The slower growth in the consumer durable industry till September suddenly took a turnaround in the festive months of September and October with sales surpassing the estimates made by industry players. Major companies, including LG Electronics, registered around 50% growth in revenue during this period, way above the 25-30% growth estimated earlier.
For instance, while the overall sales of LG Electronics went up by 50% at Rs 2,535 crore for September-October, its home appliances business registered a growth of 49%. Likewise, Godrej Appliances posted a growth of 40% in volumes, mainly led by high-end refrigerators, washing machines and microwaves, in September and October, while sales at Samsung India were up by 35% with the company launching around 15 new products in the month of October alone. Even the overall industry is estimated to have registered a growth of 25% as against 15-20% estimated earlier for this festive season.
?Sales of consumer durables and consumer electronics are not driven by finance and hence while the liquidity crunch has impacted the sales in other sectors, consumer durables have seen a spurt in sales,? says Kamal Nandi, vice president (sales and marketing), Godrej Appliances. Nandi added that the growth in revenue would be higher, around 45%, as the 5-6% increase in prices have resulted in higher realization during this period vis-a-vis last year.
According to Nandi, even the minuscule purchase on finance, hovering around 15% earlier, has now come down to less than 10% as all major players have withdrawn from the financing business. ?
?Unlike last year when all leading companies had largely focused on freebies and discounts to boost sales, this time it was new products that have driven the growth of consumer durables,? explains R Zutshi, deputy managing director, Samsung India, adding that the 32 month arrear of central government employees have converted into durable spending this time.?
?Our new festive campaign, exciting new product launches spanning across different categories, free service camps and festival/ product communication has resulted in robust growth during this time of the year,? adds Moon B Shin, managing director, LG Electronics.
Sales of air conditioners and refrigerators had plummeted during the summer months because of early arrival of monsoons. As a result the overall industry growth was down to 8-10% at that time. However, the players were optimistic that the postponement of purchase that had happened at that time would eventually culminate into purchase once the festive season sets in and people have money in hand, either through arrears or bonuses.
According to an industry expert, the penetration levels of consumer durables and consumer electronics are still so low that the segment will continue to grow as more companies expand their dealership network. ?Since consumer durables are more of a necessity now and saturation levels are still far from over, the growth will continue to happen,? he says.
