The Rs 1.5-trillion-a-year industry has ended the year with a 30 per cent fall in sales because after a steady recovery in the festive season, multiple factors dashed its hopes of revival at the end of the year.
In spite of heightened demand for consumer electronics and home appliances after lockdown, the consumer durable sector this year has been hit like never before.
The Rs 1.5-trillion-a-year industry has ended the year with a 30 per cent fall in sales because after a steady recovery in the festive season, multiple factors dashed its hopes of revival at the end of the year.
While the countrywide lockdown between late March and May wiped out sales for three months, falling demand after Diwali has been a crippling factor.
According to estimates by the Consumer Electronics and Appliances Manufacturers Association (CEAMA), the impact on sales of white goods is close to double of what was earlier expected.
“Since August sales have been recovering steadily and festive months have been good.
"But we have been hit again by the steep rise in prices of commodities at the end of the year. This has impacted chances of recovery,” said Kamal Nandi, president, CEAMA, and vice-president, Godrej & Boyce.
Buoyed by pent-up demand after lockdown, industry executives were hoping to match last year’s numbers.
Later, in November, CEAMA revised its estimates to 15 per cent de-growth over last year.
Apart from subdued demand during the wedding season due to Covid-related restrictions and uncertainties, Nandi said rising prices of key commodities like steel, copper, and plastic were a key factor in the pressure manufacturers were facing.
With a majority of them opting for price hikes, a fall in sales is inevitable.
Between June and early November, most manufacturers registered a steady rise in sales.
With most working professionals stuck indoors, sales of household appliances like automatic washing machines, frost-free refrigerators, large-screen television sets, notebooks, and audio products grew in healthy double digits.
According to Vijay Babu, vice-president of LG Electronics, the brand registered 50 per cent growth in its premium portfolio.
“The first half (of 2020) has been challenging but we witnessed good growth later,” he said.
Babu attributed the surge in demand after lockdown to several factors like growing concern among consumers for products such as premium refrigerators, which enhance health and hygiene, increase in demand for convenience products like microwave and dishwashers, and changes in content consumption, driving sales of large-screen TVs.
Sunil Nayyar, managing director, Sony India, agrees with the view.
According to him, since markets have opened up Sony has registered healthy growth in sales of LEDs with a screen size of 55 inches and above and for sound bars.
“In the past few months, we saw a shift towards established brands, especially in the consumer durables sector, of which we have been a beneficiary.
"Customers now prioritise the value proposition rather than just the price,” said Nayyar.
Full-range player Panasonic India registered 30 per cent growth in festive sales, backed by better demand for refrigerators and washing machines.
However, like others, its plans for the year were severely hit.
According to Manish Sharma, president and chief executive officer, Panasonic India and South Asia, the loss due to the pandemic in 2020 is 25 per cent.
“We are now in the last leg of 2020 and looking back I remember the excitement with which we welcomed this new year.
"We had plenty of plans and were looking forward to it as the year started.
"But 2020 has been a major setback.
"The consumer durables industry too had an impact with manufacturing and operations on hold and the summer season was a complete washout,” he said.
Sharma, however, is hopeful of better sales next year.
The firm is now gearing up to expand its reach in rural markets and strengthen its retail presence by establishing its omni-channels.
“Home appliances as a category are rising due to pent-up demand. We hope this demand sustains next year,” he said.
Photograph: Prateek Kumar/ANI Photo
