How to push sales during a slowdown?
Although the Indian mattresses industry is experiencing a shift from the unorganised sector (which has a hold of over 60 per cent of the market share) and moving towards the organised sector, there is a huge worry gripping this sector. No sector can escape the wrath of a slowing economy. As sales slump, just like it did with the auto and tourism industry in recent times, it will directly impact the organised sector first.
Let’s try to assess the possible outcomes…
- Cause: Customers will delay the purchase of hi-ticket mattresses
- Effect: Slump in demand for a luxury mattress, the shift of sales towards cheaper alternatives
- Strategy: To seize this as an opportunity and offer discounts or EMI options
- Cause: Owing to the pandemic, lesser mobility would mean lesser footfall in retail stores.
- Effect: As retail outlets will not be easy to reach out to, customers will be pushed to explore for other options.
- Strategy: Money back assurances on return with no handling costs and exciting home delivery options such as “deliver in 3 days anywhere in India”, “Zero commitment – 100 days money-back options” will help
Well, most of the aggressive of brands are already selling online with a 100-day return policy to boost sales. A few have even tied with third-party platforms such as Pepperfry and financial institutions such as Bajaj Finance and HDFC Bank to offer EMI options to enhance sales.
New entrants bring new challenges
A second source of troubles for established manufacturers is a highly successful group of no-frills start-up brands. These companies, backed by technology, are able to sell their stock directly online without retail overheads, ship their mattresses and deliver them as a compressed bed in a box format, which is easier for shipping too. Most of these brands extend offers even further, such as the 100 days-100 per cent refund policy.
Is storage shed the solution?
While e-commerce companies have pushed the boundaries of the concept of a warehouse, most of India’s logistics remain unorganized and inefficient. The advent of COVID-19 has pushed the need to build warehouses like never before.
India is experiencing this surge in tier 2 and tier 3 towns too. A product to that is sold on Amazon, manufactured in Chennai and has to be shipped to Guwahati will have to move in and out of at least 3 sheds before it is delivered. As the established players are following the FMCG sector by looking at storage sheds to take care of inventory stuck in the pipeline, this could lead to a stick situation of the sales don’t pick up or pushed out.
For instance, Maruti’s inventory – including its stockyards and dealer networks stood at around 130,000 units whereas its domestic sales during March 2020 were 78,344 units. Similarly, Hyundai’s inventory stands at 35,000 against March sales of 26,300.
Just to share references of this trend, IndoSpace is India’s largest developer of industrial and warehousing parks, with 35 parks and 15 million sq. ft ready. In 2020, the firm plans to build an additional 5 million sq. ft. IndoSpace, backed the by PE firm Everstone Group, has invested over $3 billion thus far. This is not an isolated case. The Bengaluru-based developer Embassy Group, which has invested $100 million and has committed to another $250 million. The firm has leased out three million sq. ft and is constructing about seven million more.
So although warehousing could seem like a solution, it is definitely a short term option. For companies where cutting down production is not an option, pushing out products using smart campaigns and discounts is the viable alternative till the time the markets get buoyant again.
So what is the way forward?
It is estimated that for every one lakh people, there are 11 mattress-stocking outlets resulting in almost 40,000 such outlets in urban India. Nearly half of them are furniture stores.
According to Indian Sleep Products Federation (ISPF), brands such as Sleepwell have a strong presence in the North and West regions while Kurlon leads in the South and East parts of the country. Godrej has a sizeable share in East while Duroflex, Centuary and Peps have a substantial presence in South zone.
Therefore, cross-selling and promotional offers may help long term; only a smart brand strategy can help bail out mattress brands before the sales pick up. Having a strong online presence as well as visibility and engagement will certainly help.
Can online presence and engagements help boost sales?
Think about it. Most Indians spend a fortune for luxury electronic gadgets including fancy cell phones that may cost as much as perhaps the mattress they sleep on. However, how often do you see a family investing in a quality mattress? Even though most will agree that a good mattress will enhance their sleep cycle or even promise health dividends, the same zeal doesn’t reflect when it comes to their purchase patterns. Quality awareness content is that bridge that will connect these two divides. For example, did you know that the life cycle of a mattress is around 8 years? They should be replaced periodically to ensure that your spine is in good shape, This is more important a precaution for the elderly folks. The mattress manufacturers, as well as the retailers, need to come forward to spread awareness. This will organically push sales. Why only the mattress industry, this is applicable to all products. The time is now to engage with the potential customers beyond just fancy television commercials with pretty models sitting and endorsing the products.
The Internet has opened up a new vector… it’s called the information superhighway. Given the shrinking economy, we are in today, brand engagement on product awareness and benefits will surely propel the bottom lines.