Godrej Appliances targets smaller towns to sell premium consumer durables

Purvita Chatterjee Mumbai | Updated on February 22, 2018 Published on February 22, 2018

Kamal Nandi   -  The Hindu

Strong growth prospects seen in agrarian economy

Taking a cue from the recent Budget, the ₹3,500-crore Godrej Appliances is targeting tier-1 to tier-4 towns in States such as Punjab, Maharashtra and Tamil Nadu that are driven by agricultural economy.

It is extending exclusive brand outlets (EBOs) to smaller towns since there is faster growth and greater acceptance of premium products than the urban metro markets, according to the company.

Kamal Nandi, Business Head & EVP, Godrej Appliances, said, “Consumption of premium products is higher and growth is o faster in tier-1 to 4 towns compared with the metro markets. Since the recent budget’s focus is on the agricultural economy, we want to make our premium products more accessible in smaller towns.”

Agriculture-based smaller towns in Punjab, Maharashtra and Tamil Nadu are being considered by the company for its premium brands such as NXW in categories such as air-conditioners and refrigerators.

Godrej Appliances already has in excess of 70 exclusive outlets and plans to take it up to 125 by next year. “Smaller towns were distribution led and thus had smaller display areas at multi brand outlets. We will now make our products more accessible through more exclusive outlets and there should be one each in every small town. The reach of e-commerce has also been limited with restricted pin codes, making it difficult to adequately penetrate into such smaller markets,’’ he added.

Besides it is also depending on fast-growing categories such as air-conditioners which has the lowest penetration at 3.6 per cent to drive up its top line from the current ₹3,500 crore to ₹5,000 crore by next year.

Power-saving ACs

Unleashing power-saving air-conditioners this summer with the highest ISEER rating at 6.15, the domestic appliance major expects to push up its market share in the segment. With a 5 per cent share in the air-conditioner, Godrej Appliances has a lot of catching up to do with bigger players such as Voltas and LG which have double digit shares. “We are hoping to take up our share from 5 per cent to 8 per cent for the air-conditioner segment. In the 5 star segment also we are targeting a 10-12 per cent share,’’ he added.

Currently about 20 per cent of the company’s turnover comes from the air conditioner segment while the majority 60 per cent is contributed by refrigerators.

The ₹12,000 crore air conditioner segment has been growing at a CAGR of 20 per cent and with lower penetration levels compared to other segments like refrigerators, is expected to be the growth driver for the consumer durable company this summer.

Published on February 22, 2018
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