Demand surge trips consumer durables supply lines

Meenakshi Verma Ambwani New Delhi | Updated on November 06, 2020

Alongside TVs, the demand has also surged for home appliances   -  C_V_SUBRAHMANYAM

Imports-dependent segments hit; firms quickly rejig supply chains; local makers relatively unaffected

After much research, Delhi-based Ranbir Singh finally narrowed down on a Lenovo tablet, but was disappointed to find that the model of his choice was unavailable. Even on online platforms, delivery could happen only in December. He had to settle for a different model with fewer features.

Reports of shortages of products in categories such as LED TVs, heavily reliant on key component imports; high-end imported appliances; and work-from-home products such as laptops have been rife in the critical festival sales period. A corroboration of the demand pattern comes from Amazon India spokesperson, who said that top selling categories during the first 48 hours of the Great India Festival were smartphones, large appliances and consumer electronics besides laptops, headphones, tablets, cameras and smartwatches.

However, companies said they have now bolstered supply chains to meet the massive surge in demand seen since August. Croma Chief Marketing Officer Ritesh Ghosal says retailers are seeing shortages in LED TVs, high-end refrigerators and niche products such as microwaves, dishwashers, vacuum-cleaners and air-purifiers. “In the LED TV segment, if some brands are short on products, others step in to fill the gap. However, in categories such as dishwashers, microwaves and vacuum-cleaners, definitely the demand has far outstripped the supply,” he says.

Import duty

Adding to the woes of TV makers is the imposition of the 5 per cent import duty on open cell panels and soaring of panel prices by 150 per cent. The import restrictions on completely-built units of LED TVs have only aggravated the situation.

But to meet the surging demand despite costlier TV sets, key players moved quickly to obtain licences to import TVs. For instance, Samsung India, which recently got its permit, dispatched nearly 80,000 imported TV sets to the market for the festival season.

The TV panel shortage appears to be a global problem with the unlock releasing the pent-up demand for TV sets.

Avneet Singh Marwah, CEO, Super Plastronics Pvt Ltd, the brand licensee of Kodak and Thomson TVs in India, says that “The shortage in panels started happening after the lifting of the lockdown, around May. It’s a global problem. Prices are increasing by the week and globally everybody is facing a huge challenge. There is a waiting period ranging from 7-45 days because of the panel shortage.” Marwah expects the situation to prevail till the second quarter of 2021.

Confirms Suguru Takamatsu, Divisional Head CSD, CE, Panasonic India: “The demand for LED TVs has surpassed the supply and we expect the shortage to continue and this will impact overall sales. The suppliers for open cell panel did not anticipate the kind of demand in the last few months. A lot of manufacturing lines were shifted to the IT industry building panels for computers and mobile devices and this has also impacted the supply for open cell panels for TVs.” Alongside TVs, the demand has surged for home appliances, too, and companies with strong supply chains had an edge.

As Raju Pullan, Senior Vice-President, Consumer Electronics Business, Samsung India, says: “During the festival season there is usually a surge in demand. But this year even in August and September, we saw strong demand. This excess in demand led to short supply in specific categories such as certain high-capacity front-load washing machines and side-by-side refrigerators. Because of our strong supply chain, we have now managed to fill these voids in October and are looking at even stronger November sales.”

Adds Vijay Babu, Vice-President, Home Appliances, LG Electronics India: “We were stocked out for a few SKUs in the premium segment but have sufficient stocks now. Our factories are running at full capacity. Almost our entire line up is manufactured in India which certainly gives us an advantage to adjust production to consumer demand.”

Challenges faced

Godrej Appliances Executive Vice-President Kamal Nandi, says that while some imported products may have faced challenges due to freight and port clearance delay issues, there is no shortage of locally manufactured products.

“The Covid impact has also affected supply chains globally...The risk mitigation against this would be to focus on more local manufacturing... we have already been working towards upping our indigenous manufacturing capabilities. We will be ready to manufacture nearly all our product categories locally by the year-end,” says Nandi, who is also President of Consumer Electronics and Appliances Manufacturers Association.

B Thiagarajan, Managing Director, Blue Star, confirms that there is delay in the arrival of components for air-conditioners that may necessitate a 10/15-day advance planning. But there is no shortage of materials, he says.

A spokesperson for Voltas says the demand had gone up for its air-conditioners, dishwashers, washing machines and refrigerators. “At Voltas and Voltas Beko, we have taken some key steps like shifting stocking focus to high demand goods, penetration in more rural, less affected zones, and increasing manufacturing capacities,” the spokesperson added.

(With inputs from Nandana James, Sangeetha Chengappa, TE Raja Simhan)

Published on November 06, 2020

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