White revolution in the hinterland as demand booms

Accompanied by his son and a friend, 48-year-old Mandhir Singh Sidhu, a wheat farmer from Haryana, steps into a large-format Hariyali Kissan Bazaar store in Gohana village in Sonepat district.

The store, part of DCM Shriram Consolidated Ltd (DSCL), sells fertilisers, seeds, tools, animal feed, irrigation items, and other inputs for farmers, but what has caught Sidhu’s eye is a flat-screen television set made by LG Electronics and he is ready with cash to buy it. Yes, white goods are fast moving into the hinterland.

Babasaheb Kale, a sugarcane farmer in Shrirampur near Ahmadnagar, recently went to a Hariyali Kisaan Bazaar store to buy a refrigerator he had seen on his previous trips there. “I bought a refrigerator for chilled water, and to store daily necessities like milk,” Kale said.

And Laxman Kumar, a vegetable farmer in Saharanpur, said he had purchased a semi-automatic washing machine from a Hariyali Kisaan Bazaar store a few months ago, and intended to buy an LCD television this year.

Earlier, to purchase white goods, Indian farmers had to travel to cities on trucks, mostly in groups, but now most durable goods makers are taking their gadgets closer to the rural masses.
Many post offices in the hinterland have started dedicating space for taking orders for consumer goods from villagers.

Mirc Electronics, which makes Onida brand of electronics items, has recently tied up with India Post to sell its Igo brand of products. So has Godrej Appliances, for its Chotukool, the small cooler it has created for rural India.

Godrej tied up with India Post last year and is currently running pilot projects in Maharashtra and Goa, G Sunderaman, vice-president- corporate development, Godrej Appliances, said.

Due to absence of an organised retail environment in rural India, consumer goods companies, who see massive demand in rural markets as urban, have started seeking collaborations that can help them park their products into the homes of rich farmers.

At rural stores like the ITC Ltd’s Choupal Saagars, farmers get instant payment of cash when they sell their produce, with which they often buy consumer products like washing machines, televisions, refrigerators, DVD players and microwave ovens from the same store.

Choupal Saagar stores started a new division a year ago, where consumer electronics already constitute 15% of sales and is growing at 40% per annum, S Sivakumar, divisional chief executive, ITC’s agri business division, said.

He said with increasing incomes and expanding awareness and aspirations, the rural consumers are upgrading the quality of products they have been using.

“LCD TVs, for example, make up 33% of all television sales at Choupal Saagars now, up from 12% last year. Similar is the growth in frost-free refrigerators and fully automatic washing machines,” Sivakumar said.
 
An attendant at a Hariyali Kisaan Bazaar store in Uttar Pradesh said that while villagers buy electronics for personal use, many also purchase them as give away for dowry.

Imaging products companies like Canon to electronics brands like LG Electronics India and Godrej Appliances keep sending mobile vans carrying their entire range of products to take a trip across hinterland, showcasing them to the villagers. Then there are haats, melas and mandis where these brands frequent to to gain the trust of rural folks. But these measures have not been enough to gather sales, which is where tapping the unconventional distribution channels come into play.

It took durable maker LG three years’ planning to reach villages and enter consumer homes in hinterland, leveraging unconventional distribution modes for electronics, like the collaboration with ITC and DSCL, said Dr Y V Verma, chief operating officer, LG Electronics India.

Rural sales already contribute 21% to LG India’s revenues. The company is now targeting 14 states it has identified with high disposable incomes, where it will rely on the hub-and-spoke model, collaborating with distributors of products like fertilisers or two-wheelers. “Rural consumers are not looking for low-priced products. They aspire for the best products too,” Verma said.

Mirc’s Igo, a rural-focused brand, is already selling LED and solar-based torches and lanterns in villages with less than 5000 population through 4500 post office branches in states like Madhya Pradesh, Uttar Pradesh, Gujarat and Maharashtra. Mirc has tied up with Multi Commodity Exchange of India (MCX) that takes orders for its products through these post offices.

Tarun Bhardwaj, national head- Igo, Mirc Electronics Ltd, said that the repeat orders from these markets have been encouraging and the company could sell 7000-10000 units of lanterns a month. This will help the company sell its televisions and other products through the channel in future.

What is taking consumer durable companies to small towns and even villages is the high growth, Bhardwaj said.

“The electronics market (in India) is pegged at Rs50,000 crore. The rural market forms only Rs5,000 crore of this, but is growing at 60% compared to urban market that is growing at 15-20%. In 3-4 years the rural market’s size in electronics alone should reach Rs17, 000-Rs 18, 000 crore,” Bhardwaj said.