White goods hold a significantly large base in the Indian consumer market and include goods like television, AC, refrigerator, washing machines, kitchen appliances, etc. In India, the consumer durable industry is expected to witness double-digit growth in the festive season sales in 2021, although the country's economy is still struggling. The inflationary pressures on input cost are impacting the white goods' prices, which is eventually affecting the consumers. But demand is not likely to fall this year.
The threat of a third wave of the pandemic is being discussed by analysts and white goods producers are taking measures to minimise the impacts on the white goods market. Last year, the home appliances shops and the consumer electronics industry faced major losses due to the pandemic and the floods, and in this year's festive season, they are looking to make up for it.
Additionally, in southern India, the white goods market records a 25% to 50% more than average business during the time of Onam, and this festive season, they could make up for their previous year's losses. The 2021 festive season has been particularly important for the white goods market because in last year, the industry suffered around 70% loss.
According to the Retailers Association of India (RAI), in the third quarter of the last fiscal, sales of consumer electronics and appliances increased by 23.5% (y-o-y). Since then, the demand for the same remained strong, which is being reflected in this festive year as well. Also, in the last fiscal, TV market penetration in the country was recorded at 69% while the home appliances market has seen a 5%-8% growth since August, according to industry insiders. During the festive season, white goods sellers also offer significant discounts on the products to generate demand.
Earlier, Manish Sharma, CEO and President, Panasonic India told PTI, “We are seeing a steady rise in demand for value-proposition appliances such as smart 4K Android TVs, connected range of ACs (HU series), refrigerators, washing machines, microwaves, and other lifestyle appliances.” He said that Panasonic has seen a growth of 25% in August 2021, against last year’s figures. He later added, “We are hoping to maintain the growth momentum through the festive season to make up for losses due to the pandemic.”
Additionally, Kamal Nandi, Business Head, Godrej Appliances, told media, “On a y-o-y basis, we grew sales by 10% led by more premium products and price hikes. The festive season usually contributes 30% of annual sales for us. We are seeing encouraging signs of demand revival and are targeting a double-digit growth rate of more than 20% during the festive season.”
The kitchen appliances market has grown significantly in the festive season. India's kitchen appliances market is anticipated to cross the market valuation of $6 billion by 2027, according to a report titled 'India Kitchen Appliances Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021 – 2027', by Research and Markets.
Direct impacts of the pandemic
One of the pandemic's direct impacts has been that consumers have changed their mode of buying and now they are preferring to shop online for safety issues.
On the other hand, Vishal Bhola, Managing Director, Whirlpool stated in the address to shareholders in the company's annual report of 2020-21, “With stay at home and work from home becoming the new normal, there is a greater acknowledgment of the role played by home appliances in the life of the consumer. This combined with low penetration levels, improving infrastructure and an upwardly mobile middle class will lead to sustained growth over the next few years.”
The government's measures to boost the market
In November last year, the Union government approved the Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative. The scheme, approved for a total of 16 electronics firms, has helped India to strengthen its base in the global consumer goods market.
However, awareness, access, and improving lifestyle are the major drivers of the growth of the white goods market. Relaxation of license rules and approval of 51% Foreign Direct Investment (FDI) by the Union government in multi-brand and 100% in single-brand retail, have also helped the businesses to grow. According to available data at IBEF, between April 2000 and March 2021, the Indian electronic goods market attracted FDI inflows of US$ 3.1billion, showing vibrancy and promise.
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