How bullish consumer durables sector is whipping up demand this festive season
Festival season is one of the best times of the year for consumer durable brands to garner sales. While some of the categories of the durables are seasonality driven, but during the festive season there is a good spike noticed for the overall consumer durables category. Brands aggressively promote with all kind of attractive discounts and freebies to woo the customers. But this festive season, the mood is different and one needs to see how the consumer durable brands will promote their products as there is still a gloom prevailing. While experts feel there will be pent up demand this festive season, but it is the rural markets that are expected to stimulate more demand for the consumer durable brands.
Signs of Revival
Both the FMCG and the consumer durable segments are witnessing some kind of revival. The good monsoon and opening of the markets have raised hopes of many companies in the consumer durables sector. Since rural markets could constitute many first-time buyers, we might see some of the basic consumer durables having good demand this festive season. Most companies are quite optimistic and are also operating at full capacity with their production. Since there will be a lot of first-time buyers, brands will have to plan their inventories of the product categories to meet the demand.
Rural will be a big bet
The most important reason for the spike in demand from rural markets is due to the 5 per cent agricultural growth prediction and it has further been supplemented by a good monsoon this year. This has also resulted in good harvest of staple crops and has helped the rural income to go up. Besides that, the strong reverse migration in the past few months have also led to rural jobs opening up under the government support like MNREGA. This will certainly help the rural economy to revive the market, which we may not witness in the urban markets. However, brands need to quickly gear up to address the smaller markets and ensure that their supply chain is streamlined and is in order to reach the outlets. Some of the brands have also beefed up their e-commerce portals and have also aligned with major e-commerce brands.
Will huge discounts be the game changer?
Brands may have to dish out attractive discounts and offers to woo customers. They will also have to tie up with financial brands to disburse easy durable loans at attractive interests. Some of the leading banks have already started their festive bonanza to push sales during the festivals and have tied up with several brands to leverage the festive season. During the festive season, normally a lot of new products with additional features are launched.
But this time, one is not sure about that as brands will have to make up for the lost sales in the last quarter, hence, they will first try and deplete all their inventory in stock. It is going to be a very tough festival season as there are so many challenges that the brands have to tackle. While the festive spirit may not be high, but one definitely needs to wait and watch how brands will surprise the consumers. It is a great opportunity for brands to engage with their audience, but what kind of media strategy brands will adopt will be an interesting point to ponder. Brands need to be in touch with and engage intensely with both the urban and the high potential rural markets, which will drive demand. A judicious mix of media strategy consisting of both traditional and digital may be necessary to drive pull.
To get the industry perspective and how consumer durable brands plan to tackle the several challenges they have, Adgully spoke to a few industry experts from leading brands.
Commenting on the same, Raju Pullan, Senior Vice President, Consumer Electronics Business, Samsung India, observed that since unlocking of markets, there has been an increased demand among consumers to equip their homes with the latest technology while they stay and work from home. “Owing to this trend, we have witnessed strong double-digit growth across cities. As consumer needs are changing, many are upgrading to larger screens (55 inch and above) as well as Samsung Smart TVs with Personal Computer mode owing to factors such as rise in consumption of content on OTT platforms, online learning for children and Work From Home. Driven by the need to stock up more and venture out less, the 5-in-1 Smart Convertible Refrigerators 300-litres and above are in demand. Also, consumers are looking to buy fully automatic washing machines such as Samsung Hygiene Steam to make their lives better. Riding on these factors, this festive season, we expect strong growth to continue, especially in mid and premium segments of the market,” he added.
Gulbahar Taurani, Vice President - Personal Health, Philips Indian Subcontinent, remarked, “2020 has witnessed emergence of several new trends – overall increased staying at home has actually re-defined the role of consumer durables in our lives and it is this new role – that of a partner that makes staying at home more comfortable and joyful – that will drive demand for the category this festival season. Another important factor would be that consumer spending on other buckets like travel and eating out has decreased significantly, and hence, durables may also become a way to pamper oneself in the absence of other avenues to do so. I believe all categories where brands will invest to communicate a relevant value proposition, will do well. At Philips, we expect personal grooming, cooking, cleaning & purifying appliances to all do well and are investing behind the same.”
Usha as a brand has always enjoyed a special place in the hearts of the Indian consumer, a legacy and emotional bond that the company has built over 85 years. According to Dinesh Chhabra, CEO, Usha International, with most people spending substantially more time in their homes, there has been an increased demand for home, kitchen and fabric-care appliances. He added, “At Usha, we have witnessed demand picking up significantly across product categories and, in fact, seeing a double-digit growth coming from digital and urban. Additionally, we are expecting the same from the rural markets, where a good agri-season has witnessed more MNREGA pay-outs, boosting the rural economy just ahead of the festive season.”
From sewing machines that provide a creative outlet for people investing time to develop and hone their hobbies, to products that are required on a daily basis in a self-sufficient kitchen like food processors, OTGs, cooktops, mixer grinders, and more – the demand trend is expected to continue rising in the festive season. Usha has scheduled the launch of some new products across categories, including fans, appliances like mixer grinders and blenders, and decorative lighting, etc.
“In terms of festival sales, we are expecting our appliances category to do well as it comes under the ‘gifting’ segment. We are also ensuring that we are present as close to consumers’ homes, as consumers are demanding an assortment of products from their local mom and pop stores. This year, we believe that our online sales will contribute as much as up to 35-40% sales vis-a-vis sales from offline channels,” Chhabra further said.
Shirish Agarwal, Head - Marketing Communications & Brand, Panasonic India, noted that factors such as WFH trends, onset of festive season, favourable monsoons, positive consumer sentiments and rise in first time buyers from rural markets are propelling the demand. For instance, consumers across markets are preferring large screen LEDs over smartphones to view rich OTT content.
Confined within homes this festive season, Agarwal believes consumers will be looking for products that offer a better value proposition in the longer run. For example, large screen TVs will be preferred over smartphones to watch rich content thus, driving the demand for TVs and audio devices. With consumers becoming health conscious they are opting for appliances that help them in maintaining safety and hygiene like Washing machine for clean clothes and ACs for clean air. Additionally, with people preferring home cooked meals, Panasonic has witnessed an upsurge in demand for bigger size refrigerators for increased storage capacity and microwave ovens for preparing scrumptious meals with the zero-oil cooking technology.
“At Panasonic, we have introduced 'New Dreams New Celebrations' for our consumers to make the festive purchases accessible, affordable and durable for the consumers. With this campaign, we have introduced a range of promotional offers, extended warranties and attractive consumer finance offers across our product categories such as Televisions, Refrigerators, Washing Machines, Air-Conditioners, Microwaves, Lumix Cameras, Beauty and lifestyle products,” Agarwal added.
In terms of the rural thrust, Panasonic has focused on products such as direct cool refrigerators, semi-automatic washing machines, and TVs from the starting range that are in demand across Tier 2-3-4 markets. The company has also introduced some additional initiatives to build a better brand connect with its rural customers. For example, for the significant chunk of customers who are using feature phones in rural markets, Panasonic has also made its SMS and IVR services available to cater to their needs and address all their queries.