The annual market for consumer durables in India is currently standing at Rs 25,000 crore. It is witnessing a growth of about 15 per cent in this financial year, accounting for about Rs 310.5 billion. Luxury goods are now being perceived as necessities, w
The annual market for consumer durables in India is currently standing at Rs 25,000 crore. It is witnessing a growth of about 15 per cent in this financial year, accounting for about Rs 310.5 billion. Luxury goods are now being perceived as necessities, which further explains how the industry has evolved. The rate of growth with respect to production has been more in terms of quantity than value for few products.
The increasing accessibility to consumer loans at reduced interest rates and attractive financing schemes have also given a great impetus to this industry. The shift can also be explained by the narrowing down of the price difference between branded and non-branded items, which has increased the consumer`s inclination towards branded products. The increase in the production in the organised segment has led to a sharp decrease in the unorganised segment. The change in the electricity scenario has also led more and more Indians to buy electronics goods.
Rajiv Kapur, Vice-President, Consumer Service, Whirlpool of India Ltd, opines, “The industry has witnessed healthy growth and Whirlpool has outgrown the industry and registered share gains in all its segments.”
Manoj Kumar, CEO, E-zone, adds, “The consumer durable industry is experiencing a rapid growth due to higher disposable income. The consumer durable industry is seeing a growth of over 12-15 per cent annually.”
The microwave oven industry grew at a robust rate of 48.5 per cent, the fully automatic washing machines market increased at 40 per cent, while the semi-automatic market rose by 19 per cent in the first quarter of 2007.
Refrigerator sales rose by 10.7 per cent and airconditioner sales by 50 per cent in value terms. Frost-free refrigerators reached an unprecedented growth of 50 per cent this summer compared with the previous year. While colour televisions and refrigerators have been around for many years, washing machines, microwave ovens, airconditioners and vacuum cleaners have just started making their presence felt in Indian households.
Major players
The market now has the presence of a number of Indian as well as foreign players. The MNCs definitely have an edge over the Indian counterparts in terms of capital flow and technology. They continue to dominate the Indian consumer durables segment, which is apparent from the fact that these companies command more than 65 per cent market share in the colour television segment. The major foreign players are:
Whirlpool of India Ltd (WIL) has a market share of 25 per cent in refrigerators and 17 per cent in washers. Whirlpool is present in the large home appliances category, which includes refrigeration, air treatment, fabric care and cooking as the key segments. All these segments are growing in healthy double digits. Its tagline is: “You & Whirlpool, The world`s best homemakers.”
Samsung India Electronics Ltd (Siel): It is the world`s largest electronics company. There are Samsung Digital Worlds, Samsung Digital Homes and Digital Plazas all over the country. The slogan of the company is: “Imagine the Possibilities.”
LG Electronics India (LGEI): LG Electronics is a South Korean multinational corporation and one of the world`s largest electronics companies. It is a part of the LG Group operating in 80 countries. Its tagline is: “Life`s Good.”
Sony Corporation is a Japanese multinational, one of the world`s largest media conglomerates, with a revenue of $70.303 billion (as of 2007), based in Minato, Tokyo. Sony is one of the leading manufacturers of electronics, video, communications, video games and information technology products for the consumer and professional markets. Its tagline is: “Like no other.”
And the Indian players include:
Videocon Industries Limited is an industrial conglomerate with interests all over the world. It is also the third largest picture tube manufacturer in the world. Its tagline is: `The Indian Multinational.`
Mirc, Onida, is one of India`s leading electronics brands, established as “MIRC Electronics” in 1981 in Mumbai. Onida has evolved into a multi-product company in the consumer durables and appliances sector. Onida enjoyed a market capitalisation of Rs 301.46 crore.
Panasonic, best known by its Panasonic brand name, Group & Global Headquarters, Matsushita Electric Industrial Co Ltd, based in Osaka, Japan, is a worldwide leader in the development and manufacture of electronic products for a wide range of consumer, business, and industrial needs. Its tagline is: “Ideas for Life.”
