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Hi-fi durables hit a festive note, but prices count too

Hi-fi durables hit a festive note, but prices count too

Author | Source: The Economic Times | Friday, Oct 27,2006 9:12 AM

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Hi-fi durables hit a festive note, but prices count too

It has been a mixed bag for the consumer durables industry this festive season. Consumers across urban and rural markets are clearly splurging on technology-led products, fuelling demand for high-end refrigerators and colour television (CTVs), but price and affordability is a deciding factor for washing machines and microwaves.

While a bulk of the washing machine sales came in from the semi-automatic segment, in the microwave segment, the maximum movement was in the below-Rs 7,000 category.

Within the CTVs segment, high-end sets drove sales and in the refrigerators segment, much of the sales growth came in from the higher end (300 litres and above, double-door) of the frost-free segment.

The AC segment saw a very poor offtake this Diwali. Trends during festivals indicate that bulk of the sales come in from CTVs, refrigerators and microwaves.

Durable majors across the country hiked incentives and advertising spends during the season. “It worked this time.

Sales are up in almost all product categories by 15-20% over the previous period,” said Ramesh Shah of Sony Mony, a consumer durable retail chain. And durable majors Samsung, LG, Onida and Videocon indicate that they have already crossed their targets for this period.

Dealers indicate that consumers buy lower-end microwaves primarily as gifts. Manufacturers over the last year have reduced prices of microwave ovens. “A 25 litre microwave is now available at prices as low as Rs 7,000,” a source said.

The fact that frost-free refrigerators have scored over direct cool, or that plasmas or LCDs are doing better than conventional TVs could mean that consumers favour higher technology products.

“Consumers never splurge on AC sales during Diwali. Besides installing an AC takes time. We are hoping that sales pick up post Diwali,” said Nilesh Gupta of Vijay Sales.

Besides with durable manufacturers pricing products competitively and offering various product schemes, consumers are being tempted to replace products much faster, market sources added.

Discounts and free gifts have become the mainstay of the durable industry. It's no longer brand loyalty, but value-for-money purchases that drive volumes said KS Raman, senior consultant of the consumer electronic industry.

The industry had set a sales target of 1.7-2m CTVs, which includes 55,000 units of plasmas and LCDs, 4.5-5 lakh refrigerators and 1 lakh microwave ovens during the festive season.

The splurge in sales has helped to clear up the inventory pile. With the marriage and cricket season coming up, the trend is expected to continue over the next few months, industry sources said.

Tags: e4m

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