Mr. Naresh Kumar (CEO) – EWEL says the market for white goods has been growing at close to 14% p.a and it is expected to grow at 17% in the coming years. Consumer electronics is expected to be US$29 billion market by 2020 from US$10 billion, currently. Also, the Indian consumer durable market has traditionally been a high spend priority sector and major Indian and global consumer durable companies have announced investment of around US$1.4 billion over the coming years in India.
Overview of Consumer Durable Industry:
India is expected to become the fifth largest consumer durable market in the world by 2025. The consumer electronics market is expected to increase to US$ 400 billion by 2020. The production is expected to reach US$ 104 billion by 2016. The sector is expected to double at 14.7 percent compound annual growth rate (CAGR) to US$ 12.5 billion in FY15 from US$ 6.3 billion in FY10. Urban markets account for the major share (65 percent) of total revenues in the consumer durable sector in the country. Demand in urban markets is expected to increase for non-essential products such as LED TVs, laptops, split ACs, beauty and wellness products. In rural markets, durable like refrigerators as well as consumer electronic goods are likely to witness growing demand in the coming years as the government plans to invest significantly in rural electrification. The Government of India has increased liberalization which has favored Foreign Direct Investments (FDI). Also, a policy such as National Electronics Mission and digitization of television and setting up of Electronic Hardware Technology Parks (EHTPs) is expected to boost the growth of this sector. The consumer durable market is anticipated to expand at a CAGR of 14.8 percent to US$ 12.5 billion in FY15. Also, the demand from rural and semi-urban areas is projected to expand at a CAGR of 25 percent to US$ 6.4 billion in FY15, with rural and semi-urban markets likely to contribute majorly to consumer durable sales.
Consumer durable revenues have been growing at a healthy pace:
- The consumer durable sector revenues reached US$ 9.7 billion in FY15 and is expected to reach US$ 12.5 billion in FY16
- The consumer durable market is expected to grow at a CAGR of 13 percent from FY05 to FY20
- Around two-thirds of the total revenue is generated from urban population and rest is generated from rural population
- Samsung has emerged as the market leader in the consumer durable segment followed by the Indian giant Videocon
Domestic Electrical Appliances:
Brown goods or domestic kitchen appliances are indicators of the changing consumer scenario in post-liberalization economic environment. The major products constituting the brown goods market are mixers, grinders, irons, microwave ovens, rice cookers, water heaters or geysers, electric fans and exhausts.
The branded brown goods market has expanded at a significant pace and is expected to retain the momentum into the future as well. The market has been transformed by the entry of over a dozen new brands. Moreover, competition has intensified. While focus on price competency remains a key priority, players have also started focusing on other product features such as safety and total cost of ownership of the device.
Goods like the rice cooker have been growing continuously at a slow and steady manner over a significant period of time while microwave ovens have grown exponentially after the initial period of customization to local requirements.
The electrical iron market can be divided into two segments: heavy and lightweight. The market is also segmented into two sub-segments: steam and non-steam irons.
India being a tropical country, electric fans are an essential utility for more than six months of the year in most parts of the country. The present market size is estimated at around 11.6 million pieces. The market is divided among ceiling, pedestal, wall and table fans. Industrial and exhaust fans are another important segment.
The electrical appliances industry, which was focusing on the urban market, is now reaching out to semi-urban and rural markets as well. This is because of the shift in living style of the population, increasing electrification of villages and relatively higher purchasing power of consumers. As the market penetrates into the core middle-class segment in both urban and rural areas, it is expected to expand phenomenally, offering large volumes to the industry.
The consumer durable industry in India is set for sustained growth over the long term, fueled by favorable consumer demographics, overall growth in services and industrial sectors and infrastructure development in suburban and rural areas. Several Indian and MNC players are looking to strengthen their presence in India to leverage this opportunity.
Success in the long-term will require RMS to develop a wide and robust distribution network, differentiate their products in areas of relevance to the consumer and innovate in the areas of promotion, product financing etc. The product and approach to market needs to be customized to suit the unique needs of the Indian market.
By EB Bureau