Festive Demand Surge Leads to Supply Chain Issues and Waiting Periods for Consumer Goods in India

The festive spirit in India has triggered an unexpected surge in demand for various consumer goods, leading to significant supply chain disruptions. Manufacturers and retailers are struggling to keep up with the high sales volumes, which have been further boosted by recent Goods and Services Tax (GST) reductions.

Consumers are now encountering waiting periods for premium products such as 65-85 inch televisions, large capacity washing machines (8 kg+), and refrigerators (450-500 litres and above), along with dishwashers. Furthermore, popular items like chocolates, soft drinks, and snacks, particularly in larger pack sizes, are frequently out of stock.

Industry executives estimate that it will take between 15 to 45 days to restore normal supply and availability. To meet the soaring demand, companies are ramping up production. Maruti Suzuki, for instance, has decided to keep its plants open on Sundays. The company is receiving approximately 14,000 car bookings daily, a substantial increase from pre-GST reform levels, and is experiencing shortages across its vehicle models. Between the Navaratri period and Diwali, Maruti Suzuki sold about 335,000 vehicles, a 50% rise from the previous year. Tata Motors Passenger Vehicles also reported delivering over 100,000 vehicles during the same festive period, helping reduce network stock to a manageable level.

Impact This situation highlights robust consumer spending in India's festive season, potentially boosting revenues for consumer durables and auto companies. However, it also presents challenges in production and inventory management. Investors may see increased sales figures for companies that can manage their supply chains effectively, but unmet demand could lead to frustration. The overall impact on the Indian stock market is likely positive for consumer-facing companies, though short-term stockouts might temper immediate gains. Rating: 7/10.

Difficult Terms: GST cuts: Reductions in the Goods and Services Tax rates, making products potentially cheaper or increasing manufacturer/retailer margins. Navaratri: A major Hindu festival celebrated over nine nights, marking the beginning of the festive season. Diwali: The festival of lights, a major Hindu celebration that follows Navaratri and is a peak shopping period. Network stock: The inventory of goods held by authorized dealers, distributors, and retailers before reaching the end consumer.