Electronics sales go sluggish

August 29, 2012

Sales of electronic appliances could not meet expectations of the companies this Ramadan, one of the peak seasons. Leading brands have failed to achieve their sales targets due to a drop in people’s disposable incomes amid higher inflationary pressures.
The companies also blamed a sluggish stockmarket and a long Eid vacation for the poor sales.
Another reason behind the slow turnover was a huge tax gap between the local manufacturers and the importers.
The local makers get a huge tax benefit from the government and enjoy a competitive edge over the importers.
The average inflation rate rose to 10.62 percent in fiscal 2012, the highest in the last three years and a half, according to Bangladesh Bureau of Statistics.
However, point-to-point inflation came down to 8.03 percent in July from 8.56 percent in June with the old base year.
Sector people said many consumers spend much of their Eid budget on buying electronics such as television, refrigerator, camera and other appliances.
A portion of their spending also goes for buying rice cookers and microwave ovens that see increased sales during the month.
Sales of rice cookers and microwave ovens soar in the month as many Muslims prefer to use such devices to prepare their meals quickly and easily.
Ramadan is one of the peak seasons for selling home appliances such as television, home theater, audio system and camera, said KM Musaddeque Ullah, deputy manager (marketing) of Rangs Electronics Ltd.
Rangs Electronics had a target to sell around 3,500 pieces of LCD televisions and 1,000 pieces of home theater during Ramadan, he said.
“But, we did not get a good response compared to the previous Ramadan,” said Musaddeque.
Sluggish economic activities and a volatile stockmarket also caused a slump in sales, he added.
However, Rangs Electronics, which markets Sony branded products in Bangladesh, got a positive response in camera sales. It set a target to sell around 4,000 pieces of camera in Ramadan and succeeded to achieve much of their targets, said the official.
Transcom Electronics Ltd, a leading marketer of electronics, was not happy with their sales in the month.
“We could not log sales up to our expectations due to sluggish economic activities and a price hike of clothing and footwear items,” said Firoze Mohammad, marketing manager (E&A Business) of Transcom Digital.
Long Eid vacation is another reason behind the poor sales during Ramadan, he added.
“Customers usually buy electronics from major cities. They left Dhaka early due to the long vacation,” he said.
Sales of Singer branded appliances were also not satisfactory, said MD Raziur Rahman, marketing communication manager of Singer Bangladesh. “We have achieved a moderate sales target, but it is not up to our expectations,” said Rahman.
Eroding disposable incomes could be one of the reasons for the poor sales, he added.
Md Sanaullah Shahid, chairman of Electra International Ltd, said a higher duty gap between the local companies and the importers is one of the main reasons behind the sluggish sales.
The duty gap is 98 percent, which is creating an uneven competition, he said.
Electra had a target to sell around 4,000 pieces of refrigerators, but it failed to achieve the target, said Shahid.
He also criticised the government for giving an “undue favour” to a local refrigerator maker.
Amir Hossain Khan, chairman of Bangladesh Electronics Merchants’ Association, also said the higher duty gap impacts the sales of electronics.
Giving an example, he said an imported air conditioner, after paying all duties, is sold at Tk 43,000, whereas the local manufacturers, who do not need to pay any duty and VAT, sell the product of the same cooling capacity at Tk 46,000.
The local makers’ price should have been much lower, he added.
Moreover, the local refrigerator makers do not need to pay VAT for importing raw materials such as copper pipe, metal sheet and plastic for making refrigerators.
The market size of electronics (excluding mobile phones) is Tk 6,500 crore per year and has been growing at 10 percent on average for the last 10 years.

Courtesy of The Daily Star

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