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The Market of Household Electrical Appliances in India

Introduction: Durable goods are those which donµt wear out quickly, yielding utility over time rather than at once. Examples of consumer durable goods include electronic equipment, home furnishings and fixtures, photographic equipment, leisure equipment and kitchen appliances. They can be further classified as either white goods, such as refrigerators, washing machines and air conditioners or brown goods such as blenders, cooking ranges and microwaves or consumer electronics such as televisions and DVD players. Such big-ticket items typically continue to be serviceable for three years at least and are characterized by long inter purchase times. Developing countries such as India and China have largely been shielded from the backlash of the recession, as consumers continued to buy basic appliances. In fact, China has been ranked the second-biggest market in the world for consumer electronics. Despite the recession, their strong domestic economy and growing high-income population have buoyed demand leading to aggressive market growth. There is growing interest for new age products such as LCD-TVs and DVD players. Meanwhile, the penetration of the basic, largest dollar items such as ovens, washing machines and refrigerators is also increasing. India too, has witnessed a similar phenomenon, with the urban consumer durables market growing at almost 10 %p.a., and the rural durables market growing at 25% p.a. Some high-growth categories within this segment include mobile phones, TVs and music systems. The sector has been witnessing significant growth in recent years, helped by several drivers such as the emerging retail boom, real estate and housing demand, greater disposable income and an overall increase in the level of affluence of a significant section of the population.. Apart from steady income gains, consumer financing and hire-purchase schemes have become a major driver in the consumer durables industry. In the case of more expensive consumer goods, such as refrigerators, washing machines, color televisions and personal computers, retailers are joining forces with banks and finance companies to market their goods more aggressively. In addition, change in policy, such as the WTO FTA in 2005 resulted in zero customs duty on imports of all telecom equipment, thereby improving the pricing and affordability of imported goods.

This shift can be explained by narrowing differentials between the prices of branded and unbranded products added with the high quality of after sales service provided by the branded players. The key product lines under each segment are as follows. mobile phones etc. a shift in consumer preferences towards higher end. As per a survey conducted by FICCI on the Indian consumer durables industry. Consumer Appliances can be further categorized into Brown Goods and White Goods. This industry consists of durable goods used for domestic purposes such as televisions. technologically advanced branded products has been quite discernable. White Goods Refrigerator Washing Machine Air conditioner Speakers and Audio/music system Cooking range Electric Kettle Water Purifier Pressure cooker Water heater or geyser Other electrical appliances Brown Goods/ Home Appliances Electric Fan Mixer. higher disposable income. The consumer durables industry can be broadly classified into two segments: Consumer Electronics and Consumer Appliances.Overview of Consumer durable industry: The Indian consumer durables industry has witnessed a considerable change in the past couple of years. microwave ovens. The growth in the consumer durables sector has been driven primarily by factors such as the boom in the real estate & housing industry. higher disposable income coupled with greater affordability and a surge in advertising has been instrumental in bringing about a sea change in the consumer behavior pattern. washing machines. Changing lifestyle. grinder and blender Iron Microwave/oven Consumer Electronics Television Mobile phone handset Mp3 Player DVD Player Computer and Peripherals . refrigerators. The shift has also been triggered by the availability of foreign branded products in India owing to lower import duties coupled with other liberal measures as introduced by the government. emergence of the retail industry in a big way coupled with rising affluence levels of a considerable section of the population.

. the average standard of living is rising and durables such as TVs. home appliances. refrigerators and ACs are fast turning into utility goods rather than luxury goods. washing machines. computers.Indian Durable Industry With the bracket of The Great Indian Middle Class widening.

