Will it be a summer of content for AC and refrigerator brands in 2021?
The cooling market, comprising refrigerators, air-conditioners, room coolers, is expecting a strong revival in the year 2021 after a year of slow sales in 2020. Though the pandemic and the lockdown impacted this market, post July there was some kind of recovery seen even though the market remained sluggish.
Now with the markets opening up, the COVID-19 vaccination drive on full swing and consumer sentiments improving, brands are quite optimistic and expecting to clock in good volumes, especially in the AC segment, with the summer season just round the corner.
According to industry sources, the North has shown some encouraging signs of doing well, while the West is still slow on the uptake. The markets in the East and South are gradually picking up. The commercial air-conditioning market will take some more time to recover, which could even extend till May 2022. Some of the leading brands like LG, Voltas, Blue Star and Godrej are now gearing up to meet the likely pent-up demand by expanding their production capacity, planning their marketing strategy and strengthening their supply chain function and beefing up the customer service cells.
Increase in Import Duties and Price hike
There is some hiccup expected with the customs duty hike on imported parts, as proposed in the Union Budget 2021-22, which will lead to increase in the prices of refrigerators and air conditioners, among several commonly used items.
The government is planning to bring in more curbs on imports as part of their Aatmanirbhar Bharat initiatives. Here, the government is sending a clear message for brands to be self-reliant and reduce the dependency on China. This might lead to some price increase and also expansion of the production capacity by some of the manufacturers to meet the likely demand. Also, since there is not enough clarity on this, some of the retailers are not picking up stocks as one is not sure about the quantum of the price hike.
However, even if there is a price hike, the pent-up demand for the products and growth for the AC segment will be significant and the overall growth of the refrigerators and AC is expected to be around 10-15%.
Cashing in the Opportunity
Certainly, brands will try and take the maximum advantage of the positive market sentiments to make up for the lost sales last year. We can expect some exciting launches of new models this year. Panasonic India has already launched their range of products, which are highly technology led. Samsung India has also introduced its 2021 range of home air-conditioners. More brands are planning to come out with new models, with the focus being on energy efficiency.
Speaking to Adgully, Gaurav Sah, Business Head, Air Conditioners Group, Panasonic India, remarked, “With deteriorating air quality and the pandemic, consumers have become more conscious towards their health and safety. The role of air-conditioners has evolved from just being a cooling device to a device that enables Quality Air for Life. At Panasonic, we are looking at a positive growth during summers, primarily driven by our new range of air conditioners with the added advantage of the breakthrough Nanoe X Technology that inhibits bacteria and viruses, including adhered novel coronavirus.”
He further said, “There is huge potential for air-conditioner growth in India, with current penetration being at 5-6%. The AC industry is growing at double digit CAGR and consumers are looking for energy efficient products with lower total cost of ownership. At Panasonic, we are witnessing a faster adoption of inverter ACs, as well as models with superior benefits on indoor air quality.”
Panasonic has adopted an omnichannel strategy to drive sales through both online and offline platforms. The new AC with Nanoe X technology will be available across major retail outlets, online portals and Panasonic brand stores.
Croma, a retail chain for consumer electronics and durables and part of Tata Group, is gearing up for this season and beefing up its stocks with a whole range of refrigerators and ACs. Elaborating further on their plans, Rajeev Singh, Group Business Manager (Home & Entertainment), Croma, said, “Availability of stock will be the key this season, and we are already on top of it, discussing with leading brands. We are also aligning our own label products to have enough stock to meet the seasonal demand. The other focus area would be to ensure that within the basket of assortment and offers, we have something for everyone at Croma – both first time buyers as well as customers looking for an upgrade. Needless to say, the promise of timely delivery, installation and assured lifetime service will be the cherry on the cake.”
From a marketing stand point, Croma will be approaching customers using both digital and conventional mediums, to ensure it reaches all kinds of customers and ensure Croma stores and croma.com emerges as an omni-channel, one-stop destination for all cooling needs this summer.
Nilesh Gupta, Director, Vijay Sales, a leading retail outlet, said, “Although the sale of AC and refrigerators was lost out for 2-2.5 months in India due to the lockdown, a lot of ground was recovered post unlock, but needless to say the year was negative for these two categories. This year all brands are stocking up for a good season and have aggressive marketing plans, coupled with good EMI and exchange offers. The major thrust of the brands would be energy efficiency and we expect to clock record numbers this season.”