Consumers go for high-end durables
| PRICE IS NO MATTER. |
R. Ravikumar
Vinay Kamath
Chennai, Aug. 9 Amitabh Tiwari, Business Head (Home Entertainment Business), LG Electronics India (P) Ltd, recalls that last year the company struggled to sell even 50 units of its top-end 50-inch plasma TVs a month.
During Diwali, it sold 110 units across the country. Suddenly, this year, it’s all changed. In the last four to five months, LG has been selling 750 plasma TVs a month and Mr Tiwari says the company has nearly run out of stock.
What’ve changed, as Mr Tiwari explains, are wider market reach for the plasmas, lower prices, newer technology and greater awareness among consumers, not to mention a propensity to spend.
Dropping prices
Plasma TVs, which sold for almost Rs 1 lakh last year, have seen prices dropping by approximately 40 per cent. While LCD TVs saw a drop in prices by 20-25 per cent on an average, depending on the models and brand, other categories saw a minimum of 15-per cent drop.
This is evident from the fact that there is a marked shift in consumer preference for high-end consumer electronics and durables in recent times, a trend seeping even into semi-urban towns.
According to Mr Tiwari, big-ticket items such as flat panel TVs, 350-litre-plus refrigerators, top- and front-loading models of fully automatic washing machines contribute close to 32 per cent of the company’s total turnover. “If the trend continues, this will breach 40 per cent next year,” he says.
Samsung India’s Deputy Managing Director, Mr R. Zutshi, says 62 per cent of AC sales came from split air-conditioners, which cost at least 20 per cent more than window ACs. The shift is even more pronounced in the South where 80 per cent of the sales came from splits. While Samsung’s sales of LCD TVs saw a 117-per cent growth, Mr Zutshi says the company’s washing machines business is growing by 31 per cent, the bulk of it coming from the high-end. “The share of fully automatic machines in our sales of washers will be 45 per cent this year.”
He says the trend is also catching on in the rural market. Thanks to the expanding distribution network, service back-up and increasing disposable incomes, people in rural areas too want to graduate to technically-superior models of durables.
The shift towards top-end appliances is also reflected in the overall industry. According to industry officials, who quote research body ORG-GfK figures, in 2008, when the entire colour TV category grew by 13 per cent over the previous year, flat panel TVs – dominated by LCD TVs – grew 65 per cent.
In the refrigerator segment, 350-litre and higher capacity fridges grew 15 per cent against the overall segment growth of 8 per cent. The growth of direct-cool refrigerators was only 9 per cent.
In the air-conditioner category, which grew 15 per cent, split ACs registered a growth of 22 per cent while window ACs posted a growth of only 5 per cent.
Ditto with washing machines: the fully-automatic front-loading machine range (which is considered to be the top-end segment) grew at 20 per cent against the overall washing machine category growth of 9 per cent.
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