By Marzin R Shroff
The consumer durables industry has been on a high growth trajectory in the recent past, aided by government support, emergence of innovative technological solutions, increased disposal incomes, and easy access to credit. According to a recent report by the India Brand Equity Foundation, the Indian consumer durables market is predicted to reach $20 billion by 2020. With the government investing significantly in rural electrification, the demand for durables and consumer goods is expected to increase in rural markets in the next few years. By 2025, India is set to become the fifth-largest consumer durables market in the world.
It is evident, then, that there are certain trends shaping the future of the consumer durables industry.
Mounting IoT acceptance and the rise of digital consumers: The concept of Internet of Things is growing in both scale and accessibility, with major ramifications across the business gamut. Both brands and consumers today are using IoT as a platform for real-time consumer engagement and customer service. The amount of internet-connected devices has vastly expanded over the past decade. Everything from watches to light bulbs, refrigerators to even water purifiers are now capable of wirelessly communicating with users via the internet. IoT is likely to generate more consumer data and insights, thereby helping companies to deliver more personalised offerings to the next-gen shoppers.
Customised solutions: Consumers have a lot of choice and they demand easy access to services, along with customised and consistent experience at every purchase stage. Addressing key customer requirements, following integrated approach and providing technologies and solutions that benefit them through low power consumption, low service requirement, low cost of operation, etc, is key to establish strong brand association and success in the industry. Energy efficiency will be the fundamental force driving the growth of consumer durables space in the near future. New-age consumers are responsible towards the environment and are opting for energy-efficient appliances, which also help combat higher utility bills. To stay ahead of the competition and distinguish their products, brands will have to increase focus on developing energy-efficient and eco-friendly products.
Transformative business models: Over the next decade, as new models multiply in the online space, physical stores will continue to exist, but will require an evolved value proposition for the consumers. Retailers will place more emphasis on personalised services and experiences. These stores will become smaller, and offer dynamic interactions and virtual experiences to the customers.
Increased online spending: In the past three years, the number of online buyers has increased sevenfold, according to a recent report by the Boston Consulting Group (BCG). Growth in internet penetration and rising e-commerce adoption will further increase growth in the number of online buyers. Unique services offered by online sellers, burgeoning payment platforms, strengthened delivery logistics, and significant investments are going to be the major factors behind the rising adoption of e-commerce channels. In terms of value, although online commerce is still a small portion of total retail sales, it is growing at a rapid pace.
Growing affluence: The BCG report also added that, in terms of spending, the two top consumer categories—elite and affluent—will become the largest combined segment by 2025, accounting for 40% of consumption, and will fuel most of the growth. Wealthy urbanites will be responsible for one-third of total consumption of consumer durable goods. The demand for consumer durables in India has been growing on the back of rising incomes; this trend is set to continue even as other factors like rising rural incomes, increasing urbanisation and changing lifestyles aid the growth of demand in the sector.
The author is MD & CEO, Eureka Forbes Ltd