Markets upbeat as Onam festivities lift consumer sentiments

The disruptions brought about by Covid-19 have not dampened the spirit of Malayalis as Kerala gets set for Onam festivities. With the Kerala government announcing initiatives like the Onam festival bonus for government employees and teachers, ease in restrictions on store timings, the market is in an upbeat mood. Moreover, with consumers not willing to travel long distances, small retailers and dealers have benefitted and seen a big boost.

K. Bhavadasan, Managing Director, K.P. Namboodiri's, says, “Onam in Kerala marks the beginning of the festive calendar in our country. Inspite of the floods for the last two years and the pandemic this year, we see Onam as a sign of new beginnings and a harbinger of good times. As it's our home state and based on our understanding of the Malayali audience, we believe the market is on the way to recovery. We are optimistic and looking forward to a market bounce back.”

Consumer Demand Back But Advertising Hit

With the festive season around the corner, industry experts see the consumer pent-up demand translating into sales. However, while consumers have started spending, many local retail advertisers have curtailed spends. Raju Menon, Managing Director, Maitri Advertising Works Pvt Ltd., explains that many local clients have seen consumer demand without advertising. This has resulted in clients cutting back on advertising as the amplification brought by ads could lead to increased crowds going against COVID safety measures.

Meanwhile, national advertisers have spent money in the market but lesser than previous years resulting in overall curtailed Onam spends. According to Shekhar Banerjee, Chief Client Officer & Head – West, Wavemaker India, “Festivities during this phase has not been the same, more so for advertisers than for consumers. Onam and Ganpati have taught us that consumer sentiments for festivities have not gone down, they have just scaled down their celebration and this rationalization is natural. However, we have seen an extreme recoil by national players for regional festivals, which I believe is an missed opportunity. Having said that, most national advertisers are conserving for the mega festival of Diwali and they want to use it as an occasion to rebound.”

Radhika Ramani, Managing Partner - South, Motivator says, “Initial forecasts estimate Onam ad spends would be about 65-70% of last year. From what we can see FMCG, two-wheelers and gold seem to be faring better than fashion and retail. While there are spends on consumer durables it does seem to be more muted than the previous years. Online sales though seem to have picked up.”

Sharing more insights, Menon said, “Gold and the jewellery sector has been advertising. Textiles has started to see an uptick while there is interest from the auto sector, particularly two-wheelers, lower segment cars and pre-owned cars are seeing. The government has also started advertising.”

On his part, Paul Philip, Business Head, The Local Network says, “Gold Retail has continued to advertise. So have Gold Loan Companies/NBFCs. In Apparel Retail segment, brands that are offering value are advertising and doing well.”

One brand that has looked to tap the gold demand in India’s second biggest gold market – Kerala – is PhonePe. The company allows consumers to purchase Gold digitally and then request for the physical delivery of the Gold in the form of gold coins and bars. Talking about the importance of Onam and the brand’s plans, Terence Lucein, Head of Mutual Funds & Gold, PhonePe says, “In the past we have seen a significant increase in the number of customers who purchase gold in the run up to and during festivals and auspicious days such as Onam. Hence, this year for Onam we have launched a cashback offer for our users wherein customers buying gold from SafeGold through the PhonePe app can win a cashback of upto Rs 100.”

Commenting on the advertising strategy adopted by K.P. Namboodiri's for its range of ayurvedic herbal products, Bhavadasan says, “We have regained our presence on TV from August first week in Kerala. And the market is reacting positively so far which is a sign of consumer's resilience. Going forward, we will be extending the campaign to digital & print also as part of our media strategy.”

However, the segment that has been hit significantly are local agencies who have seen reduced spends from both retail and national brands. Menon explains, “Normally, if there are 100 national brands advertising in Kerala, at least 10-15 brands would have a regional budget that is given to the local agencies here. That has completely stopped now. That is a big blow for us. Also, if you were to look at advertisers like for eg. car dealers, all dealers of any given brand would advertise, now only the large dealers are advertising locally.”

Looking Beyond Onam

Traditionally, the one month leading to Onam is the biggest time period for all brands in Kerala. It is estimated that more than 30% of ad spends are targeted at the consumers in Kerala during this period. Media planners say advertisers usually over-index on the Kerala market during this period.

Despite the fact that Kerala is a state with high spending capacity and huge consumption, many brands do not look to advertise consistently through the year in the state, focusing instead on Onam. A possible strategy for brands could be to spread their spends in Kerala through the year as brands that have invested in the state have seen growth and significant gains.

According to Philip, “With all the challenges it ushered in, the pandemic has been a great teacher, as it triggered us to think differently, have new perspectives. So the same learning series continue when we prepared for Onam also. We did a lot of work for our clients keeping the new reality in mind. Moreover for us, communication professionals in Kerala, the last two years (Onam shopping was impacted due to floods in the last 2 years) have prepared us for the pandemic and taught us not to focus all our energies around only Onam. So we have been advising our clients to look at growth throughout the year.”