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The consumer durables industry expects around 10-15% growth in FY23 driven by premium products as customers look to upgrade appliances with purchases facilitated by easy financing schemes offered by brands.
“Overall, the industry is expected to grow at 10-15% in FY23-24 and Godrej Appliances is expecting a 20% growth during this period. This growth will be primarily led by the premium segment,” said Kamal Nandi, business head and executive vice-president, Godrej Appliances.
Year-to-date (YTD) November data re-establish the premium trend, with frost-free refrigerators and fully automatic washing machines continuing to grow much faster than other products. “We have also planned significant investments and have new launches coming up as well,” Nandi said.
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In FY22, the industry saw premium segments faring much better than mass products as inflation continued to hit customer spending in the segment.
In the last one-and-a-half year, the industry took a price hike of 15-20% across products because of a spike in the costs of raw material like aluminum and nickel, transportation and crude. During the current fiscal so far, the overall industry growth has been around 20-22% with premium products seeing much higher growth, while the mass categories seeing degrowth.
“We have seen mass products seeing a degrowth of 8-10% this year so far which is where we lost volumes,” said Nilesh Gupta, MD, Vijay Sales. “However, we saw a 30% growth in our topline, driven by higher average selling prices and premium products,” he said.
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While growth in the premium categories has been the defining trend in the consumer durables industry this year, experts say this is likely to continue next year as well with new launches being skewed towards the same.
In the current year, while inflation impacted mass category growth, the need for upgrade and convenience and easy availability of financing schemes also helped consumers buy premium products.
Mohandeep Singh, senior vice-president, consumer electronics business, Samsung India, said this trend in consumer electronics gathered momentum during the pandemic by early adopters as consumer needs evolved. “Ever since, we have been witnessing a rise in demand for 55-inch televisions and soundbars owing to the in-home entertainment requirement. At the same time, large-capacity washing machines and refrigerators to address home utility with superior technology also gained traction.”
According to Singh, this trend is here to stay as consumers see more value in spending a little extra to experience advanced technology and more convenience.
The availability of financial offers such as credit card offers and EMIs that have been more aggressive this year also worked in favour of premium products.
For instance, to push consumers purchases, many smart TVs companies this year gave discounts of as much as 35-40% compared with 15-20% in the previous years,” said Avneet Singh Marwah, CEO, SPPL, the exclusive brand licensee of Thomson in India.
In fact, some industry players also say, looking at the customer inclination towards premium products, brands’ marketing initiatives are also now driven towards the higher-end and premium products as they seek better profitability.
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