Durable companies selling television sets, air conditioners (ACs), washing machines and refrigerators have closed this year’s festive season between October and November, with around 25-30% sales growth, led by urban demand, spurred by lucrative offers as well as the need to upgrade.
Online platforms, according to Unicommerce, saw a growth of 37% during the festive period this year versus 22% seen last year. Companies such as Godrej, LG, Blue Star and Voltas said that the share of online within durables is about 12-15% versus offline’s share of 85%, in part because consumers are driven to touch, feel and experience products themselves before making a purchase.
“Festive season sales have been good this year. This has come as a respite for the industry, which saw a difficult summer season due to weather uncertainty. The industry was also counting on the second half of the financial year for a demand revival. This has happened,” says Eric Braganza, president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), an apex body of durable makers in the country.
Kamal Nandi, business head and executive vice-president, Godrej Appliances, says that the premium end of the market performed well versus the mass end, as rural demand continued to remain weak.
“Rural demand has been a challenge for a few quarters now, which has affected entry and mass-market products. On the other hand, urban consumers feel the need to up-trade to higher capacities and want products with smarter features. They have also been open to taking advantage of consumer offers that the festive season provides,” says Nandi.
For instance, companies such as Godrej, LG and Voltas, are seeing as much as 40-45% of their goods sold on easy financing schemes today, notably, during the festive period, which was half this number (20-22%) around 5-6 years ago.
Digital payments as well as zero interest on more high-end products from mobile phones and laptops to TV sets and washing machines have helped fuel the sales of premium products this year, says Mohit Makhija, senior director at Crisil Ratings.
Unicommerce, which tracks online sales, notes that the growth of prepaid orders this festive season at 45% has been more than double that of the growth seen in orders driven by cash-on-delivery (20%) during the same period.
“The surge in prepaid orders can be attributed to lucrative bank offers and convenient equated monthly installment (EMI) options, which is an encouraging trend for the industry, Kapil Makhija, chief executive officer of Unicommerce, says.
Ashish Agrawal, senior vice-president and head, GTM at LG Electronics India, says that 55-inch and above TVs at his company has seen significant demand this festive season. Products such as side-by-side refrigerators and full-automatic washing machines have also seen good traction this year.
“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 the festive season last year,” Agrawal says.