The modern consumer is willing to shell out extra bucks for style and durability.33. Thus.50% growth rate compared with 5. People are no longer averting to the risk of trying new products/brands with innovative offerings. This. and traditional. the real per capita disposable income (average income at fixed prices) of Indians grew by 5. While these attributes are still prevalent in his image.588 in 2009-10 as against a 5% growth in the previous fiscal. a new liberal set of consumers is emerging in India. A few years back. on the whole. family-oriented.a. would translate to a domestic demand rising to Rs.31. Due to the crisis last year we have seen fall in demand which resulted in nominal 4. celebrity influenced.73. Also this year. he is also fast turning brandconscious and quality-oriented. Indulgence in comfort has overpowered the guilt in the consumerµs mind when he splurges on convenience products.89% growth in February 2010 compared with 5. in the all-India per capita average expenditure on consumer durables and with almost 67% of population of 1264mn people in 2015 forming the consumer class. Considering a modest average growth of 9% p. Another factor that has played a major role in the changing consumer behaviour is the shift in socio-cultural values. will boost buying power. . The consumer durables index recorded 29. in turn.78% increase in the same month last year. the consumer demand for durables will see a robust growth for the next few years. the average Indian consumerµs spending habits on durables were value-oriented. which does not hesitate to spend extravagantly on the domestic appliances and electronics in exchange for comfort and luxury.6% from Rs. This real income is a better measure of the growth in purchasing power than the nominal income (average income at current prices) is.50% growth for the year 2008 09. They are not sceptical about newer technologies. The emotional connect and loyalty to a brand is slowly being replaced with rational selection and functionality. They are seeing products as extension of their own personality.Consumer Behaviour Consumer behaviour varies from region to region and purchasing pattern keeps on changing with changing geographical and climatic conditions.821 in 2008-09 to Rs. the expected normal monsoon is likely to stabilize inflation by decelerating the price rise in food and commodity prices.78% growth in April October 2008 09. as it broadly factors in inflation and thus indicates change in spending power at the same price levels. Current Domestic Demand and Demand Forecasting According to the government data on national income released in early June. 256 crore in 2015 for consumer durable goods indicating an industry CAGR of 18%20%. However till February 2010 the index recorded 25. Thus.

electric fans at 7.Market Overview The market size (value) of the consumer durables industry has seen an exponential growth in the past few years.28% from FY 09 to FY 10 ‡High end segment-Fully automated and Front loaded. washing appliances at 7 per cent and sewing machines at 5 per cent. followed by refrigerators at 14 per cent. Consumer Appliances y The consumer appliances market is estimated at US$4. with imports valued at US$ 1.38 billion electronics and Home Appliances Industry in India could become a $ 40 billion Industry by 2012. Air conditioners (including industrial and office conditioners) constituted 38 per cent of the consumer appliances market. electric coffee makers.050 Crores in 2008-2009 ‡AC segment growth declined in 2009. etc. Low end segmentSemi automated and Top loaders. The study titled 'Electronics and Appliances Manufacturing . said a joint study conducted by Assocham and Ernst & Young. As said earlier market is primarily categorized into Consumer Electronics and Consumer Appliances. provided there is support from the government. Most imports are in the finished goods categories such as watches. Refrigerator ‡Total Market size was Rs 5324 crore in 2008-09 ‡Total Production increased by 27. growing at a CAGR of 15-20%.1% over the previous year in rupee terms. Consumer Appliances is further subdivided into Home appliances and White Goods. The $27. ‡Split AC growth 22%. y y White Goods Air-Conditioner ‡Total market size Rs 10. Washing Machine ‡Total market size in 2008-09 was Rs 3337 crores ‡Total production increased by 26.the India Opportunity" said the Industry has growth by 7.22 billion. electric heaters.55% form FY 09 to FY 10 . food grinders. Windows AC growth 5%.5 per cent.34 billion.

