The premiumisation trend in consumer durables is consolidating as the need to upgrade to bigger and better products, led by easy financing and rapid technological changes, is driving sales more than last year, top executives at durable firms have told FE.
Onam, which was celebrated on Sunday and signals the start of the two-month festive season in India, has borne out this trend, executives say. The premiumisation trend is pronounced in urban areas, where demand has been stable. Rural markets, while showing signs of recovery, will begin to pick up with a lag, but largely for entry-level durable products, said executives.
“Onam this year is certainly better than last year, when the market saw a de-growth of 5-6%. This was due to the mass segment which was weak; traction for premium products wasn’t as high either. This year, the sales traction for premium products, largely in washing machines and air conditioners, has been better than last year. We have seen a 15-20% year-on-year growth, led by premium products during Onam this year,” Kamal Nandi, business head and executive vice-president, Godrej Appliances, said.
Typically, India’s festive season gives consumer durable companies a third of their annual sales. Firms do everything from launching new products, driving consumer offers, discounts and cashbacks and putting out aggressive advertising and marketing campaigns to draw the attention of shoppers during the period.
“Onam gives an early indication of how the festive season will look like. We have seen an almost 30-35% growth this Onam over last year, led by our high-end LED television sets, top-load washing machines and smart refrigerators with artificial intelligence. This is mainly in the urban areas. However, entry-level products, while muted now, could pick up closer to Diwali as pent-up demand may drive rural purchases during the period,” said NS Satish, president, Haier Appliances India.
Avneet Singh Marwah, director and CEO of Super Plastronics, a consumer durable manufacturer based out of Noida, said that production lines for categories such as television sets, washing machines and air conditioners were running at full capacity in anticipation of strong demand during Dussehra-Diwali this year, which is considered the peak of the festive season.
Marwah also says that he sees discounts rising during the festive season, with combo offers likely to be higher this year versus last year for large appliances as manufacturers look to bundle TVs with refrigerators, washing machines or air conditioners to drive sales.
“Dealer inquiries have been growing in the run-up to the Dussehra-Diwali period. For us, the attention is on the larger television screens, our smart TV portfolio, 4K TVs as well as higher-capacity washing machines and air conditioners because we expect much of the sales action to be there,” Marwah said.
A recent report by Crisil notes that domestic consumer durables makers will see revenue growth of about 9-10% this financial year (FY25), supported by premiumisation in the market. This will be on the back of a volume-led, post-pandemic growth of about 15-18% seen in the previous fiscal years.
From: financialexpress
Financial News
