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Demand for home appliances on rise amid Covid-19, premium products driving revenues

As people are spending more time at home in the Covid world, home appliances are increasingly making their way to shopping carts. While the industry witnessed a slight turbulence owing to the lockdowns, the overall consumer sentiment has been positive, and the outlook, optimistic.

Kamal Nandi, business head and executive vice president, Godrej Appliances told DH that the company has seen a 50% year-on-year growth in Q1 – which is largely a factor of the washout seen during the same period.

“April saw business but June was subdued over last year, witnessing degrowth. The pent-up demand that surfaced in June last year was not felt this year with consumers showing a lot of reluctance in stepping into stores. Demand, however, has picked up in July,” Nandi says.

“April saw business but June was subdued over last year, witnessing degrowth. The pent-up demand that surfaced in June last year was not felt this year with consumers showing a lot of reluctance in stepping into stores. Demand, however, has picked up in July,” Nandi says.

Demand is higher in premium segments like frost-free or fully automatic washing machines, he adds.

Home appliance brand Candes’ revenues also saw an upward trend. Sandeep Agarwal co-founder, Candes says, sales turnover has increased from Rs 2 crore in April to Rs 4 crore in May, Rs 6 crore in June and Rs 10 crore till now for July. Agarwal expects it to be around Rs 15-20 crore in August and September respectively.

According to PAYBACK-Unomer Shopper Study, Kitchen Appliances see continued interest with a marginal growth of 3%, while Cleaning Appliances are seeing a whopping 55% growth.

Large Appliances & Television sets are seeing a tremendous interest, with almost every category showing a positive bias. Some of the under-penetrated categories like Dishwasher show a rise of 60%, Microwave, a rise of 50%, followed by Television (27%), Air Conditioners (22%), Refrigerators (10%) and Washing Machines (8%).

Saurabh Baishakhia, President, Appliances, Usha International says, for both 2020 and 2021, they began witnessing an upsurge in pent-up demand during June, not just for home and kitchen appliances, but for other categories such as fans and air coolers as well.

“We have been witnessing a great deal of demand for products that ease WFH situations, like Air-Coolers, Food Processors, OTG, Steam Irons, etc from the Northern regions. From South, kitchen appliances such as Wet Grinders and Cooktops hold majority of the sales. Recently, in smaller markets, there has been a significant increase in the use of premium differentiated products and a 90% growth in sales of appliances range.”

Kent RO Systems Ltd Chairman Mahesh Gupta says, the company’s Rs 1,000 crore revenue target was on track in 2020 and it continues to do well in the current year.

“Automatic home and kitchen solutions have gained a lot of traction so our smart water purifiers, air purifiers along with smart kitchen appliances such as noodle and pasta maker, electric rice cooker, dosa maker have done very well.”

Price hike
The appliances price change is a result of multiple macroeconomic factors like commodity prices, freight rates, material shortages etc. The industry faced challenges in the last quarter of FY’21 and all-time high commodity prices forced the industry to raise cost by close to 3% every month from January onwards.

The rally in commodities continued in Q1 of FY’22. Nandi explains, starting Q2 FY’22, some of the commodities like resins & chemicals have shown price corrections over Q1 FY’22, but this decrease is getting offset due to the upward price trajectory in steel category.

Talking about the price hike at Godrej, he says, “We have been undertaking a small increment in prices month-on-month, although in the past quarter no price hike was implemented. So far most players in the industry and Godrej too, have taken an approximately 15% hike (including 3% hike this month) in appliance prices since December 2020.”

“With the commodity prices continuing to show an upward trend, as a measure to partially offset the increase, we are evaluating how the market is responding and accordingly will take up the balance price increase in a phased manner.”

Usha International has a taken a further 5% increase in the current quarter. “At an organisational level, we are trying to absorb some of the impact through cost innovation, however the unbearable part of the increase will be passed on to the consumer,” says Baishakhia.

A recent report by Research and Markets based on the Indian Consumer Electronics and Home Appliances has shown that the appliances market in India will grow $2.12 billion during 2021-2025, progressing at a CAGR of 1% in the forecast period. Deccan Herald

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