issue: May 2009 APPLIANCE Magazine
International Report - India
Upbeat in India
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Adite Banerjie, India correspondent
While most of the world is reeling from the economic slowdown, the mood is strangely upbeat in India.
A global consumer confidence study
by Nielsen reveals that Indians are “the most optimistic lot globally
who think that their country will be out of the economic recession in
the next 12 months.”
The study, which polled
26,000 consumers across the world about their economic outlook, reports
that 16% of Indians consider job prospects within the country as
“excellent,” while 59% say that prospects are “good.”
upbeat mood has rubbed off on the consumer durables market in India as
well. Despite fears that the sector would suffer a setback in the wake
of the global economic downturn, industry analysts report that consumer
spending on durables in both urban and rural India since January 2009
has been picking up. Volumes of LCD TVs, laptop computers,
air-conditioners, refrigerators, washing machines, and audio systems
are reported to have increased by 20%. Rural markets are also reporting
Appliance manufacturers are of
the opinion that home appliances will see growth rates of 15–20% in
2009, while manufacturers of electronics goods are projecting sales
growth of 12–15%. LCD TV sales continue to register high growth rates
and the general consensus is that aspirational products such as LCD TVs
are unlikely to be affected by the economic downturn. Increasingly, the
rural market is becoming a more lucrative destination for appliance and
electronics goods marketers. A number of government initiatives aimed
at tackling rural employment has ensured that rural citizens have more
disposable incomes than ever before.
rural demand for white goods grows, some companies like LG are putting
more focus on these markets. The company is reworking its model mix for
the rural market so that it is able to offer a wider choice of models
at the entry level. However, for top-end products, it will continue to
focus on urban markets. The semi-urban and rural markets’ contribution
to the company’s sales revenue is expected to reach almost half of its
total sales revenue.
Another company that is
looking at improving its sales share in the tier 2 and 3 towns of India
is Dutch appliance OEM Philips. It is planning to roll out various
appliances targeted at the low-income groups in urban and rural markets.
smokeless Chulha (stove) is one product that Philips is planning to
introduce for rural consumers. The Chulha was developed as a way to
help the socially disadvantaged and was designed to be simple to use
and maintain, locally manufactured, relatively inexpensive, easily
produced, and able to significantly reduce indoor pollution. Philips
plans to partner with nongovernment organizations, microfinance
companies, and rural cooperatives to help market the stove. Entry-level
products are the ones that are expected to generate big volumes for the
company in the rural markets.
analysts feel that while the impact of the downturn is likely to hit
urban consumers in India, rural consumers will continue to remain
insulated from recessionary trends in the near future. Recent studies
have shown that rural demand for big-ticket items is growing steadily.
It’s therefore not surprising that companies such as LG and Philips are
gearing up to address the huge untapped potential of rural sales.