The refrigerator category as a whole has evolved in the past few years from being a ?white box? to a sophisticated feature-rich device. Responding to consumer needs and demands, companies are developing the segment by offering unique value propositions for their products. These may vary from stylish looks, add-on features, warranty, energy efficiency, eco-friendly features to health benefits and functional aspects.
Indian consumers are looking for modern features and design and brands are pampering them with options. Godrej launched ?Eon Muziplay? frost-free range of refrigerators which came with an FM radio and an MP3 player attached to the refrigerator riding on the concept of entertainment in the kitchen. Haier is set to launch a new six-door refrigerator with inverter compressor and twin cooling system under the global brand theme of ?EcoLife?. LG is planning to launch a smart refrigerator in India soon that will have sensors which will read the barcode on whatever is stored in the fridge and will flash its expiry date on the display panel.
Refrigerator exteriors have seen a significant makeover with the product available in bright colours and sporting stylish embellishments. Extensive warranty and better after-sales service are some of the other benefits on offer. Companies are now complying with global standards and providing extended warranty of ten years on the compressor against three years a while back.
The marketing strategies have also evolved in the past few years with the focus now on health marketing and energy efficiency rather than just highlighting the functional aspects. LG had recently launched a new range of premium refrigerators with ?Health Guard? technology that uses four special filters, one each for dust, fungi spore, bacteria and odour. Similarly, Haier launched a new campaign Jhukna Mat for its bottom mount refrigerator series, featuring its brand ambassador John Abraham highlighting the health aspect of not bending. Samsung recently launched a product with digital inverter compressor which saves electricity and has a longer life. Whirlpool is the only player which continues to rely on highlighting the cooling factor, which is also being emphasized in its new range of ?Neoichill? refrigerators.
The replacement cycle of refrigerators has reduced in the last few years. Over a decade ago, consumers would use refrigerators for approximately 15 years which has now come down to 5 years. This trend is more prevalent in case of urban consumers while the rural market has a completely different story to tell.
Penetration is still low in rural India for refrigerators; currently it stands at less than 10% and hence there is a huge untapped potential. Godrej & Boyce has introduced a mini-refrigerator called ?Chotukool? for the rural market. Priced at R3800, it can run on batteries and is insulated to remain cool even without power. The channel strategy adopted was also slightly different where the product was advocated through panchayats in the villages.
The market (urban and rural) for refrigeration appliances grew by 15% in volume terms to reach 9 million units in 2011. The key reasons were increased disposable income, greater rural penetration and differentiated product offerings by players. Free-standing fridges have seen a 14% rise in volumes to reach almost 6 million units, accounting for nearly 62% of all units sold in 2011. The single-door refrigerator market is declining at the rate of 35% while double-door refrigerators are increasingly being preferred, accounting for 50% of total sales. Side-by-side fridges account for a small share of volume, about 8%, but are growing steadily with several players introducing their premium range of products.
Demand for refrigerators has seen a decline in the last six months due to increase in prices as a result of depreciating rupee and rising input costs. The ratings for refrigerators have also been revised recently by the Bureau of Energy Efficiency. Competition is fierce in the market with leading players such as LG and Samsung together garnering close to 45% market share. Domestic players such as Godrej and Videocon are playing on competitive pricing and are giving multinational players a tough time. A new entrant, Bosch Siemens, launched its line of refrigerators at the end of 2011 and positioned itself at the premium end of the market. In 2011, private label Croma came out with upside-down fridges which have freezers at the bottom.
By 2015, it is expected that the refrigerator market will reach 15 million units growing at 12.5% annually.
Suheil Murgai is associate director at Ipsos Business Consulting (IBC) while Arushi Thakur is manager, IBC
(This is the third of a five-part series by Ipsos Business Consulting, the consulting division of global market research firm Ipsos in India, on changing trends in the consumer durables space)