Durables shine with double-digit growth, TVs lose lustre

The white goods market had a decent growth so far, primarily driven by compressor-based products like room air conditioners (RAC) and refrigerators.

The extreme and extended summer led to 20% growth in the RAC segment and double-digit growth for the over durable industry in the first quarter of the current fiscal. However, the television segment lagged, mainly owing to policy structure issues, frequent technology changes, competition from new players and fight for eyeballs with mobile screens.

Manish Sharma, president and chief executive officer, Panasonic India and South Asia, told DNA that growth in RAC was due a low base last year. "There was pent-up demand and the extreme, extended summer season also played a crucial role in the RAC growth. Except television, all other products like air-conditioner, refrigerator, washing machine, etc, are doing well. It was a fantastic summer for all the cooling products. Washing machines continues to do well and monsoon is the time when it starts to see good demand. Overall in durables, the growth from April to year-to-date would have been in double digits," said Sharma.

While sporting events were expected to boost TV sales, discretionary spend by consumers was diverted from TVs to RACs and refrigerators as a result of which TV sales were flat in the April to June quarter, said Kamal Nandi, business head and executive vice president - Godrej Appliances.

Growing preference for mobile phones over TV as the primary media consumption, low-cost availability of data and rising affordability of smartphones also impacted TV sales.

"For July and August, the sales overview has not been very encouraging and de-growth is being experienced across categories. The sales during Independence Day was lower than expected and consumers are mostly holding their purchases due to the liquidity crunch in the market. This being a lean period, retailers foresee a growth of 35-50% in consumers opting for easy finance schemes for the coming days. Given the economic slowdown across sectors, the overall sentiment in the economy might also impact consumer behaviour. Having said that, the recent initiatives by the government to boost consumer and industry sentiment will increase liquidity in the market by enabling greater lending. Easier loans for auto, homes and consumer goods in particular should help in improving festive sentiments," said Nandi.

The over 14 million units TV market in India is largely dominated by players like Samsung, LG and Sony. However, the advent of Chinese brands like Mi and a few others like Blaupunkt, Metz, Kodak, Thomson, etc has led to a cut-throat competition in the market and significant pressure on pricing.

From a retailer's point of view, TV as a category was struggling a year ago. However, low prices became the name of the game as Chinese brands made a beeline to tap the consumer demand thus improving the market situation. "So 32'' TV is now available under Rs 12,000 and smart TVs were being offered at Rs 14,000 and that's bringing in the required traction over the last six months. While the likes of Netflix are eating screen time from large screens, they have also started fuelling growth (of large screen TVs). Six months ago we only saw increase in average sales price (ASP) or value but the numbers were de-growing. Now, the numbers are also stabilising.

Having said that, TV will no longer be a high growth category because screen time is shared between TV, mobile, tab and laptop. Earlier, growth rates were also very high ,but the base has been set now. I think this will be the new benchmark for everyone to follow," said Nilesh Gupta, managing director of electronics retail chain Vijay Sales.

The growth in television (TV) segment is not happening to the extent of its potential also due to policy issues. The industry has been hoping for some relaxation in goods and services (GST) rates on TV but that hasn't happened as expected. "We were hoping the GST rate would be reduced to 18% if not 12%. These days, major buying action is happening on TVs in the 32 inch and above sizes but these units continue to be taxed at 28%. Adding to the cost is duty on open cell at 5%, which doesn't make sense at all. That's because no one manufactures open cell in India. It has to go back to zero, which was the case around 18 months ago," said Sharma.

Over a year ago, duty on open cell, which contributes almost 65% of the cost of the television, was increased from zero to 10%. However, post representations from the industry it was reduced to 5%. The intention, according to industry experts, was to invite investments in setting up manufacturing facilities.

"However, setting up such a facility calls for significantly high investments running into billions of dollars. It appears, there is some understanding now among the regulators and the industry players that this has to be a part of a phased manufacturing programme for television in India. If the government wants companies to invest then it will have to offer them clarity on how the duty structure will evolve over the coming years," said Sharma.

The TV category sales is also under pressure owing to the increasing trend of consumers being glued to their mobile phones watching exclusive content on Netflix and Amazon Prime in addition to over-the-top (OTT) platforms like Zee5 and hotstar to name a few. While a lot of entertainment content consumption is happening on mobile devices, improvement in 4G network speeds coupled with affordable prices and the advent of 5G is likely to trigger migration to large screens with high-definition, 4K screens and related content.

"That's when people will start coming back to large screen TVs. But current times are little tough for TV players. Considering the fast changing technology environment, players in the TV category had started exercising cautious optimism since a year-and-a-half. As a result of which there is no excess inventory situation in the market. But if you ask whether players are losing out on the opportunity, I would say to some extent yes," said Sharma.