×

Consumer appliance makers see demand pickup in June as lockdown eases

Godrej Appliances says they are reaching last year’s levels

Representative image | Reuters

As India began to unlock the economy at the beginning of June after a near complete lockdown for almost 60 days, things seem to have begun improving for a few sectors. Consumer appliances, for instance, seems to be one of them, with products like washing machines, refrigerators and dishwashers seeing brisk demand from people working from home and due to absence of domestic helps. 

“June has surprised all of us in terms of demand. Practically, we are reaching last year’s levels; brands will be anywhere between 80 per cent to 100 per cent. The trend that we are observing is that customers today are really looking at substitutes to their domestic helps,” Kamal Nandi, business head and executive vice-president at Godrej Appliances, told THE WEEK.

COVID-19 cases across the country have continued to rise and amid the fear of the virus entering homes, many people are likely to keep domestic helps away for some time, while many housing complexes are also not allowing house helps to enter, and that is driving demand for products like washing machines, dishwashers, refrigerators and microwave owens, he pointed out.

The government imposed a nationwide lockdown towards the end of March to curb the spread of the COVID-19. The lockdown impacted revenue by about 40-45 per cent in March, and washed out April completely for the industry. This is a crucial summer period for makers of air conditioners and refrigerators and thankfully, things started to pick up from May as lockdown relaxations eased, helping sales pickup to around 30-35 per cent of what they were in May 2019.

“By first week of June, 95-97 per cent of the market started opening up. Therefore, in June, business has been encouraging for our industry. It got supported by the heat wave in north India in the first half of June, so there was demand for cooling products. As of June 25, we are about 95 per cent of last year June’s level, which is very encouraging for the industry,” said Nandi. 

In a conference call earlier this month, even rival Voltas had pointed out that demand had picked up in areas where the lockdowns had been relaxed and markets were opening.

“Wherever markets have opened up, we are actually getting quite a bit of demand for additional stocks,” Anil George, deputy MD and CFO of Voltas said.

Others like Symphony, the country’s largest maker of air coolers, too reported “brisk sales” post the relaxation in lockdown.

Despite the strong pickup companies are seeing from June, the industry is expected to de-grow this year. Nandi expects industry revenue to decline 15-20 per cent in the year ending March 2021, although this will still be better than the earlier expectation of a 25-30 per cent de-growth.

As the demand has increased, production is also going up. Godrej Appliances production in June was at 60 per cent of capacity, which it hopes to ramp up to 80 per cent in July and 100 per cent in August. 

Companies like Godrej Appliances are strengthening their e-commerce plays, given that coronavirus cases continue to rise and social distancing norms are likely to stay in place for quite some time. 

Godrej is launching offline trade partners’ e-stores on Facebook’s business pages and has taken up a challenge of creating 25,000 such virtual stores on Facebook. The company has also been registering its exclusive brand outlets on Amazon’s e-commerce platform.

“We have tried to create a complete ecosystem of digital enablement for our trade partners. We were present on e-commerce platforms like Amazon and Flipkart since last year. Now, we have connected our exclusive brand outlets, which are largely in tier three and tier four towns, which has helped build our revenue from e-commerce,” said Nandi. 

Online sales for consumer appliances have risen to around 15 per cent now, and could further grow, although offline purchases are still going to account for a bulk of demand, as people like to explore the products physically before buying. 

The recent border standoff between India and China, which has led to growing demand for banning products from China has also worried consumer appliance makers. While many more companies are now making appliances in India, many components required are still imported from China. The extent of component imports vary from category to category in the range of 25-70 per cent. The highest is in ACs which is 70 per cent, while it's less for washing machines, given a large ecosystem is already developed in the country

Nandi called for a long-term transition plan if companies were to shift their sourcing from China to other countries or look to scale up supplies domestically.

“Its a long process, not something done overnight. It takes time to develop a competitive ecosystem in the country and it takes time to look at alternate supplies,” he said.