Corona puts consumer durables under duress
The government directive to stop imports of non-essential items in the face of COVID-19 spread, and the curfews, have hit the consumer durables’ market hard with virtually zero sales during end March to mid-April which is the Avurudu season.
With demand for such goods already waning amidst the low growth trajectory in the economy during the past year, importers who expected better sales this season with the change in government are in for a hard jolt this year and maybe the next.
The consumer durables industry can be broadly classified into two segments: Consumer Electronics and Consumer Appliances. As it is, consumers aren’t interested in either.
Why? Because the demand for consumer durables normally rise with the increase in disposable income and right now ‘all’ incomes are faced with some kind of freeze.
The Cabinet decided to halt the import of cars, perfumes, tyres, footwear, air conditioners, refrigerators, mobile phones, televisions and washing machines with the currency crash after the pandemic started spreading. Right now ‘white goods (consumer durables)’ are the furthest from consumers’ minds as it’s a struggle for survival in these tough times, a white goods dealer noted.
Analysts noted that sales of major white goods importers would not have collapsed if not for the import ban in this pandemic situation. “At the moment most other industries except supermarkets and pharmacies aren’t doing sales,” the dealer remarked.
This crisis will impact the overall business environment in the coming months, all the three major importers – Singer, Abans and Softlogic have said noting that the depreciating rupee and higher input costs owing to the impact of the coronavirus will lead to a significant increase in prices and affect demand negatively.
The outbreak has impacted both on consumer spending and sentiment and adding to the ongoing liquidity concerns and lockdown situation, the upcoming seasonal sales are a virtual no no, they added.
The seasonal sales will also depend on how much people are earning during this time. With salary cuts and layoffs in many firms and daily wage earners hitting rock bottom, curfews and lockdown situations add to the woes. The importers also say that a lot of demand is being deliberately suppressed by, among other things, telling people to stay at home and that the real issue is where to redirect demand.
In such a scenario the upcoming seasonal consumer durables won’t have any sales even if the curfew was lifted, analysts said.
The agricultural community accounts for the bulk of the sales of consumer durables and right now their incomes are also bleak.