Work from home and life without domestic help have pushed the average Indian consumer to indulge in consumer durables and appliances this festive season. The consumer durables sector has registered a close to 10 per cent growth over last year's festive season, as demand for 65-inch smart TV panels, dishwashers, washing machines, and large-sized refrigerators surged. However, a huge gap in demand and supply has also undermined the possibility of higher growth.
Since there have always been limited takers for a premium 65-inch TV panel or a dishwasher, most brands have preferred to import them from other countries, as manufacturing them in India didn't make economic sense. The import challenges due to the coronavirus pandemic have made it difficult for most brands to get their products into the country this year, resulting in a supply crisis. "We have no washing machines, refrigerators and dishwashers. Our products are ready at various ports but there are no containers available," says Neeraj Bahl, MD and CEO, BSH Home Appliances. The demand for dishwashers, says Bahl, has gone up by 70 per cent, while washing machine demand has increased by 30 per cent.
The fastest-moving inventory in a category like television has always been 32-40 inches panels, but this time around consumers have mostly bought 32-40 inches smart TV panels. "There were hardly any takers for the regular LED panels. With entertainment consumption moving towards OTT, most consumers have preferred smart TVs. There was maximum demand for 65-inch panels," points out Ritesh Ghosal, Chief Marketing Officer, Croma.
He claims that the consumer durable retail company experienced a 17 per cent growth over last year's festival season. "Had there not been a supply challenge, we would have easily grown upwards of 22 per cent," he further adds.
Although festival sales have been rather encouraging despite the pandemic impacting incomes and jobs, the industry is not too confident about ending the fiscal on a positive note. "Three-fourths of our sales come from air-conditioners and bulk of AC sales happen during the months of April and May. Due to the lockdown, sales were negligible during these months. We launched refrigerators and dishwashers, but they helped us recover losses only to a certain extent," says Shashi Arora, CEO, Lloyd-Havells India.
The first quarter of a fiscal usually contributes 35 per cent to the revenue of the consumer durable industry, however, the industry lost over 25 per cent of sales in Q1FY21. "Recovering the lost revenue of Q1FY21 will not be easy. The industry will degrow by 10-15 per cent this year," says Kamal Nandi, Business Head, Godrej Appliances.
While rural and tier 2-3-4 markets emerged outliers when the economy opened up post the lockdown, the festive season saw a better offtake in the metro markets. "The smaller markets were flat. But with agricultural income being good this year, we expect those markets to pick up momentum in Q4," says Nandi of Godrej Appliances.
So, where did Indians shop for durables this year? While online shopping did grow by 15-odd per cent, 85 per cent preferred to walk into a nearby durable store, touch and feel the product and then buy. The durable marketers who have been aggressively strengthening their omni-channel presence believe the ratio of offline shoppers will further go up as the COVID-19 situation improves.