Sucking in the competition

The consumer durables market in India is not an easy one to navigate. Narrowing it down to basic home appliance segments such as refrigerators and washing machines alone will show that this is a highly fragmented sector, and not just because there are so many brands vying for attention. There’s no clear Number One across every product category, especially when microwave ovens and air-conditioners are also added to the ‘essentials’ in urban India. However, Whirlpool stands out for overcoming the initial churn that well-known Korean players and other recent entrants such as Miele and Siemens caused in their wake.

Wins in the entry-level to semi-premium refrigerator and washing machine categories are also helping it gain ground in the microwave segment, where it is inching closer to being among the Top 3, says Shantanu Dasgupta, Vice-President - Corporate Affairs and Strategy, Whirlpool India. The brand’s ride with air-conditioners is not without challenges. But with a Voltas owning about 19 per cent market share to largely rule in the space and all brands put together accounting for a mere 5 per cent penetration across India, it’s very likely that Whirlpool may achieve the double digit percentage growth it aims for with air-conditioners too.

The outlook for the industry looks promising in spite of recent fluctuations in consumer spending as a result of political or economic upheavals. A recent India Brand Equity Foundation (IBEF) report says that 65 per cent of total revenues in the consumer durables market comes from urban India. Step back further and we see that the sector grew from $3.8 billion in FY06 to $7.3 billion in FY12. A 14.8 per cent growth (CAGR) is likely particularly between FY12 and FY15.

In such a scenario, Whirlpool’s Dasgupta is clear that when it comes to consumer choice, the role of the product assumes huge importance.

“The question of brand comes next. Consumers first think of a product that they desire before they zoom in on the brand, and yet, we’ve managed to be in that primary set of consideration in their minds.

“To make up for any gap in width of distribution, we ensure depth. Whirlpool is a specialist in a few categories and large retailers like to stick with us because of the footfalls we attract,” he asserts.

Whirlpool spends in the near future will be above ₹510 crore, with investments mostly going into product innovation and brand building. The brand will also spread its presence to an additional 4,000 outlets by the end of 2015.

Notably, the rural market in India is also opening up with products such as refrigerators becoming the top pick among households. The IBEF report highlights how it will likely contribute to revenues for the consumer durables sector – 25 per cent CAGR to grow to $6.4 billion in FY15 from $2.1 billion in FY10.

Whirlpool’s stability in stormy seasons can be attributed to its simultaneous focus on entry-level products without losing sight of potential for innovation.

“We’re very strong at the entry-level if you just look at a category like semi-automatic washing machines. But we want to be ‘contemporary’ in the minds of consumers everywhere. India presents a big opportunity from the point of view of household penetration. We definitely want to move the brand footprint beyond where we are today,” stresses Dasgupta.

Going by reports, the consumer durables sector in India is likely to sport revenues to the tune of $12.5 billion by FY15. Internet retail growth will be a definite enabler in this movement as well as shopping on mobile as smartphones rule among most income groups in India. To achieve a balance of relevance to urban India while capitalising on the potential in rural areas, Whirlpool is already bringing the ‘European kitchen’ to India through partnerships with Nolte and other kitchen manufacturers for built-in appliances. The brand has set its sights on wired and connected appliances as well as ‘managing energy’, communication between appliances and the power grid.

Some of this will take a while to widely penetrate even urban India, but the opportunity is not just a castle in the air.

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