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Consumer durables are expected to see a double-digit demand surge during the festive season with companies such as Godrej Appliances, Bajaj Electricals, Panasonic and Bluestar being cautiously optimistic about achieving a pre-pandemic level of sales, if not higher, during the coming Diwali season.
Global container shortages as well as the ongoing silicon shortage, however, continue to be major hurdles on the supply side front.
Kamal Nandi, Business Head and Executive Vice President, Godrej Appliances, told BusinessLine , “Despite concerns around the third Covid wave, double vaccination should help in driving positive consumer sentiment.
“The festive season usually contributes 30 per cent of annual sales for us. We are seeing encouraging signs of demand revival and are targeting a growth rate of 20 per cent plus during the festive season.”
The President and CEO, Panasonic India and SA, Manish Sharma, also expects to maintain the 25 per cent growth momentum seen in August, into the festive season.
Anuj Poddar, Executive Director of Bajaj Electricals, remains cautiously optimistic about growth going into the festive season.
“Unlike last year, where pent up demand fuelled the demand surge during the festive season, this year we have to push harder on the marketing front to get consumers enticed. Nevertheless, we expect growth in the lower double digits during the festive season”.
Price rise due to supply chain issues
Despite a surge in demand, the ongoing container shortage has been a major dampener, creating supply chain issues.
Shortage of shipping containers has its origins in the ongoing Covid-19 pandemic. As some of the countries go into pandemic-related lockdowns, there is a shortage of containers, which remain stuck in the ports.
Consequently, containers also spend less time transporting goods and remain idle, reducing efficiency.
B Thiagarajan, Managing Director of Blue Star Ltd, explained, “It is not just an issue of lack of availability of containers. The shortage is also raising prices by 2 to 2.5 times, which consequently increases the price of the product itself.”
Sharma also said rising container prices due to the higher cost of inward freight in the last few months did result in a 4-5 per cent price increase (in July) of ACs and refrigerators.
An ongoing chip shortage is also a major cause of worry. “We use chipsets in our light fixtures and they have remained unavailable as a result of the ongoing semiconductor shortages.
“LED light fixtures account for 15 per cent of our overall sales portfolio and, thus, have been impacted. Strong demand means that we have still been able to maintain growth,” Poddar said.
According to Nandi, the industry as a whole is witnessing shortages in multiple components - semiconductors & chips (microcontrollers, optocoupler, power relay, switch, varistor, connectors, etc.).
The ongoing semiconductor shortage has resulted in increased lead times and price inflation. Supply-side challenges coupled with export curbs at airports and ports in China are adding to the woes of appliance manufacturers already plagued by the continuing acute shortage of chipsets.
Other companies are also reporting higher lead times to deliver purchased goods to their customers.
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