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Consumer durable companies hope the coming summer season will turn fortunes after almost two washed-out summers of 2020 and 2021, on the back of pent-up demand and hot weather conditions. They said that feature-rich products will drive sales this year.
Consumer durable companies are expecting a strong summer season this year after an almost washed-out two summers of 2020 and 2021 due to Covid related restrictions and low consumer sentiments. “With the third wave practically over, vaccination drive covering a larger population and summer temperatures rising, and also the pent-up demand in the category, we expect more than double growth in our AC sales this summer in comparison to last year. Generally speaking, 29-30 per cent of total annual sales come from the summer season,” Kamal Nandi, Business Head and Executive Vice President – Godrej Appliances, part of Godrej & Boyce, told Financial Express Online.
Summer of 2022 to make up for sales lost to Covid
The peak season for cooling appliances during the last two years was hit by the first and second Covid wave which led to almost close to zero sales for appliance makers. These companies are betting on 2022 to make up for the losses incurred. “The volume contribution of summer sales to the full year typically is one-third of the total for refrigerators and more than half for ACs. As home is the new headquarters and with a hybrid culture becoming the new norm, industry players across consumer tech and durables are looking at 2022 as a recovery year,” said Nikhil Mathur, Managing Director – India & Head of Data Partnership & Innovation – APAC, GfK.
Other consumer durable companies such as Bajaj Electricals, Orient, Panasonic, Somany, Voltas, etc too are betting on the coming summers to make up for the ‘losses’ from the last two years.
Rakesh Kaul, CEO and Whole Time Director, Somany Home Innovation Limited, said, “We are expecting to see an upswing in the demand for product categories such as air coolers, ceiling fans, and water purifiers in the upcoming summer season. We are expecting a 20-30 per cent rise in sales of air cooler and ceiling fans segments compared to the last two seasons.”
Atul Jain, Executive VP, Orient Electric, said, “Summer sales typically contribute to almost 35- 40 per cent of our annual fan sales and we are expecting that this year the contribution levels will be the same.”
Demand for feature-rich products
In terms of demand, consumers are choosing more feature-rich appliances, showing a trend towards technologically driven products. “With home-as-the-hub to stay, we are seeing a rise in demand for value proposition appliances that are easy to use (allowing them to multi-task), energy-efficient, connected (smart), and are healthy & hygienic. We have synergized our efforts in creating a robust portfolio of smart products across categories,” said Manish Sharma, CEO, Panasonic India. Capitalizing on higher Inverter AC sales, Panasonic India’s AC division across the country registered a sales growth of nearly 45 per cent in FY 2021.
Tata group’s Voltas has introduced air conditioners with air purification capabilities. Godrej Appliances too has launched ACs with air purification, and other features such as UV cooling, anti-viral filter and IoT controls. “We have incorporated these newer technologies in some of the other existing product ranges as well,” said Kamal Nandi from Godrej Appliances.
Beyond functionality: Energy efficiency, design aesthetics on consumers’ minds
Anuj Poddar, Executive Director, Bajaj Electricals Ltd, said, “There is an inclination towards making homes aesthetically appealing, thus moving beyond the functionality of the product. We foresee an uptick in demand for well-designed, feature-led consumer durables.”
And among feature-rich products, what’s standing out in terms of demand from consumers is energy-efficient range. Nikhil Mathur of GfK agreed, “Volume contribution of 4 & 5 star ratings is up from 19 per cent to 32 per cent for AC while refrigerator is up from 10 per cent to 16 per cent in FY 2021 vs. 2019.”
The trend is catching up in such a way that these companies are focusing on incorporating the feature in their new launches for this summer while also upgrading their old range with energy-efficient mechanisms. Atul Jain from Orient said, “We are launching energy efficient fans this summer season which will be the star-rated fans, in line with the Bureau of Energy Efficiency (BEE) directive. We have seen around 5-10 per cent of the sales already moving towards these ranges.” Somany too is launching energy-efficient BLDC fans and other IoT-enabled cooling appliances in the coming quarters.
Meanwhile, Kamal Nandi said, “There are various star-ratings and the demand for them varies from market to market. Nevertheless, the belly of the market is three star and as you go up the star hierarchy, the demand goes down since they are more expensive. Our three star to five star range is roughly 10-15 per cent premium than the low star-rated range.”
Will frequent price hikes impact demand?
Even as there has been very frequent, though moderate, price hikes across consumer goods, electronic appliances companies maintained that ‘consumers are accepting the price hikes’ and that this will not impact the demand this season. “Despite the fact that recent increases in raw material prices have resulted in price increases for a number of white goods, we remain optimistic about consumer emotions as a result of pent-up demand and a hot summer,” said Voltas spokesperson.
“Price hikes have been a natural part of the increasing commodity prices and raw material shortages in the last few months. However, I don’t think that there will be much impact on the sales, because these spikes are happening across all the categories and consumers are, to some extent, aware as to why this is happening,” said Atul Jain from Orient.
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