Growth pockets bring good news for consumer durables

Growth pockets bring good news for consumer durables

Author | Source: The Economic Times | Saturday, Jun 18,2005 9:08 AM

Growth pockets bring good news for consumer durables

The consumer durable industry has developed clear pockets of growth in various product categories. While the growth theme runs through the top-end of all products, including high volume items like colour televisions (CTVs), refrigerators, washing machines and airconditioners, there are pockets even in the low-end or entry level segments that are defying the technological obsolescence factor.

Take the CTV segment, where sales of conventional or curved screen television segment - which comprises 70% of overall market in units and 60% in value - reported 2.6% drop in volumes and 15.6% drop for FY05. But within this, there are clear pockets of growth. Unit sales of the 14”-19” screen size segment reported double digit growth, while value wise it was only marginally positive. The conventional 20” and 21” segments, which form the bulk of CTV sales, reported decline in growth as consumers shifted to flat screen television.

Says Girish Rao, head of sales, LG Electronics India, “Different product segments have different dynamics. For instance in case of televisions the small screen segment is clocking growth as consumers are shifting from B&W television to entry level CTVs.”

The refrigerator industry is also reporting a similar pattern. While overall growth is coming from frost-free or the higher-end product category, the direct cool segment that accounts for more than 75% of the market is reporting few pockets of growth.

So while the frost-free segment reported 50% jump in unit sales last fiscal year, the higher capacity direct cool refrigerators is notching up sales.

According to Kamal Nandi, vice-president(sales) at Godrej Appliances, “The overall declivity in direct cool segment is due to rural market hitting a saturation primarily due to lack of electricity. Low penetration of electricity in rural homes dissuades rural consumers from opting for a fridge.”

While this partly explains the deceleration of the low capacity direct cool segment, the growth in higher capacity refrigerators is because the consumers are upgrading to larger size products but are not opting for frost-free as it requires a decent electricity supply, a problem in semi urban areas.

However, the nascent product categories like microwave ovens and DVD players are reporting all round growth.

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