White goods industry hopes 2021 mirrors the second half of 2020 in growth trends

After a roller-coaster of a year, the consumer durables industry is hoping for sizzling sales in the upcoming summer season. It is also pinning its hopes that strong demand trends witnessed in the second half of 2020 will sustain in 2021, amid escalating raw material and freight costs.

While the first half was adversely impacted due to the pandemic-induced lockdowns, pent-up demand and evolving consumer needs for convenience, hygiene and in-home entertainment, enabled the industry record strong sales in the second half of the calendar year.

Vishal Bhola, Managing Director, Whirlpool of India, “We saw a strong comeback in demand in the second half of 2020 once the restrictions were removed and the festive period kicked in. Consumer durables moved from a passive to an active space enabling daily household chores and supporting everyday care.”

The need for convenience was so striking that consumers not only upgraded their refrigerators, washing machines and LED TVs but even lapped up vacuum cleaners and dishwashers. In fact, LED TVs and high-end imported appliances faced stock out situations during the festival season.

Eric Braganza, President, Haier India, pointed out that upgrading appliances to enhance their lifestyles became a priority for consumers who could seamlessly work from home and spends on categories like apparel or eating out took backseat in the pandemic.

New categories

Players like Havells India ventured into new categories despite the pandemic. Shashi Arora, CEO, Lloyd, said the company focussed on realigning its product approach to suit the needs of the consumers and bolstered its refrigerator, washing machine and dishwasher range.

Consumers also became more digitally influenced and online platforms’ contribution as purchase enablers grew significantly. The uptick in demand did help most players record strong double digit growth in the festival season.

But, players pointed out that while the industry recouped some of the losses made in the first half of the year, overall it will end the calendar year on a negative growth trajectory. So a lot is riding on 2021.

“We are extremely bullish about 2021 as we are seeing good traction in the Indian market and plan to introduce a range of new products focussed on energy conservation and enhancing health and hygiene,” added Vijay Babu, Vice-President-Home Appliances, LG Electronics India.

Added Bhola, “Post the festivities, momentum seems to be continuing. On the medium to long-term front, we foresee double digits growth for Q3 and Q4 (FY 20-21). If there are no disruptions on account of Covid-19 and we have a good agricultural season, we will witness a strong 2021.”

Supply chain challenges

2020 will also be remembered as a year where consumer durables companies’ business plans were upended by supply chains challenges through the year. Take for instance: demand for LED TVs, which surpassed supply, mainly due to high sell-out during the early months of unlocking. More recently, companies have had to hike prices due to rise in raw materials and freight costs.

Manish Sharma, President and CEO, Panasonic India and South Asia, said that increase in commodity prices and non-availability of large shipment containers continue to impact the supply chain and overall product costs but he was hopeful it will ease in the future. “The supply chain has become the main protagonist everywhere, it has moved from playing “behind the scenes” organizational role to being a prime driver of the company business. In the coming time, it is imperative for companies to monitor the situation closely, analyse and optimise the supply chain, and optimise the inventories to sustain consumer demands,” he added.

Neeraj Bahl, MD & CEO, BSH Home Appliances, said, “Factories worldwide are facing challenges due to lockdowns, increase in material costs, shortage of material etc. Q1 of 2021 calendar year looks tight, but eventually this should ease off.” He said that post-lockdown the company witnessed a V-shaped growth trend and remains bullish on 2021.

Price hikes

Avneet Singh Marwah, CEO of SSPL, added that the company is hiking product prices by 10 per cent in response to panels being in short supply and their prices having shot up by 200 per cent as TV-makers continue to be heavily reliant on import of panels from China.

Meanwhile, the government took a slew of steps to put restriction on imports and strengthen domestic manufacturing and component ecosystem this year.

“The government’s PLI scheme will strengthen domestic manufacturing, increase self-reliance, and reduce import bills. It strategically drives India into key segments of global value chains and making India Atmanirbhar… Moreover, the PMP (Phased Manufacturing Programme) for all essential appliances that offers a structured approach to manufacturing, aids in the predictability of components, goods and helps relieve domestic manufactures from multiple importation associated costs (duty costs),” Sharma of Panasonic India added.

Companies are also looking to ramp up localisation of components and making India a sourcing hub. “We will look for opportunities wherein the materials we are importing today can be made in India. And in case we don’t have manufacturing capabilities here, we will get some of our global suppliers to set them up in India,” Bhola of Whirlpool India said.

COMMENT NOW