Interview: Dinesh Nair, Director – Consumer Business, Lenovo India

By: |
October 22, 2021 6:53 AM

‘Market for premium PCs has exploded in the past 18 months’

For a population of India’s size, the need for devices will stay.For a population of India’s size, the need for devices will stay.

Lenovo India, which recently combined its offline and online retail channels under Lenovo OnDemand service, now allows for consumers to browse products online and pick them up from the nearest offline store. Dinesh Nair speaks to Venkata Susmita Biswas about the company’s omnichannel foray, trends in the consumer PC segment, and whether the surge in demand is here to stay.

India’s PC market has had a dream run due to both work from home and learning from home. Is this sustainable beyond FY22?

Since before the pandemic, for almost three to four years, the industry recorded very sluggish growth. A lot of the PC business in the consumer space was dominated by entry-level products. As a result of the pandemic, the market went from about four million shipments per year to six million. The back-to-school segment is adding to the market. Working professionals are also upgrading devices more often, resulting in the shortening of refresh cycles. Further, demand for gaming devices, especially products with high-end specs, has more than doubled over the past one year.

For a population of India’s size, the need for devices will stay. Fundamentally, the way we work, study and interact has shifted. The estimate for shipments this fiscal is 7.5 million units for the consumer market. As per current forecasts, the market is projected to grow at least for the next two to three years.

Has the average selling price surged, too?

The average selling price has grown by about 30-40% over 2019. Further, the share of entry-level products has dropped from 40% before March 2020 to 10-15% now. A large part of our sales is above the Rs 50,000 price point. The premium products market has exploded. This is primarily because the usage patterns and people’s expectations from their devices have completely changed in the past 18 months. Users want better cameras and high audio quality on their PCs. Not only has the volume of sales increased, we see that the whole revenue opportunity in the market is at a very different level right now.

But according to a recent IDC report, consumer preference is moving towards entry-level PCs…

There is an apparent need for affordable devices. As people have certain expectations from their devices, the issue now is what kind of specifications can be offered to consumers at an affordable price. This is because component costs have gone up significantly in the past 18 months. There are many industries that are competing for similar components and the supply-demand situation will take a few more quarters to stabilise. Similarly, it will be some time before we are able to cater to this demand.

How significantly has the uptake of tablets changed?

The tablets market was on a decline for many years, and it largely became very heavily indexed on commercial sales. But in the past 18 months, this has flipped. Consumer sales account for 60% of the overall pie, up from 30%. A large part of the consumer demand in the entry-level segment is being fulfilled by devices like tablets. Earlier, if Rs 10,000 was the most popular price point for tablets, we are now seeing a lot of growth coming from the Rs 15,000 to Rs 25,000 segment.

Lenovo recently launched an omnichannel retail model. What prompted this?

This service is aimed at supporting both retail partners and consumers. We have about 470 stores across 180 cities and towns, whose inventory is available online. A user who logs on to our website can not only go pick up their device from a store nearby after browsing online, but can also get same-day delivery.

When e-commerce resumed in FY21, there was a huge spike in sales, and online sales doubled. Of the extra two million units sold last year over FY20, one million were sold online. Currently, about 5-6% of the consumer business comes from the online channel.

Unlike a lot of other industries, a significant part of our sales takes place offline. Every time the offline market stabilises, we see online sales come down. That has given us confidence to utilise our strength in offline retail and technology to build a platform that will match the expectation of the consumer in terms of what an e-commerce site can offer.

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