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Demand recovery for large appliances is “mirroring that of last year”, as opening up happens postCovid-induced regional lockdowns and area-specific restrictions, says Vishal Bhola, Managing Director of consumer durables major, Whirlpool of India.
Confident of registering a “double digit growth” ahead of market estimates, he says, there is pent-up demand that is being witnessed in places which are opening up. Long-term sustainability of demand depends on vaccination drive, and the intensity of a probable third wave.
A 3-5 per cent price hike, across the board, could be initiated July onwards as commodity prices remain northward bound particularly for steel and polypropylene, among others. A 8-10 per cent hike was initiated in December last year.
Price hikes are unlikely to impact demand though.
“Over the next three months, we feel pent-up demand to play out strongly and if markets continue to remain open, then a double digit over the next 9 months. So a strong double digit growth or the full fiscal is not improbable,” he told BusinessLine .
Sales recovery
For instance, over the last three weeks since opening up, Tier-2 markets like Varanasi and its suburbs are witnessing increased demand. This could be replenishment demand, and long term sustainability “could be something to watch out for” as it depends on multiple factors beyond health, like monsoon, MSPs, right price for agri-produce, large events like marriages and big ticket gifting, and so on.
“So there is no immediate way to suggest the impact of the second wave of infections on consumer sentiments and if people are actually postponing purchases. Factors like marriages continue to drive sales. However, something to watch out for is if a third wave of infections hit, as predicted, then what happens to consumer sentiments,” Bhola told BusinessLine .
“As of now there are three primary markets for us — metros & Tier-1, semi-urban, Tier- 2 & Tier- 3 & finally rural. Initial indications show no difference in purchase patterns happening this year (across these markets) post opening up, as it was post unlocking last year after the national lockdown. Clearly, there is pent-up demand and it is visible in sales over the last few weeks,” he added.
Replacement markets
Upgrades are happening in replacement markets, while low penetration of consumer durables has helped Whirlpool of India grow and gain market share. Replacement sales at present account for 55 per cent; while fresh purchases are at 45 per cent. In upgrades, people are looking at “options that have a health factor” imbibed in the offerings.
Interestingly, the company has seen a post-Covid growth of 18.5 per cent in FY21’s topline, higher than growth it has seen in the pre-Covid period. Nearly 85-90 per cent of its turnover is driven by refrigerator and washing machine sales. On the other hand, ACs, microwaves, hobs and chimneys are some of the other verticals where the company is trying to build scale.
In June, 65 per cent of sales for Whirlpool of India came from North, Central and West; while the markets in the South and East accounted for the rest.
“As of now, the southern markets are behaving in a more conservative manner; but patterns in the East and South too will mirror the rest of Indian States as opening up happens,” he added.
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