GfK India MD on post-Covid electronics road map

Electronics and smartphone industry market researcher GfK India managing director Nikhil Mathur in an interview to ET's Writankar Mukherjee says the pick up in sales post lockdown last year in India is continuing this year as well. The researcher said consumers are shifting to premium products, online sales have surged. Mathur, however, has a word of caution on the market in 2021 which he says will be governed by interplay of domestic manufacturing, imports, transportation cost and raw material prices. Edited excerpts. What have been the purchase trends for electronics and appliances in India after the country unlocked?In 2020, we witnessed the re-prioritization of product categories that accelerated growth of some of the key consumer durable product categories such as microwave and washing machine. However, compressor categories were the worst hit industry due to nationwide lockdown during peak season. The lockdown situation forced a paradigm shift in the way we live, work, engage and communicate. This led to the emergence of at home norm and gave the first big taste of do-it-yourself to the urban Indian consumers, especially the working class, as their focus shifted towards health, hygiene and safety.How did the festive season perform, despite job and income losses?Last year, a common trend of premiumization was observed across product categories and an upward trend in online retail contribution to overall category sales of consumer durables with increased digitization. This trend is expected to continue with evolving consumer needs and choices. As per GfK market intelligence sales tracking, Q4’2020 witnessed a pent-up demand across categories coupled with heavy promotions by manufacturers and retailers making it the best performing quarter in the last three years. Noteworthy to mention, this made Diwali season sales also one of the best festive seasons since 2018.Do you expect this buoyancy will continue in 2021?In 2021, we see continued positive sentiments from the fourth quarter of last year, especially with the roll out of vaccination in the country. However, there is a cautious optimism in the market which will be governed by interplay of domestic manufacturing, imports, transportation cost and raw material prices.How come premium products are selling so well?As per GfK market intelligence sales tracking, maximum number of the units were sold in the second half of 2020 for AC, washing machine and refrigerator when compared with the last ten years for the same time period. Smartphone market witnessed highest value generation in the second half of the year 2020 since 2011. This reflects the evolving consumer preferences and an upward trend towards the premium segment over a decade.As markets are moving from “want” to “need” norm, it is not only about the product/ device but consumer lifestyle. The pent-up demand of tech and durables is owing to lesser avenues of spend during the pandemic. Therefore, with changing lifestyle in the new normal and growing economy, this trend is likely to stay. Consumers turned to tech to continue working and learning while staying at home. Equally important was the need for the convenience offered by home appliances to cook and clean. When consumers were adjusting to life in lockdown, the need for ‘entertain at home’ also kicked in, aiding the growth of the premium price segment.Therefore, some of the categories which witnessed increase in average selling price and premiumization trend are laptop, smartphone, washing machine, microwave oven and refrigerator. For instance, refrigerator, microwave and washing machines witnessed an increase in average selling price by 1 – 4% and 7-9% for smartphone and laptop market in 2020 compared to last year.Any other interesting trend across product categories?The COVID-19 pandemic disrupted multiple industries in 2020, however some of the product categories in electronics and appliances displayed resilience. The year 2020 saw a surge in adaption of frost-free refrigerators across product sizes, despite the drop in overall category growth. The AC market recovered in the second half of 2020 especially with heavy discounts in online channels by 8 – 9%. The overall category registered value growth of 25% across channels during the same time period, led by inverter window AC segment.Since consumers spent most of their times at home, microwave category grew throughout the year. It registered a value growth of 8% in offline retail led by convection oven segment and 44% in online retail led by grill oven segment. Despite overall decline in the TV market, products with large screen size and UHD technology grew much faster. The UHD tech segment witnessed growth with price discounts of 11% in offline retail and 13% in online retail.Washing machines saw value growth of 8% across channels, largely driven by fully automatic front load segment across offline retail (6%) and online retail (34%) with 1-2% price increase. In the smartphone market, the Rs 20,000 to Rs 40,000 price segment products registered higher value growth across channels and an upgrade in the Rs 10,000 to Rs 15,000 price segment in offline retail. Likewise, laptop market registered value growth of 55% (17% in offline retail and 81% in online retail), driven by premium (49%) and gaming (82%) segment as a result of at home norm.How has the market shifted towards e-commerce?The pandemic triggered some structural shift in buying behavior. GfK report reveals the increasing preference of online shopping via general shopping apps, brands’ own websites and social media. This reflects the rising consumer trust and digitalization of purchase journeys fueling the online retail contribution to overall category sales of consumer durables. For instance, microwave ovens accounted for 39% online retail volume contribution in 2020, which is seven percentage points higher than previous year. Similar movement was observed for air conditioner (13%), refrigerator (13%), TV (29%) and washing machines (19%) – all registering three to five percentage points higher than last year. This digitalization trend is expected to continue with evolving consumer needs and choices across big and small cities. With life coming back to normal and offline retail seeing increasing footfalls, omni-channel experience will be key for success in the market.

from Economic Times https://ift.tt/3lN4s4N