November , 2018
Festivals generating growth for the white goods market
13:47 pm

Isha Chakraborty and Kuntala Sarkar

Dhanteras ushers the high sale of white goods and not just jewellery. Major retailers, both in the online and offline spaces, offer attractive discounts and offers during this auspicious period.

Pulkit Baid, Director, Great Eastern Retail Pvt. Ltd., told BE, “The Dhanteras day records the highest single day sales of electronics nationwide except in some southern markets. We are expecting a high sale this Dhanteras.”

Voltas, a major seller of air-conditioners, and Arçelik, a Turkey-based household appliances manufacturer, have jointly launched a consumer durables brand, Voltas Beko Home Appliances Pvt. Ltd., which is also known as Voltbek. Sanjay Johri, Chairman, Voltbek Home Appliances, stated, “Sales during the last two festive seasons were impacted by demonetisation and GST implementation. However this year, I am expecting the industry to grow at a double digit rate.”

According to a report by the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the refrigerator segment alone is expected to grow to an industry size of 18.4 million units and ensure growth of around Rs. 344 billion within 2022. It was around Rs. 195 billion in 2017. Some new technologies related to compressors, especially with inverter compressors, have arrived in the market and may augment well for this segment. The refrigerator market is trying to offer better facilities within an affordable price range.

Diwali marks the arrival of winter. Known for its chilly winter weather, north India makes a good market for heating products that complement the growth of the appliances and consumer electronics industry. Almost 90% of these goods are dependent on seasonal buying trends in the retail market. The predictable market size for water heaters, which is an important white goods item in India, is around 3.1 million. It is continuously growing with more brands foraying into the sector. The entire water heater industry in the country currently is worth around Rs. 2,000 crore and has the possibility to grow further. Dhanteras sales see a huge demand for heaters in northern India.

Marketing strategies

With the festive season lasting for about four months in India, consumer durable companies come up with innovative strategies to market their products. These strategies generally include attractive offers, discounts, and easy paying options. Baid also said, “We are running a gift scheme along with a chance to win double the value of your purchase in gold. Almost all categories of electronics do well. Appliances and televisions are the best performers.” 

GST rate reduction

After the GST rates were finally decided, the consumer durable market gained strongly. This move to slash rates for consumer durables has also aided the domestic manufacturing sector and helped in creating more employment opportunities.

Manish Sharma, President, CEAMA, said sales of appliances like refrigerators and washing machines are expecting a double digit growth after the government cut GST rates on an array of electronic products last July, pulling the tax rate down from 28% to 18%. White goods producers like LG, Samsung, Panasonic, Whirlpool, Godrej and IFB have decided to cut the price by 7.8% to 9% on televisions, refrigerators, washing machines, vacuum cleaners after the reduction of GST rates. Rajeev Bhutani, Senior Vice

President, Samsung India (consumer electronics), also stated that their company will extend the benefits of GST rate reduction to their customers. He also informed that the GST reduction will benefit the consumer durable sector and may ensure its growth. 

Most of the prominent companies have projected festive season sale of white goods to grow by double digits thereby generating approximately 8.2% GDP growth in the last quarter. LG has dropped the prices by 8% - 9%. Samsung and Godrej have reduced the prices roughly by 7.81% for most of their products after the GST cut. Panasonic’s net price cut is between 7% and 8%. Such attractive price cuts will only add to the demand during the festive season.

Offers on White Goods

Prasant Agarwal, Director, Capital Electronics and Appliances Ltd., told BE, “Sony has some product-specific offers, which include free products with certain Sony purchases. Similarly, Samsung and LG are also offering free products on purchases.”

Non-banking finance companies like HDFC Finance, Capital First Finance and Bajaj Finance Ltd. are currently offering no down-payment and zero interest schemes to boost sales during Diwali and Dhanteras. They have collaborated with retail sellers and manufacturers who bear the interest costs. Agarwal added, “The EMI schemes make these products highly affordable to customers.”

According to Agarwal, 2016 had been the best year for the white goods market. He informed, “Most companies are trying to reach the 2016 level this year.” Sunil Nayyar, MD, Sony India, informed, “Historically, we have noticed whenever the festive period spreads out over two months, consumers tend to spend more since they can pool in two months’ earnings.”


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