With Diwali a fortnight away, consumers are busy making their purchases for the occasion. What is interesting to note is that the premium durable counters are the busiest of the lot.
The Vijay Sales store in the suburb of Santacruz in Mumbai is packed to the rafters. Sales people are busy taking consumers through some of the high-end phones, large-screen television sets and fully-automatic washing machines at the outlet. Many prospective buyers are not hesitating to place orders after the sales drill is over.
Led by a stable urban demand, the need to upgrade and easy financing options, consumers are flocking to stores with an intent to pick up products that have bigger and better features such as frost-free refrigerators, 43-inch and above TVs, higher-capacity split air conditioners and fully-automatic washing machines.
On the other hand, mass category products such as semi-automatic washing machines, single-door refrigerators, window ACs are seeing a decline, as rural demand remains weak, thanks to weather uncertainty and inflationary pressures, which has hurt discretionary spends.
“Premium durable products are growing at around 25-30% this festive season versus last year,” Kamal Nandi, business head and executive vice-president, Godrej Appliances, said.
“In contrast, the mass-market products are de-growing by about 5-10%,” Nandi says.
A report released on Tuesday by Crisil Ratings says that the domestic consumer durables industry will see revenue growth of 8-10% this financial year, supported by premiumisation and steady growth in urban demand. This will be on the back of a healthy volume-led, post-pandemic growth of 18% last fiscal.
“Demand for premium appliances is expected to gain traction this fiscal. This will play out in three ways: One, rising demand for appliances with smart technologies; two, up-trading to higher capacities; and three, efficient appliances that lower the operating cost,” Mohit Makhija, senior director, Crisil Ratings, said.
ACs and TVs, experts say, are benefiting the most from this premiumisation trend, fueled in part by a residential real estate boom, which has triggered demand for home appliances, notably at the higher end.
“People are seeking better viewing experiences at home, which is pushing up the sale of large-screen TVs with better technologies. For instance, our Quantum dot Light Emitting Diode (QLED) TVs have been well-received and so have TVs with larger screen sizes such as 43-inches and above,” Pallavi Singh, vice-president at Super Plastronics, which is a brand licensee for several international brands such as Thomson, Blaupunkt and Electrolux, said.
Ashish Agrawal, senior vice-president and head, GTM at LG Electronics India, says that 55-inch and above TVs at his company has seen a significant demand this festive season. And so have products such as side-by-side refrigerators and full-automatic washing machines.
“Sales in TVs, for instance, have seen a surge of 2 to 2.5 times compared to the previous year. While refrigerators and washing machines have seen a sales growth of 40-60% compared to last year,” Agrawal says.
The growth in premium products, especially TVs, Agrawal says, can be attributed to high-decibel sports events such as the ongoing Cricket World Cup in India, which have buoyed many to pick up larger TVs.
Saif Khan, MD & CEO, BSH Home Appliances, says that the company has seen an uptick in premium products across metros and cities.
“We recently launched our Bosch and Siemens Brand Stores in Siliguri and Guwahati to tap into the growing demand for premium appliances in the North East region of India. As the appreciation for high-quality appliances rises, we are committed to providing top-tier products and services to meet the increasing demand,” he says.