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The festive season is here, and after a poor showing for over two years, retailers and manufacturers of appliances like TVs, smartphones, air-conditioners, and refrigerators are banking on the coming three months to put the wind back in their sails.
Strong footfalls at appliance stores have given companies confidence that they will clock 25-35 percent growth in the run-up to Diwali.
Nilesh Gupta, director of Vijay Sales said, “Possibly this could be Diwali of the decade. Compared to last year, we expect a growth of around 20 percent in terms of value. Over 2019 that is pre-COVID, we will be seeing a growth of around 10-12 percent.”
Seven million smartphones were sold in just the first four days of online festive sales. But industry players say that when it comes to the festive season, home appliances like refrigerators will take the lead mainly because of a broader economic recovery that’s unfolding.
Kamal Nandi, business head at Godrej Appliances said, “Larger size refrigerators, chest freezers, and air conditioners will drive the growth because more homes are coming up, more construction is happening, and therefore consumption of AC and refrigerators will happen.”
But the surge in demand may not be uniform… with the mass-market segment taking a hit due to lower discretionary budgets on the back of rising inflation. “Over 2019, I think the mass segment is clearly de-growing in volumes by about 5-7 percent,” Nandi said.
That leaves the premium segment and experts say there’s a very good chance that business will be driven almost exclusively by this segment, especially larger capacity appliances.
Vijay Sales and Godrej, for instance, expect over 50 percent growth in the premium segment and Samsung pegs growth in this segment at 80 percent.
Gupta said, “A few years back, the financing ratio was around 60-65 percent, now we are nearly touching 75-80 percent. Even the emphasis of the brands is on finance so that people can upgrade their appliances.”
The bigger worry is that this may not be sustainable as input cost concerns are far from over. While commodity prices are softening a depreciating rupee is offsetting any benefit. And if this continues, the industry may be staring at another price hike post the festive season. But for now, companies are focused on raking in festive sales, backed by offers, discounts and financing options.
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