MUMBAI: Economists can debate what drives rural growth, improvement in farm prices or rural wages, or pure availability of credit that is driving demand for consumer products. But, it is clear that rural markets are continuing to grow, and are lapping up premium products.
Rural markets are doing better than urban markets.
The growth rate is double than that of urban markets today and the penetration is increasing, says Kamal Nandi, Business head & executive vice-president, Godrej Appliances. Not just increase in demand, but the rural market is also embracing premium products, Nandi said.
Today, the premium products don’t just mean large products or higher capacities, but those that are aspired by consumers in every segment. “I think if there is affordability, people really want to go in for the best in the class that they are entering into,” Nandi said.
Sensing the shift in consumer preferences, Godrej at the onset of the current festive season, launched 40 new models across categories with “primary focus on premiumisation”.
Expansion of the portfolio with an emphasis on premium has paid off well, be it the “Duo” refrigerator launch, front-loading washing machines, chest-freezers or the other product categories.
This has also helped the company post double the industry growth rate – while the industry is growing in single digits, Godrej has been able to achieve 25 per cent growth on year backed by the launches, Nandi said.
Beyond that, it has also helped the company gain market share from the multinational brands. Nandi says the Duo launch clearly showed customers moving back from MNC brands.
Apart from the premium, the rural focus is also playing out quite strong, with the company choosing to open exclusive outlets, specifically in the tier-2, tier-3 and tier-4 markets.
Since its launch four years ago, it has so far opened 99 such outlets and aims to add 200-250 more in the next few years.
“We are seeing a really huge traction of premium products from these outlets across geographies. By design, we want to open only in these markets,” Nandi said.
While overall growth has been satisfying for the company, festival season, especially this year, hasn’t shown much promise so far. Festive season to festive season growth has been muted at around 10 per cent, he said.
Onam to Diwali is the main festive season, and south is the strong market for Godrej. With Kerala having its own issues after floods, the south, so far this season, hasn’t been promising.
But, Nandi expects pent-up demand to come back when Tamil Nadu festival season starts in November and December, and Kerala to come back by December. The weekend running up to Diwali is going to be crucial for the industry.
