Spending spree

Mumbai, March 16: There is a robust upswing in the consumer durables market for high-end lifestyle products such as DVD players, camcorders, digital cameras and mobile camera phones.

The surge has occurred as prices have been lowered. When price rationalisation slows down value growth for the market, volumes move up to compensate. The coming year will also enable manufacturers to study the complete effect of free trade agreements (FTA) with select Southeast Asian countries.

?Durable marketers have focused on the two key issues of affordability and availability. In large metros, a proliferation of options at the premium end of the market has resulted in marketers trying to segment buyers carefully and provide a suite of products to match segment-wise needs,? ORG-Gfk associate director Bhuwan Singh said.

The domestic consumer durable industry grew by 6 per cent in 2004, according to the ORG-Gfk durable retail audit. Various product categories, including consumer electronics (CE) and household appliances (HHA), have exhibited growth across the board.

Categories that experienced minor declines in the previous year are now in positive territory.

Singh attributes this growth to growing affluence across demographic groups, easier credit financing and an explosion in the variety of product offerings. ?This has created a propulsion for offtake,? he said.

India is the only market witnessing a high growth in CTV sales and a 30-40 per cent surge in that of mobile phone handsets.

Combined with relatively low penetration and a gradually inverting income pyramid, this provides the growth thrust that the durables market is likely to experience, the survey said.

Much of the growth has occurred more noticeably in premium categories like flat panel TVs, frost-free refrigerators and fully automated washing machines. ?Technology adoption?, therefore, has remained the catchphrase in 2004. There appears to be a discernible shift in consumer preference towards technologically upgraded variants within existing categories.

The move from round screens to flat ones in CTVs, from direct-cool to frost-free in refrigerators and the shift towards fully automated machines are telling indicators of this phenomenon.

The survey revealed that flat TVs, frost-free refrigerators and fully automatic washing machines now contribute to over 25 per cent of volume sales in their respective categories.

While the industry has shown an overall unit growth, there are stark geographic differences. Last year, there has been resurgence in the western and southern regions. Though the north remains the biggest contributor to the market, an upsurge in premium categories has led to higher growth for the west and south zones. This phenomenon is more evident in Maharashtra and Tamil Nadu. The east zone remains a laggard on the growth front leading to a lower contribution to the total market across benchmark categories.

Small towns (less than 1 lakh population) across the country now contribute significantly to all durable categories, including some of the high-end categories like frost-free refrigerators and flat TVs.