Amid dismal macroeconomic prospects unleashed by the Covid-19 pandemic, consumer durable companies are now banking on the crucial festive season to recoup losses. Brands have been advancing production plans, expanding rural outreach and even planning attractive offers, hoping to achieve a 10-15 per cent sales growth during this period after a lackluster May and a near wipeout in April.
“Currently, the work from home situation and the reluctance in hiring domestic help due to pandemic fear – is leading to a spike in demand for home appliances like AC, refrigerators, washing machines and microwave ovens. With the onset of the festive season and reopening of markets, we expect further uptake in demand. There will be some pent-up demand, with rural markets performing better after a normal monsoon and several firms reversing pay cuts in the urban,” said Kamal Nandi – Business Head and Executive Vice President – Godrej Appliances.
The company, he added, is targeting double-digit growth of more than 10 per cent for the entire festive season.
Dixon Technologies, a contract manufacturer for Samsung, Xiaomi and Panasonic, plans to expand capacity for washing machines and televisions by up to 40 per cent.
India’s largest home appliances maker LG Electronics India has also advanced it's production plan by a month and is scaling up output by 10-15 per cent.
“This festive year is very different and we are predicting that priorities will be different with consumers looking for products that enhance health & hygiene. The pent up demand, especially for appliances, during the unlock phase has been phenomenal both in metros and non-metros and we are confident of good growth in sales going ahead,” said Vijay Babu-VP- Home Appliances- LG Electronics India.
According to Manish Sharma, President and CEO, Panasonic India and South Asia, appliances like vacuum cleaners, washing machines are seeing significant traction.
“The consumer durable industry witnessed a loss of around 20 per cent during the past few months, but this festive season we are hopeful of recovering some of these losses. The onset of the festive season is expected to provide an impetus for a sustained demand across smaller markets. Besides, the demand is likely to sustain as the market penetration of appliances continues to remain low. For instance, refrigerators penetration stands at 34.1 per cent, washing machines at 14.3 per cent and air conditioners the lowest with 4.8 per cent,” Sharma added.
For semi urban and rural markets, Panasonic has introduced a new initiative - Bharat Marketing - to get real-time information on inventory and has also launched products from the starting range for these markets.
In June and July, the company registered a growth of about 13 per cent and 19 per cent, respectively, from tier-2 markets.
Companies are also upping their promotions game, even as reduced price-tags seem unlikely. Godrej and LG, for instance, have worked out a spectrum of lucrative offers such as cashbacks, extended warranties and consumer finance.
The industry, however, indicated that this festive year may see some of the lowest discounts in recent years.
Typically, festive sales contribute 35-40 per cent of the annual sales for the industry. Owing to the loss in sales during the lockdown months, the industry is projected to see degrowth of 10-12 per cent in the current financial year, said Nandi, who is also the President of Consumer Electronics and Appliances Manufacturers Association (CEAMA).
“The economic uncertainty hampered demand and hurt consumer sentiments causing a loss of 30-40 per cent in March. The loss in April was 100 per cent due to the nationwide lockdown, while we have seen a near 60-70 per cent drop in sales in May. However, June July has shown an upswing – with the drop tapering to about 10 per cent compared to last year. We expect the consumption graph to rise from here,” he pointed out.