One of the top spends that new, young and older households spend on is Consumer Durables. With the current trend of Smart Homes gaining more traction than ever in metro cities as well as in the hinterland, the market for Consumer durables is expected to hit USD 34 Bn by 2025. Tier 2 and towns smaller than that would be a significant contributor to the overall sales, as well. Sony, Samsung, LG, Carrier, Daikin are some of the most popular electronics brands in India while homegrown Voltas, Videocon, Whirlpool and many others are getting a push due to the Atmanirbhar scheme of the Govt. Of India coupled with doles for the ambitious “Make in India” pet project of the Indian Prime Minister.
According to the latest report released by homegrown firm RedSeer Consulting ‘Opportunity in digitizing the consumer durables value chain’, India’s enormous durables industry is set to become a $34 Billion dollar industry by 2025, with Tier 2+ cities contributing 68% (~$23 billion) of the incremental sales. The report also observes that consumers purchase durables through both offline and online channels which has its own share of obstacles. Key challenges in online purchasing of durables is a lack of support and touch/feel of the physical product, Offline purchasing while working great on assistance and physically reviewing of the products, is hampered by a lack of selection and exorbitant pricing.
Croma, Reliance Digital are top two offline retail chains selling Consumer Durables and Electronics while Amazon & Flipkart remain the top two online portals for the segment. There are several regional chains which have legacy on their back attracting gnerations of customers including Viveks & Co, Vasanth & Co, Sathya, Girias, etc. in the South of India while chains like Vijay Home are popular in the West of India. The regional chains have chosen to remain within their regions, penetrating in to Tier 3/4 markets. for Ex., Vasanth & Co whose Founder. Late Mr. Vasanth Kumar, )Member of Parliament) opened it’s 100th branch recently and it was inaugurated by Mr. VG Santhosham, Chairman of fellow competitor chain VGP & Co. It must be noted that Mr. Vasanth joined as a Salesman 2.5 decades ago at VGP and later went on to start his own business which today employs over 2,000 people directly and indirectly.
In a recent Industry interaction event, ‘ Mr. Vijay Vasanth, s/o Mr. Vasanth said their staff explain the pitfalls of online shopping to their customers, citing how they could become gullibe with false commitments from online sellers such as installation of a/c units, (lack of) warranty for imported models of Tv & Washing Machines, etc. He said most consumers prefer trust over a small price difference and that’s how they have retained customers over the past few years and are still growing, despite online dominance.
The Redseer report suggests that an Omnichannel approach – one that combines online browsing & offline shopping is perhaps best suited for consumer durables as consumers prefer to see live performance of products before buying them. However, the share of the General Trade doesn’t seem to abate in coming times, with around 68% turnover estimated to arise from these markets only.