Voltas Beko betting on product development to tide over Covid-19 lockdown

Since Voltas’ re-entry into the consumer durables market as a joint venture Voltas Beko, life has been increasingly difficult: First, a prolonged dip in consumer spending and then a bolt from the blue in the form of the Covid-19 pandemic.

According to a Deloitte report, the Covid impact is expected to be felt acutely in the consumer durable sector as it has a high dependence on China for imports. India imports almost half of its completely built units of consumer durables from China. In addition, India also imports the bulk of its consumer durables components from China.

This is an area where Voltas Beko sees an advantage for the company. “As indigenous manufacturers backed by strong R&D and distribution networks, we are able to offer appropriate products at an affordable price. This is our advantage,” says Jayant Balan, CEO, Voltas Beko Home Appliances. “We recently inaugurated our first factory for Voltas Beko in Sanand, Gujarat, which in the initial phase will primarily manufacture direct cool refrigerators that currently account for more than 80 per cent of the refrigerator market by volume. This segment caters to the mass market and we do anticipate a robust demand for these lower-priced products despite some anxiety around the economy and individual incomes.”

A 50:50 joint venture between the Tata-group-owned Voltas and Arcelik, a Turkey-based home appliances company, Voltas Beko offers refrigerators, washing machines, dishwashers and microwave ovens. As a standalone brand, Voltas is a key player in the air conditioner space. Balan says that the company’s biggest advantage is that it understands the Indian consumer better than MNCs do. “We had conducted extremely intensive immersive programmes amongst our audience at the time of our launch. Voltas Beko’s entire product portfolio came into being after 7,000-plus customer immersions and these wide-ranging inputs from customer have gone into the design of our products. This has provided us with the opportunity to integrate certain necessary features in our products that cater specifically to the Indian requirements.”

Despite the odds the company believes that its focus on product development, its consumer centricity and digitisation will help it tide over the crisis and meet the "surge in demand for homegrown consumer appliances” that it anticipates. The firm attributes its optimism to initiatives such as setting up of the new manufacturing plant and using artificial intelligence for demand prediction.

Balan talks about some of its products developed with a keen eye on the Indian consumer. Take, for example, the 30-day “Store Fresh+” technology in its refrigerators that enables the consumer to store food for a longer period; the stain expert function in its washing machines that removes 26 types of stains; or the aqua intense technology in dishwashers that provides intense water pressure to clean heavily soiled pots and pans that are very common in an Indian household.

An unintended benefit of the lockdown has been that these products and categories have turned out to be more relevant for the over-burdened family.
 

“For example, the Store Fresh+ Technology positioning for refrigerators is a boon during the lockdown when one cannot venture outside always or consciously avoids it given the risks,” says Balan.

Similarly, the company foresees more queries especially for a product like the dishwasher (which has very low penetration in India of X per cent). “We do see a large spike in sales for this product category once the lockdown is lifted. This is evident from the 42.17 per cent increase in dishwasher search volume between the period of March 2019 and March 2020,” Balan says.

But the lockdown has its own set of challenges. But while the constraints continue to be company- and sector-agnostic, preparing for an aggressive push will come in handy when thingsreturn to business as usual. Arvind Singhal, chairman and managing director, Technopak, says a key challenge for brands would be to come up with relevant consumer financing schemes or team up with those who do to help the consumer get loans on easier terms as consumer durables is a high value purchase and the economic scenario remains grim.

Pinakiranjan Mishra, partner and leader, consumer products and retail for EY India, says that both sales and services are crucial make-or-break factors for consumer durables. He adds the May 1 relaxations are a “blue print” for the companies to figure out their manufacturing and supply strategies and they must put in extra effort to identify and fix gaps in the chain during this crucial period. “In the given scenario and complying with the government guidelines, companies should also make their commitment towards hygienic practices extra visible and provide the right kind of gear, health checks and sanitised equipment to its representatives who visit the households,” he says.

Voltas Beko acknowledges the projected demand slump but says it won’t have a long-term impact on its goal of acquiring a 10 per cent market share in all the categories by 2025.
 

“Considering the pandemic and the resultant lockdown, there will be an impact on the economy and the consumer durables industry is not exempt from the likely economic downturn. It is important to note here that the penetration rate today for home appliances is still relatively low compared to the global average and demand therefore will continue to remain robust in the medium to long term,” says Balan.