics costs, our margin can only be up to 5% to 10%. We need to make some revenue from our products. Already the sale is dwindling due to less demand and with high discounts we would not be able to keep our businesses afloat for a long time.”
The introduction of GST and poor infrastructure in various locations has also contributed to a loss in businesses. Sharma pointed, “With GST coming into effect, the price of our products increased. People stopped buying utensils from us. The other reason for us to lose the market is because people want to avoid the hassle of travelling with bulk purchases in congested lanes of our cities. They are not able to bring and park their vehicles into our bylanes.” In such conditions, online delivery becomes a preferable option.
Improved demand during festivals
The local store owners believe that the downward run of the economy has unsettled the market. This has led to cautious spending during the festive season. The sentimental slowdown has hit the market harder than the actual slowdown.
Though there is a dip in the purchase of utensils this year, sales have started improving during the festive season. Suresh Kumar Gourisaria, owner, Shree Gobind Steels, told BE, “We have been able to sell double the number of utensils within the range of `100-`250 in last 15 days in comparison to the preceding months. Mostly, the customers purchase thalis (plates). Last Dhanteras, we were able to double the business on that particular day as compared to other days of the month.”
However, with the economic slowdown and availability of cheap prices online, the local business owners are wary of good numbers this year. Gourisaria said, “In the recent years, during Dhanteras to tackle the online market, I have been decreasing the margin on the sale of goods to increase the turnover of my business. During the time of festivals, people look for cheaper options. This amounts to better sales but does not account for better revenue.”
With the government policies allowing the manufacturers open their own retail outlets and franchisee, local utensil retailers are being threatened. It is becoming increasingly difficult for them to keep their business afloat in this highly saturated market in trying economic times.
The organised stainless market gains from increased sale of utensils during the festive season. But due to the economic downturn, the stainless steel industry plans to supply a diverse range of utensils to better utilise the festival season. Mandeep Singh, CEO, JSL Lifestyle Ltd., a subsidiary of Jindal Stainless (Hisar) Limited, spoke to BE.
Q. How is the market for utensils during Dhanteras and Diwali?
A. Sales of utensils during the last quarter of the calendar year (CY) are always on the higher side with the onset of festivities like Dhanteras, Diwali, Christmas, etc. Utensils are closely linked to Indian culture and are considered to be an auspicious purchase during this period. This creates a massive opportunity for manufacturers and consumers, leading to a surge in demand and sales. Going by our marketing initiatives, we are expecting our brands to register sales as much as 180% higher than last year. However, overall market sentiments in this segment remain subdued. Being a subsidiary of India’s largest stainless steel manufacturer, we have been making a dent in the market with a wide variety of products that are differentiated by intricate designs and competitive pricing. Backed by the excellence of our brand Arttd’inox, we will have good demand and sale.
Q. What type of stainless steel utensils are in high demand by the wholesale suppliers in the Indian market?
A. While we are not directly involved in the wholesale domain and follow a franchise-based model, the universe of stainless steel utensils is diverse and the market offers products to every league of the consumer. This range varies from economical to premium segments, including cutlery and decorative kitchenware. Moreover, today these products have left behind the image of functional products to enter the modern designer range. The target consumers broadly include millennials and High Net worth Individuals (HNIs). While the millennials today are investing on remodeling their homes in the aspiration of a better lifestyle, the HNIs are investing in art and artistic elements. Our wide array of products meets the requirement of both these segments. This, in turn, has positioned these products as an absolute choice for gifting for all the occasions.
As the pioneer in the stainless steel industry, with 12 exclusive Arttd’inox stores catering to consumers across the country, Jindal Stainless has successfully provided an extensive product range to the customers.
Q. Out of the total production of stainless steel, how much is produced for the manufacture of utensils and home appliances?
A. The demand from the kitchenware segment amounts to nearly 40% of the total domestic stainless steel market in India. The end-products comprise tableware, cookware, cutlery, gas stoves, sinks, and similar applications. Although the segment is largely unorganised in India, Jindal Stainless holds around 50% market share. It is noteworthy that the national annual growth rate for the utensil (kitchenware) segment is pegged at 7%.