According to industry estimates, the consumer durables and appliances market in India was valued at Rs 90,000 crore in 2019
At a time when most sectors grapple with subdued sales, consumer durables and appliances have been witnessing the reverse. Companies such as Panasonic India, Godrej Appliances and Philips India have reported a surge in sales of kitchen appliances, washing machines, television sets and personal appliances in the past two months.
Panasonic India has seen a growth of 20% in the sales of vacuum cleaners, and 44% in microwaves and washing machines (top load), as compared to the pre-Covid levels. Godrej Appliances says the sales of its microwaves doubled this year in June, compared to the same period last year, and the number of dishwashers sold saw a fivefold increase. Philips India, meanwhile, has seen a 40-50% growth in the sales of personal appliances, while Panasonic India has seen this category grow five times, as compared to the pre-Covid period.
Experts attribute the buzz in these categories to the increased workload at home, in the absence of house help as people continue to stay indoors and do household chores themselves. According to industry estimates, the consumer durables and appliances market in India was valued at Rs 90,000 crore in 2019; however, this is projected to see de-growth in 2020, due to the loss of sales during the lockdown months, and shrink to Rs 80,000 crore.
These companies have seen a downtrend in impulse shopping and purchase of small-ticket items in the wake of the pandemic. “Consumers are making planned trips to the stores, and buying only one or two products. The time being spent in our stores has almost halved in comparison to the pre-Covid times,” says Ritesh Ghosal, CMO, Infiniti Retail – Croma.
On the other hand, these companies claim to have seen an increase in traffic on their websites. Tata Croma, for instance, which used to get 3-5% of its overall sales from its website, now gets 10-12%. “We have sold more products on Croma.com in May and June than the whole of last year,” adds Ghosal.
Godrej Appliances, too, has increased its share of sales from online channels in the last three months by 60%. It is also working to “digitally enable” its 75,000 exclusive brand outlets. “We are training our seller partners to make them self-reliant in this digital era. We are opening e-stores for them, helping them list their shops on Google Maps, and enabling them with digital payments,” says Kamal Nandi, business head and EVP, Godrej Appliances.
Panasonic India, too, has introduced a digital payment platform Benow, to help its offline retail partners digitise their selling processes. “While our efforts are focussed on building a robust online channel to drive sales, we have also been upgrading the offline channel to provide a better purchase experience,” says Suguru Takamatsu, head – consumer sales division, Panasonic India. The company has rolled out schemes offering 50% off on installation cost, extended warranty, no-cost EMI, and cashback on credit cards to fuel demand in these times.
These companies are also beefing up their digital marketing budgets. Godrej Appliances has increased its budget by 150%, while Tata Croma will now spend 40% of its overall marketing budget on digital, as compared to the 10-15% earlier.
How would this trend pan out in the long term? Though the demand for certain product categories has gone up in recent months, the overall sales are still 15-20% lower in comparison to the same period last year.
According to a senior retail analyst, most companies in the segment are expected to see flat growth in FY21. “The surge is being witnessed as a result of the pent-up demand due to the lockdown, and it is not sustainable in the long run, especially for high-value purchases.”
Building online capabilities could be an effective strategy for these companies, he says, but it would come with constraints given that “touch and feel is an important factor in the purchase of these products”.
Industry experts also say that companies operating in the segment need to make their products more affordable, considering the economic slowdown, as pricing is an important lever in this category.
Besides, says Subhendu Roy, partner, consumer and retail industries at Kearney, supply chains will remain a challenge for these brands until they find an alternative to sourcing components from China.