Consumer Durables

By Rajveer Karaniya

“Consumer durables are the products whose life expectancy is at least 3 years. These products

are hard goods that cannot be used up at ones”.

Consumer Durables

Consumer durables involve any type of products purchased by consumers that are manufactured

for long-term use. As opposed to many goods that are intended for consumption in the short

term, consumer durables are intended to endure regular usage for several years or longer before

replacement of the consumer product is required. Just about every household will contain

at least a few items of this nature.

Meaning

Consumer Durable Goods

White Goods Brown Goods Consumer Electronics

Types Of Consumer Durable Goods

Large electrical goods used domestically such

as refrigerators and washing machines, typically white in colour.

White Goods

Television sets, audio equipment, and similar

household appliances.

Brown Goods

India is likely to emerge as the world’s largest middle class

consumer market with an aggregated consumer spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte titled 'India matters: Winning in growth markets'.

The consumer durables market is expected to expand at a compound annual growth rate (CAGR) of 14.8 per cent to US$ 12.5 billion in FY 2015 from US$ 7.3 billion in FY 2012.

Urban markets account for the major share (65 per cent) of total revenues in the Indian consumer durables sector. In rural markets, durables, such as refrigerators, and consumer electronic goods are likely to witness growing demand in the coming years. From US$ 2.1 billion in FY 2010, the rural market is expected to grow at a CAGR of 25 per cent to touch US$ 6.4 billion in FY 2015.

Growth prospects

Indian ConsumerDurables Industry

Income growth

and availability

offinancing

Growth oforganised

retail

Increasedcompetition

dueto entry of

largePlayers

Appreciation

of the Rupee

Falling prices

increasingaffordability

Trends Favouring the Growth of the ConsumerDurables Industry

While the market is continuously expanding, there are

several concerns that will have to be addressed while moving the focus towards tier III towns and rural areas.

Total cost of ownership would be a key factor that would drive purchase in these regions.

From an organised industry’s perspective, success would be determined by superiority of product technology, which could provide added benefits to the customer.

For example; low power consumption, low service requirement and low cost of operation.

Product Technology

Brands account for 10 per cent of the total consumer

goods market in India, while organised retailing is around 2 per cent of the total industry.

Though branded products are perceived to be costlier than non-branded products, the penetration of branded products is increasing.

The relative shares of branded products and organised retail indicate that a significant share of branded products is being sold through unorganised channels.

This highlights the need for a strong distribution network to penetrate deeper into the potential market.

Branded products sell in unorganised retail as well

While income levels are rising across consumer

segments in both urban and rural markets, the level of infrastructure development and facilities vary widely across these markets. This has resulted in the emergence of two separate consumer segments with different demands.

Independent retail outlets, handcarts serve rural areas. In cities, independent retailers, retail chains (including shopping malls), department stores and supermarkets are becoming increasingly common.

Different requirements to address urban and rural

population

The other major influence on the consumer

durable industry is product customisation to address unique requirements of the Indian market.

Some examples of products customised for India include refrigerators that can keep foodstuff cool for long even during a power cut and washing machines with extra rinse cycles.

At the same time, these features are to be delivered at no extra cost to the consumer, given the price sensitive nature of the market.

Products need to address Indian working environment

Since raw materials account for more than 75

per cent of the manufacturing cost of consumer durables and with a significant part of it being imported, Maharashtra’s, Gujarat’s and Tamil Nadu’s proximity to ports, high demand for durable goods and factor consolidation in

manufacturing sector make them amongst the more considered destinations for investment in

manufacturing.

Attractive locations

LG Nokia Philips Samsung Sony Whirlpool Blue Star Carrier Godrej India Hitachi India Limited Sharp India Limited Tata Toshiba India Private Limited Videocon Voltas

Some of the top consumer durables brands in India are:

Thank You