NEW DELHI: Consumer durables giants are seeing an increase in demand for value-added or premium products in comparison to entry-level products. Entry-level products are under pressure due to two main reasons, according to experts - the first is increasing pressure on disposable income and the rising cost of living, particularly affecting the low-income buyers and the second is the narrowing price gap between the entry-level and value-added categories.
At the same time, the buyer of value-added products, which is the people in the middle or high-income group, are driving sales of white and brown goods and companies in the sector are, therefore, banking on the category.
Sustaining prices is becoming difficult, as there is a constant cost increase due to commodity prices, therefore, sales of entry-level products are hit, says Avneet Singh Marwah, CEO SPPL. “If the delta between entry-level and mid-level is narrowed then consumers will choose the mid and affordable premium category. Currently, we are witnessing the same. Our 40 inches and 43 inches 4K TV segment is performing as good as the entry-level segment,” Marwah says.
Pallavi Singh, Sr. VP SPPL, agrees with this explanation. “Due to this increase, the cost of entry-level products is now nearing that of the next segment, hence a consumer would feel the need to debate on settling for a product when a value add can be purchased by paying a minimal price difference,” Singh says.
K Shankaran – Wholetime Director & Secretary of TTK Prestige limited, in the consumer durables major’s earnings call said, “Our core customer is largely middle class and above, and the value-added segment is seeing traction as compared to the entry-level pricing, so our innovations have been largely from the value-added segment which will continue to happen because that is the imprint lifeline of the company.”
“There is an income pressure on the entry-level product consumers. So, that is the trend as of now. We’ll have to wait and see how the inflation pans out, how this geopolitical situation eases out,” he added.
Saurabh Baishakhia President - Appliances, Usha International says Premiumization has been gaining momentum industry-wide. “We at USHA have witnessed a surge in demand for premium products that add value and convenience to consumers’ daily lives, across home and kitchen appliances.”