- Consumer durable sector was grappling with low consumption appetite even before coronavirus lockdown
- Industry insiders predicted 40 per cent degrowth, but degrowth in Q1FY21 is just about 12-15 per cent
- CEOs of the sector say that they will be happy if they are able to match last year's growth rates
Consumer durable majors have every reason to smile, as the sector has reported a close to 50 per cent growth in sales in the month of June compared to April and May when there was absolutely no sales. With work from home becoming a reality at least for the near future, Indian consumers have started investing on consumer durables to enable them to multi-task better. The fear of the virus has also forced them to keep their domestic help at bay, and this has led to categories such as dishwashers grow by 250 per cent over same time last year. Washing machine, microwave and big sized refrigerator sales have doubled too. "I am over-booked by 20,000 for dishwashers," says Neeraj Bahl, MD and CEO, BSH Home Appliances. Dishwashers comprised just 5-6 per cent of BSH's sales prior to COVID.
"We had predicted a 40 per cent degrowth over last year, but the degrowth in Q1FY21 is just about 12-15 per cent. It has come as a pleasant surprise, consumers are looking for effort minimisation, storage and hygiene in the new normal. There is clearly a trend of substituting domestic help with gadgets," points out Kamal Nandi, Business Head, Godrej Appliances. Indian consumers have traditionally never considered it important enough to equip their kitchens with gadgets that could help increase their productivity as they have had the luxury of domestic help. "Also with spends on travel, eating out and shopping having dropped significantly, people are investing on products which can entertain them as well as help them multi-task," says Manish Sharma, MD, Panasonic India.
The consumer durable sector was grappling with low consumption appetite even before coronavirus lockdown and companies had been resorting to deep discounting, offering attractive EMI schemes just to push consumers to buy. Nothing was really working for them and many predicted the demise of categories such as small sized TV panels as smart phones had started doubling up as TV screens. The other surprise category in the COVID world has been the surge of sales of large sized TV panels upwards of 55 inches. "Our TV sales grew by 50 per cent in June. With multiplex visits having stopped and more time being spent at home consumers are seeking large screen experience through large TV panels. People are buying TVs to consume OTT and some are also doing video conferencing. Staring at the laptop for long hours gets stressful," says Sharma of Panasonic India. Apart from dishwashers, mircowaves, TV panels and even mixer grinders, personal grooming gadgets such as trimmers, epilators and shavers have sold five times more than what they did same time last year. Office automation products such as video conferencing cameras have also taken off.
Is this surge in consumer durables sales an indication of pent up demand? Nandi of Godrej doesn't deny it, but he also says that there is a trend of a change in lifestyle and the demand for these products will sustain till everyone has found gadgets to substitute their domestic help. Bahl of BSH says that demand may not forever grow by 200 per cent, but it will be there.
A bulk of these sales has come through online channels, but not necessarily through Amazon and Flipkart. During the lockdown, all consumer durable majors helped their traditional dealers digitise, create their own websites and also made demo videos which the dealers sent to consumers on WhatsApp, and that has yielded results. "Our traditional trade partners saw bulk of their sales coming from online in the last one month, which was earlier zero for them," says Godrej's Nandi. Bahl of BSH says that their largest traditional trade partner who never took online seriously, has sold Rs 40 lakh worth of goods online in the last one month. "Store sales have also happened. Earlier consumers used to come 4-5 times to a store before buying a product. But now, they do their research online and come to the store for the final transaction," adds Bahl.
Is the consumer durable industry expecting high growth rates this fiscal? The CEOs of the sector say that they will be happy if they are able to match last year's growth rates. In fact most of them had assumed that FY21 would be a write off.