After three years of a good run, 2008 has proved to be a tough period for the Rs. 25,000 crore consumer durable industry. Consumer durable prices across segments are its lowest in the country since the past five years. Despite the recent hike in input prices, companies were not able to pass on the hike to consumers.
In spite of that sales of consumer electronics (CTVs & audios) have dipped by over 20 per cent, industry heavyweights are worried over the fate of home appliances like ACs and refrigerators this summer. Industry watchers say consumers are shying away from purchases especially in the wake of depressed stock market trends. What is worrying industry officials is that the pace of growth has slipped in both the high-end and low-end of the market.
The biggest casualty is the CTV segment which constitutes the biggest chunk of durable sales at 60-70 per cent. Price erosion too has been the sharpest in this segment especially in the high-end segment.
As reported by Economic Times, V Ramachandran, LG Director (sales & marketing) said, “There are clear indications of a slowdown in the consumer electronics segment. We are hoping that demand for home appliances should be better. Consumer electronics has taken a hit in the absence of any major event to push sales. As the largest player in the market, we are taking proactive steps to draw consumers into showrooms to make purchases.”
The Korean heavyweight is pumping in big money on the eve of its 11th anniversary to offer huge freebies and gifts on any LG brand purchases. The company is also on a major after-sales service drive offering to reach a consumer within 24 hours of logging a complaint and fixing it at the consumer’s convenience.
Although modern formats like Croma and Next are reporting better sales compared to the smaller traditional formats, manufacturers attribute it to their faster rate of expansion.
There has been no major event in the recent past to weave any excitement among consumers for durable sales. Dealers are hoping that secondary sales – dealer to consumer – should pick up after companies step up discounts and promotional offers to clear up existing inventory levels. Durable majors like LG, Videocon, Philips, Onida and others are understood to have pruned production and imports by 22-25 per cent since the last quarter of 2007. Currently, 60 per cent of the domestic demand is met by local manufacturing and the rest through imports.
With ICICI Bank and Bajaj Finance stepping up financing, consumers have started buying smaller items like mixers, irons and toasters. Companies, on their part, have stepped up promotions and discounts to rev up sales.