The Hindu Business Line : The market’s on a roll

Looking at the country’s economic growth and the low penetration levels for the various product categories, there is nothing that can suggest a slowdown in the consumption of consumer durables. _ Ravinder Zutshi, Samsung India

Buyers throng a store at a sale (file picture)

R. Ravikumar
Debdatta Das
Vinay Kamath

The groundswell of optimism regarding the good performance of consumer durables pervades the overall industry scene, with categories such as washing machines, microwave ovens and air-conditioners being the stars of the show. Mirc’s Sharma says washing machines as a category, with 18.6 per cent growth during the April-September period, performed very well for everyone in the industry. Microwave ovens grew 40 per cent, though on a small base. Air-conditioners posted a 60 per cent growth in unit terms. Onida itself registered a growth of 35 per cent during April-September this year. “Our Diwali sales grew 45 per cent (in value terms) this year as against that of the previous year,” he says. The company’s fully automatic washing machine grew 15 per cent during the April-September 2007 period while microwave ovens posted 50 per cent growth and split air-conditioners 75 per cent over the same period last year. “LCD TVs are doing very well for us. Onida hopes to cross the Rs 2,000-crore mark comfortably in 2007-08,” he added.

Endorsing Sharma’s views, Kamal Nandi, Vice-President (Sales and Marketing) of another homegrown player, Godrej & Boyce, also points out that the growth this year is driven mainly by the three categories. “Despite the fact that the washing machines segment has a low market penetration of around 7 per cent, it did well for all of us this year,” he said. In the air-conditioner and refrigerator segments, there is a great demand for high-end models. Nandi attributes it to consumers’ tendency to indulge in luxury products.

“Though there was a lull in the durables market, particularly in the North, during the first half of the year, it gathered a phenomenal momentum in the later part with washing machines leading the pack,” he said. According to him, Godrej posted a 42 per cent growth this year so far, fuelled by air-conditioner at 126 per cent, refrigerators and washing machines both at 22 per cent.

Shantanu Dasgupta, Vice-President (Marketing), Whirlpool of India, points out, “All categories are growing. The ones that are growing very rapidly are the less penetrated ones. There is a distinct trend of the more technologically advanced high-end offerings growing faster than the average, for example, the fully automatic washing machines, frost-free refrigerators, split air-conditioners and convection microwaves. We at Whirlpool have been experiencing high double digit growths over the last 2-3 years and expect to end this financial year at 15-20 per cent growth.”

Also fuelling this growth is the rapid emergence of organised retail, more specifically the home solution and digital zones. While these outlets not only provide the manufacturers a larger area with good spacing to showcase the full range of their products, they also provide the consumers the ease to touch, feel and experience the products and the brands, before they make their final buy. Says Gibson G. Vedamani of the Retail Association of India, “The emergence of organised retail has helped consumers gain confidence in products being sold at the outlets, giving them guarantees. Also, manufacturers have been able to coordinate with retail chains well to make the products available at good and attractive offers. This allows both the retail outlets as well as the manufacturers to do their own set of promotional campaigns that help consumers understand the variety of offers better.” Alok Bharadwaj, Vice-President, Canon India says, “The selling and buying environment is conducive in an organised scenario. There is also some level of personal consultancy. The quality of selling also matters a lot. Since the company itself is the best salesman of its products, organised retail allows companies to train the shop salesmen in understanding the product better so that these salesmen in turn can explain the features of the various products to the consumers better,”

In fact, talking of understanding the consumers better and making them offers that they can’t resist, the companies have already gotten down to work, strategising initiatives to maintain and give further impetus to the current rates of growth. The good times should continue. As Samsung’s Zutshi puts it, “Looking at the country’s economic growth and the low penetration levels for the various product categories, there is nothing that can suggest a slowdown in the consumption of consumer durables. As far as Samsung is concerned, we are looking at creating consumer excitement through new, advanced technology product introductions as well as innovative marketing strategies. Product customisation will be one of the key thrust areas as we look at customising more and more products to better meet the needs of Indian customers.” On similar lines, even LG hopes to focus on innovation, creating aspirational products as well as catering to the specific needs of the Indian consumer as its tries to keep ahead of the pack.

With the economy growing at over 8 per cent, salaries doubling, ever growing levels of aspirations and companies fighting it out to beat the others in the race, one could take a leaf from actor Shah Rukh Khan’s dialogue in the latest blockbuster Om Shanti Om, “Picture abhi baaki hai mere dost”! Mean

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