Consumer durables are products that are used for domestic use and have an extended lifespan. Goods and appliances such as Television, Washing machine, Air conditioners, Kitchen appliances, Cell phones fall in this category. Over the years, the consumer durable business in India has been witnessing strong growth because of the positive economic condition and supportive demographics. Factors such as emergence in the retail sector, real estate, increase in disposable income and innovative technological development have contributed to the growth of consumer durables industry in India. India is also one of the major exporters of consumer goods such as Televisions, refrigerating equipment compressors, air-conditioning parts, and automated washing machines.
The Consumer Durables Industry in India is segmented as;
Indian Consumer durables industry was estimated to be valued at INR 2.65 trillion in 2020 and is forecasted to reach INR 3.15 trillion 2022 with a CAGR of around 9% till 2022.
The consumer durables industry in India is highly competitive dominated by both domestic and international companies across segments. Whirlpool India dominates the household appliances market with a revenue of INR 6,121 Crore in 2020. Bajaj Electricals and Crompton were also leading domestic companies in the segment. Similarly the Smartphone market in India is led by Xiaomi holding upto 26% and followed by Samsung with 20%. Apart from these categories, there are also other segments dominated by players such as; Sony, Philips, Blue Star, Voltas, Godrej Group, Onida, Panasonic and LG Electronics.
India’s per capita income has increased by more than 30% compared to six years before leading to an increase in disposable income. This increases the consumption of consumer electronics & appliances to raise their standard of living.
A consumer durable loan offers customers the flexibility to pay the amount of goods in a certain period of time with a minimum interest rate. As customers enjoy the convenience of not paying the full amount upfront this can encourage more customers to buy consumer durable goods.
The number of online shoppers in India has increased by seven times when compared over the past three to four years. Increased internet penetration led to the growth of online retailers. As online retailers give the advantage of one-stop shopping experience this can increase the consumption in the industry.
Consumer durable goods generally require heavy capital investments to manufacture. The manufacturing cost of these products are higher in India when compared to China and other Southeast Asian countries due to the high cost of capital.
One of the biggest challenges of consumer electronics manufacturers is to manufacture goods that last longer but consume less-power. Companies need to invest more in R&D to produce goods with high ratings. Also, frequently changing energy efficiency norms create additional financial burdens to manufacturers.
Indian taxation structure is generally complex. Under the Goods and Service Tax (GST) majority of the consumer durables are taxed at 18%. However, some goods such as Air-conditioners, Refrigerators, Televisions (over 32 inches) are taxed at 28%. This high tax slab increases the overall cost of the goods.
The coronavirus outbreak impacted the life of individuals, communities and businesses around the world in 2020. Almost all the businesses in India took a major hit due to the nationwide lockdown implemented by the government. This had a severe impact on sales of home appliances such as refrigerators, air conditioners and other products. The closure of factories in China caused a major value chain disruption as India imports most of the consumer durables and their components from China. Due to the extended period of lockdown from March to June, the industry took a major hit on the summer sales which likely accounts for 30-35% of the total sales in the country. As most of the consumers generally preferred in-store experiences, moving to digital medium by retailers did not gain traction. On looking at the overall picture, the industry anticipated a plunge in sales by 30% for the whole year.
Though all the businesses around the world suffered from the pandemic, it also opened opportunities for companies to rethink their product offerings and innovation in consumer durable goods. It is expected that the industry will be innovated by technologies such as robotics, AI, IoT etc that will have a major impact on buying decisions. As the cases continue to surge across the country, the companies can expect the sales to further plunge as customers will spend on essentials and postpone the purchase of electronics or appliances.