ACs and refrigerators saw strong sales in March and early April, before the second wave of the pandemic hit the country
With most states extending lockdown-like restrictions till the last week of May due to the second wave of the pandemic, the consumer durables industry is staring at a 10-15 per cent drop in annual sales with a washed out summer season. With consumer sentiment battered due to the intensity of the second wave, concerns are also rife on the pace of recovery in demand for consumer durables once restrictions are lifted.
Eric Braganza, President, Haier India, said consumer sentiment has been impacted adversely due to the intensity of the second pandemic wave, which has even spread in rural regions. “Last year, there was strong pent-up demand witnessed in the second half of the year as consumers prioritised spends on appliances. But this time, with consumers experiencing the pain of the pandemic and a sombre mood, there are concerns about whether the second half of the year will be as good as last year. If lockdown restrictions are lifted in June in the major markets, then we may see some sales happening in the northern region for cooling products, if not, the industry could see a bigger impact than last year,” Braganza added.
April and May contribute 27-28 per cent to annual sales for the industry, driven by air-conditioners and refrigerators. Players said only about 10-15 per cent of the consumer durables retail stores are operational in the country, that too, under restrictions and limited footfalls.
Kamal Nandi, Business Head & Executive Vice-President, Godrej Appliances said, the industry is estimated to have lost 15 per cent of annual sales . “If the spread is curbed and with the focus on vaccinations, consumer sentiment is expected to see a revival in the second half of the year, especially during the festival season. The industry is hoping to see pent-up demand for appliances from June onwards if restrictions are lifted in major markets. But if restrictions continue in June, the drop in annual sales could be as much as 20 per cent.,” he added.
Manish Sharma, President and CEO, Panasonic India and South Asia, added that the industry may see a “loss of nearly 50 per cent against the sales projection during the ongoing quarter.”
Consumer appliance retailers are saddled with large inventories of cooling products as they began stocking up due to projections of an intense summer as early as February.
Nilesh Gupta, Director, Vijay Sales said, “Last year, we saw the average spends on appliances go up by nearly 10-20 per cent as consumers focused on upgrading their appliances. This time, due to the subdued consumer sentiment, while volumes are expected to pick up as consumers purchase what they need in terms of replacement of their appliances, they may not put higher spends on upgrading their products as they did last year.”