Refrigerator sales decline despite Eid

Sales of refrigerators and chest freezers declined by 13 percent ahead of Eid-ul-Azha as consumers contended with persistent inflationary pressures as well as an increase in the prices of the home appliances, according to industry players.

Data from the Bangladesh Bureau of Statistics showed that non-food inflation remained above 9 percent since January this year and stood at 9.19 percent in May. It averaged 9.39 percent in the last financial year.

This has impacted the refrigerator market in the run-up to Eid-ul-Azha since customers have had to tighten their belts.

Usually, the demand for the home appliances goes up by up to 60 percent ahead of the festival as people purchase them to preserve the meat collected from sacrificial animals.

However, this time around, retailers and manufacturers say overall sales of the two products declined by around 13 percent compared to last year.

Eid-ul-Azha has accounted for around 30 percent of the total annual sales of refrigerators and chest freezers in recent years. But this year, the occasion may only account for a quarter of sales if the situation does not improve.

According to market insiders, at best 7 lakh refrigerators and chest freezers were sold ahead of Eid this year. It usually stays above 8 lakh units in normal times.

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"We could sell around 30 refrigerators ahead of Eid this year while we sold over 50 units during the same time last year," said Sabbir Al Mamun, owner of Biswas Electronics at Kalamia Market in the Kotchandpur upazila of Jhenaidah.

Mamun, who retails Walton-branded electronic products, including refrigerators, freezers, televisions and air conditioners, said he had not seen such a dull market ahead of Eid in the past five to six years.

Md Shohidul Islam Reza, product manager for refrigerator at Walton Hi-Tech Industries PLC, said the company had posted strong growth in sales due to its newer models of fridges and freezers offering various features at affordable prices.

"Overall sales of Walton refrigerators witnessed 8 to 10 percent growth compared to the previous year. However, sales were hampered in some districts due to natural disasters and calamities."

Ritesh Ranjan, head of business at Transcom Digital, said the sales of mid and high-end refrigerators and freezers went down by at least 15 percent this year as the prices have gone up owing to the depreciation of the local currency and the impacts of high inflation.

According to Ranjan, the demand for refrigerators that cost more than Tk 50,000 and chest freezers with a capacity of over 300 litres is low, which makes it clear that demand for mid and high-end products is low.

He added that people had spent money to purchase air conditioners during heatwaves in recent months and also to celebrate Eid-ul-Fitr in April. Since their disposable incomes have fallen, it has caused the sales of refrigerators and freezers to decline substantially, he said.

However, he added that sales of low-end refrigerators and freezers were faring slightly better.

Transcom Digital sold 2,000 units ahead of Eid this year, similar to last year's.

Mokbulla Huda Chowdhury, sales director of Butterfly Group, which retails LG and Butterfly-branded products, said overall sales of refrigerators and freezers had fallen by 13 percent compared to last year and around 20 percent compared to 2022.

He attributed the fall to a rise in the price of products due to the dollar price hike. The US currency has gained by 35 percent against the taka in the past two years.

"People are prioritising essentials due to inflationary pressures. Therefore, the sales of luxury items are low," Chowdhury said.

"We could not achieve the target as sales did not grow as per our expectations on the occasion of Eid," said Md Nurul Afsar, deputy managing director of Electro Mart Ltd.

He opined that inflation was the main reason for the slowdown.

Muhammad Nafees Imtiaz, brand manager of Rangs eMart, said sales were slightly affected by ongoing inflationary pressures. "The quantity of sales declined despite revenue increasing due to the price hike of the products."

He said their target customer segment is the affluent class, who realised that prices would go up from July as the government plans to increase VAT on refrigerators from 5 percent to 7.5 percent as part of its new budgetary measures.

So, they bought refrigerators and freezers before the new rate comes into effect, he said. "Consequently, sales slightly improved at the last moment despite the situation being unsatisfactory over the prior months."

He added that the company's sales grew by around 15 to 20 percent compared to Eid-ul-Azha last year.

Transcom Digital's Ranjan said there is no possibility of the sales scenario improving until inflation is curbed.