Television. Air-conditioner and Refrigerator Television. DVD players. DVD Players. Home theatre. Home theatre. water heaters or geysers. Mobile phones. DVD Players. Sony India Pvt. Microwave ovens and Computers. DVD Players. In-car entertainment and Video gaming products. Refrigerators. While focus on price competency remains a key priority. increasing electrification of villages and relatively higher purchasing power of consumers. DVD players. Washing machine. Hitachi Home & Life Solution (India) Ltd. DVD Players. Computers and Phones. Digital imaging and Audio-Visual products. grinders. Airconditioner. Refrigerators. Washing machine. Digital camera. Television. Washing machine Microwave ovens. The electrical appliances industry. The branded brown goods market has expanded at a significant pace and is expected to retain the momentum into the future as well. Home theatre. microwaveovens. House hold Product. As the market penetrates into the core middle class segment in both urban and rural areas. Key Players in Industry Company Blue Star Ltd Daikin Air Conditioning India Pvt. because of the shift in living style of the population. it is expected to expand phenomenally. which had been focused on the urban market. Water purifiers and Power back up solutions. Personal Care Product. Microwave ovens and Computers Television. irons. Microwave ovens. Projectors. Audio Product. Microwave ovens. LG Electronics Pvt Ltd. Television. Air-conditioner. Whirpool Of India Ltd. Samsung India Electronics Pvt. Mobile phones. Philips Electronics India Ltd. and Power back up system. Audio system. is now reaching out to semi-urban and rural markets as well. Ltd. Washing machine. Air-conditioner. Vacuum Cleaners.Brown Goods The major products constituting the brown goods market are mixers.Ltd Godrej & Boyce Mfg. . rice cookers. Home theatre. Specialty Cooling Products. Air-conditioning and Cooling equipment Refrigerators. electric fans and exhausts. Ltd Product Category Air-conditioner. refrigerator. players have also started focusing on other product features such as safety and total cost of ownership of the device. Videocon Industries Ltd. Washing machine. Digital camera. mobile phones. Ltd. Refrigerators. Refrigerator. Digital camera.

y Providing support to global projects from India. .Two Recent Trends in Market Recent Upcoming Major Investments The high potential of the Indian market has encouraged the durables industry players to expand their presence in several ways y Expanding production base in India. y Introducing new products in India from the global product basket.

5 billion and exported worth US$ 3. manpower. This India. still buys black and white TVs and doesn't know what flat screens are.Export. foraying into these rural markets has a considerable cost component attached to it. Companies not only have to set up the basic infrastructure in terms of office space. at least a large proportion of its constituents. Also.Import Scenario: y y y India is a net importer of electronics and appliances.69 billion of electronics goods between April 2008 and February 2010 Opportunity and Challenges Challenges About 65 per cent of Indian population that lives in its villages still remains relevant for some consumer durables companies. which are touted . Even LG and Samsung. India imported worth US$ 18. More that 70 per cent of Indian electronics market depends on import of both finished goods and components. but also spend on transportation for moving inventory.

have a direct presence only in 15. low running cost. The growing purchasing power of the rural community has encouraged companies to introduce quality products targeting this low-income consumer segment ( bottom of the pyramidµ). But that remains a major hiccup in India. fuelled by favorable consumer demographics. Opportunity The consumer durables market in India is entering a new phase driven by a young population.000 retail outlets (for consumer durables) in the country.000 of the around 40. after sales services to suit the infrastructure and the existing amenities like electricity. overall growth in services and industrial sectors and infrastructure development in suburban and rural areas. MNCs hold an edge over their Indian counterparts in terms of superior technology combined with a steady flow of capital. Success in the longterm will require firms to develop a wide and robust distribution network. and rise in having the largest distribution network in the country. Penetration of consumer durables would be deeper in rural India if banks and financial institutions come out with liberal incentive schemes for the white goods industry segment.000 to 18. power availability. etc. Conclusion: The consumer durables industry in India is set for sustained growth over the long term. with access to higher disposable income and easy finance options. Several Indian and MNC players are looking to strengthen their presence in India to leverage this opportunity. improving lifestyles. The product and approach to market need to be customized to suit the unique needs of the Indian market. growth in disposable income. voltage etc. rural consumers should be provided with easily payable consumer finance schemes and basic services. customers have increasing choice from both domestically produced and imported goods. while domestic companies compete on the basis of their wellacknowledged brands. . On the demand side. While the consumer durables market is facing a slowdown due to saturation in the urban market. with similar features. There is an opportunity for integrated product development in India. product financing. Regular power supply is imperative for any consumer electronics product. Poor infrastructure is another reason that seems to have held back the industry. differentiate their products in areas of relevance to the consumer and innovate in the areas of promotion. as the country is now regarded as a preferred designing base for semiconductor and chip manufacturing companies. an extensive distribution network and an insight in local market conditions. This homogeneity makes it difficult for players to remain ahead of the competition.