Upper-, mid-end consumer electronics drive growth

Consumers buying home appliances were unfazed by the spate of price rises in recent months, owing to the fluctuation in the rupee

 

This Diwali season, sales of 40-inch flat-panel television sets, 300-litre frost-free refrigerators and eight-kg semi-automatic washing machines surprised Hemant Shah, owner of an electronics store in the Santacruz suburb here.

“The bulk of my business came from these categories,” he says. “While I had all the necessary elements in place — a helpful sales staff, easy financing options, and discounts and offers to lure consumers — I was a bit sceptical as to whether sale of big-ticket items would take off, given the slowdown stories I’d been reading in newspapers.”

Shah is merely stating what most manufacturers and consumer electronics retailers have been observing — sales of mid- and upper-end products rose across categories this Diwali season. The average growth, for instance, seen in flat-panel TV sets of 40 inches or more, according to industry estimates, was 25-30 per cent. Industry sources say usually, this is lower, as TVs in this segment don’t cost less than Rs 40,000-45,000 a unit. Typically, products here are positioned at the upper end of the market. The mid-end, namely the 32-inch LED TV (priced at Rs 27,000-28,000 across brands), however, remains a favourite of most middle-class buyers. This segment grew 40-50 per cent this Diwali season, a tad more than most expected, retail industry sources said.

Deepak Jasodia, business head (home electronics), LG India, says uptrading in flat-panel TV sets has been seen for a while, despite the slowdown in discretionary spends. “Normally, you have consumers who make planned purchases during the festive period and given preference in consumer electronics remains for bigger and better products due to technological advancements, consumers have not opted to deviate from this practice,” he said.

Samsung executives say for them, business continues to boom in categories such as mobile phones (especially smartphones), tablets and high-definition TVs, for which easy financing has allowed consumers to make the much-needed shift to bigger and better products.

“A good smartphone from a reputed company, say, Apple or Samsung, will cost nothing less than Rs 40,000-45,000; a 55-inch high-definition TV, the newest rage in town, costs nothing less than Rs 3.5 lakh a unit. Despite the price, you’d be surprised there are consumers for these products and we did see quite a few of them during the festive season,” says Nilesh Gupta, chief executive officer, Vijay Sales, a Mumbai-based consumer electronics chain present across cities.

In the case of home appliances, consumers seemed unfazed by the spate of price rises in recent months, owing to the fluctuation in the rupee. They opted for products that gave them higher-order benefits. Eric Braganza, president, Haier Appliances India, says the price-value equation for consumers is changing, with many not hesitant to buy products at the mid and upper ends of the market, if the perceived benefits are good. What has aided this phenomenon this year is the deferment of purchases in the last few months, he says.

“Consumers were deferring purchases for a while. When many realised it was no longer possible to hold back purchases, they stepped in to buy the products they wanted at the appropriate price. And, given the replacement cycle in consumer durables is longer than in electronics, many opted to invest in a good product, backed by good financing schemes,” he said.

The result? These categories saw record growth. Braganza says he saw 63 per cent growth during the festive season, driven primarily by mid- and upper-end washing machines, refrigerators, flat-panel TVs and water heaters.