Voltas is an engineering, airconditioning, and refrigeration company based in Mumbai, India. It is a part of the Tata group. It is the largest HVAC (heating, ventilation, and airconditioning) service provider in the country.
BPL established its image as a reliable and strong brand in the consumer durables market, a reputation that it still enjoys. BPL has its footprint across the country through a distribution network comprising over 7000 channel partners.
Eureka Forbes: It is a part of the Shapoorji Pallonji Group and a multi-channel corporation. It is Asia`s largest direct sales organisation. They are undisputed pioneers in water purification products. An established company with a turnover of Rs 850 crore and experience of over 25 years of unprecedented success. Their tagline is: “`Friends for Life.”
E- zone: Home Solutions Retail India Limited operates with two different formats for consumer durable and electronics: “E Zone- Lifestyle format” and “Electronic BAZAAR – the value format.” E Zone is a lifestyle format spread over 12 cities catering to the need for experiencing the trendy and latest in consumer durables and electronics.
Challenges
In the initial stages, the industry had to face many hardships like any other sector of the market before it flourished. The increasing cost of raw materials as against the competition in prices between various brands was quite a challenge for them. The need for better production facilities and marketing strategies followed.
The demand for the products is seasonal and cyclical, being heavy during the festive season as there are special discounts or schemes offered by the companies to attract more and more buyers. Kumar says, “Initially, this market was dominated by unorganised retail and other than the FMCG sector, no other industry was accustomed to modern trade; hence, initially manufactures took time to understand modern trade. Now, things have changed as there are separate key account managers handling this aspect of the business.”
Earlier, the consumer awareness was low because the role of entertainment was insignificant. But nowadays the consumer is very much aware and knows what each brand has to offer, and this has further increased the price competitiveness among brands. The entry of international brands also posed a threat for the Indian brands. The poor government spending on infrastructure, especially rural electrification, has also been a major drawback as the rural market has a lot of potential for these products. The penetration of consumer durables is the lowest in India at 24 per cent and there is still immense untapped potential.
Need for franchising
The consumer durables industry is growing at a dynamic rate and franchising plays a very important role in its growth. Vikas Kapoor, Deputy General Manager, Eureka Forbes, opted for franchising, `for deeper penetration and faster growth possibilities.` Kapur says, “At Whirlpool, the consumer is at the centre of everything that we do and providing service that delights a consumer when an appliance breaks down is very crucial to the building of consumer loyalty. The franchisee plays a very important role in building this consumer loyalty.”
Future growth
The rising GDP and purchasing power along with an increase in the propensity to consume and the hunger for sophisticated and technologically advanced goods will provide a push to this segment of the industry. Kapoor explains, “India being one of the fastest growing economies of the globe and its 12 cities being the fastest growing amongst the top 100 economies of the world, this consumer durables industry is bound to grow by leaps and bounds.” As the urban market is reaching its saturation point in the demand for basic products, it is a replacement and upgradation market now, whereas rural India, accounting for nearly 70 per cent of the total number of households, offers plenty of scope and opportunities for growth.
Kumar opines, “E Zone and E Bazaar`s focus is to create a loyal base of customers, who appreciate the buying experience and service at our stores. Hence, one would say the prospects of the industry look very bright.” The seasonal character of buying should be converted to a regular feature to further strengthen the market. The use of the Internet will also help market functionaries sell products more intelligently. While the colour television segment is expected to grow by 15-20 per cent, the projected growth for VCD/MP3 players is 30 per cent, 25 per cent for DVDs, 5-10 per cent for washing machines and 25 per cent for microwave ovens. Producers and dealers should be compelled to explore every possible method to improve their efficiencies in order to achieve substantial and profitable business growth.
Business Opportunities
Our Group Sites
Popular Cities
