The consumer durables industry is one of the most lucrative and fast-growing industries in India and is considered to be one of the largest in the world. India is currently on the 5th position in the consumers market and is growing at the average rate of 15 percent per year. The Indian consumer durables sector is vast in scope – including a range of household and industrial electronics – air conditioners, televisions, washing machines, refrigerators, air coolers, laptops and personal computers, and a wide range of other household/domestic appliances and conveniences. Approximately over 65 percent of the total revenue for the sector is generated from the urban population and the rest from rural India.
The rural market contributes only 33 percent to total sales, which is a huge untapped unexplored market with minimum penetration. The durables market is also likely to witness growing demand in the rural markets with the government’s plan to invest significantly in rural electrification. Owing to a favorable changing consumption trend and potential size of the market, the rural areas provide a lucrative investment opportunity to the private companies, which is why some of India’s largest consumer durable companies serve one-third of their consumers from rural India.
India has also emerged as a very successful exporter of consumer durable goods to the rest of the world. Over a period of time it has attracted increased investment which has led to a strong foothold in production, distribution, and R&D. With growing sales, there is a noted disparity among the rural and urban contribution to the consumer durables market. The consumer durable items that were formerly considered as luxury goods for a long period of time have become basic necessities of sorts today. Because of the government’s initiatives toward urbanization and transmission network augmentation, electric supply channels have been able to cover the previously underserved/unserved regions of India. Moreover, wide usage of online platforms and rise in working age population has stimulated the demand.
Advancement in technology and higher competition are driving price reductions across various consumer durable product segments such as refrigerators and TVs. Due to the ever-changing tastes of consumers in the technology industry, companies have to follow the pace and offer progressive and evolving gadgets to their customers. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the consumer market. The durables market is not just price-sensitive, but is directly linked to the discretionary incomes in the hands of the end-consumers. Increasing electrification of rural areas and wide usability of online sales also leads to growth in demand. Opportunities such as rise in organized retail and easy consumer financing not only streamline the supply chain but also facilitate increased demand, particularly for high-end and branded products. The organized retail industry is expected to cover a market share of 15–18 percent, from around 3 percent currently by 2020. The attractive financing option in the case of expensive consumer goods involves retailers providing easy financing or easy monthly installment (EMI) options to consumers by collaborating with banks respectively.
The growing number of households has not only pushed the demand for necessities but the combined mix of greater purchasing power and willingness to spend has resulted in the nuclear family’s shifting focus toward luxury/semi-luxury products. The average monthly disposable income of a household has a strong positive effect on the acquisition of durables and household expenditure on durables. This has thus led to higher demand for durables in the country. The consumer durables market has huge potential to grow in near future in India. Also, government’s initiative of Make in India is a great opportunity for this sector as the manufacturers are bringing in new and different technologies which focus on being energy efficient and environment friendly products.