Amid the Coronavirus-induced lockdown that has hit businesses across sectors, consumer durable companies are resting their hope on a revival in demand in May-June.
"We have been closely monitoring the situation and based on the trend, we expect the ongoing negative impact on consumer durable products to get diluted over next few quarters. We strongly believe that the demand in the coming quarters is expected to compensate for the ongoing deficit," Manish Sharma, President and CEO, Panasonic India and SA told Businessline.
For Avneet Singh Marwah, CEO SPPL, Exclusive brand licensee of Thomson TVs, the biggest worry is not being able to ensure sales services owing to the lockdown, and due to this, it is planning to offer free services to customers for a month once the lockdown is lifted. Avneet is also laying out roadmaps and plans to achieve targets considering the remaining 10.5 months as this financial year. The company will also make sure that prices of its TVs remain the same despite the pressure on pricing owing to the virus outbreak. The company has also assured its employees that there would be no layoffs for now, said Singh.
Even as it was staggering under the impact of supply disruptions due to the Coronavirus outbreak in Wuhan, sales in the consumer durables industry have also ground to a standstill now due to its outbreak in India and the resultant nationwide lockdown.
In the consumer durables sector, India imports 45-50 per cent completely built units, mainly from China, apart from also importing a bulk of components. “Supply disruptions have already led to scarcity of components or units, pushing up prices. Further, given the lockdown, companies have shut their assembling/ manufacturing units in India. Sales have come to a standstill,” said Hetal Gandhi, Director, CRISIL Research.
Companies are taking measures to stay afloat, not just on the strategy front, but also by keeping spirits high. For example, Xiaomi India has replaced team selfies with ‘Zoomies’ or a screenshot of all the entire team on a zoom call. Carrier Midea ensures a regular routine with even the leadership team getting into a video call first thing in the morning every working day. Thomson TV has availed of a firm’s services to inculcate stress-free exercises, even among the top management.
“It is imperative for companies to monitor the situation closely, analyze the supply chain and optimize the inventories to sustain consumer demands,” said Sharma. At Panasonic India, it is preparing for different scenarios by doing this. It is also looking at strengthening its after sales services, whilst also planning for production in advance for the summer season lest there be issues related to supply.
Godrej Appliances is engaging in an “extensive knowledge building program” across the ecosystem for both sales and services, said Kamal Nandi, Business Head and Executive Vice-President - Godrej Appliances.
“We are in continuous touch with both our trade and service partners as well as our supplier partners so we have a pulse of both front end and back end. We are also focusing on ensuring collections and mapping and monitoring cost heads closely. Our work on product development has not stopped and people are connected digitally on a daily basis so that none of our long term plans get affected,” explained Nandi.
If something has shifted, it is that some of its digital initiatives are being driven even harder, said Nandi, adding that the company is in the middle of some key digital transformation projects. “The work on that end is also very much on so that we are able to respond better when we emerge from this pandemic situation,” he said.
As for AC maker Carrier Midea, it is making concerted efforts in dispelling what it identified as myths around room air conditioning being unsafe amid Coronavirus.
“We are working in tandem with all relevant bodies and authorities to ensure that we maintain a good balance between business continuity and fluid market conditions. We are also maintaining a healthy stock inventory in preparation of consumer demand, which we hope will go up in the coming months,” said Krishan Sachdev, MD, Carrier Midea India, Midea Group-India RegionCarrier Midea. If consumers do not accelerate buying as per the company’s expectations, it may have to start cutting back on the inventory, said Sachdev.
A Voltas spokesperson said that it is equipping its distribution channel with sufficient inventory to cater to any pent-up demand in the future.
Even as such measures are in place, prospects remain bleak.
CRISIL Research expects a sharp fall in volume demand - more than 40 per cent year-on-year - during the first quarter of fiscal 2021. On an overall basis, it expects consumer durables demand to decline by around 14-16 per cent in fiscal 2021, said Gandhi. On the supply side, companies will take some time to streamline the supply chain and manage inventories even after the lockdown is revoked, she added.
The impact on consumer demand in the consumer electronics industry is a function primarily because of the drop in national and global GDP, rather than a direct impact of change in consumer behavior, Sharma pointed out.
However, companies remain hopeful. “Previously, we have observed that about 40 per cent of an AC company’s annual sales can come from a month alone, so there’s still hope that as we start to recover from COVID-19, a robust May or June will push the trajectory up again,” said Sachdev. A Voltas spokesperson also said that it is optimistic there will be sufficient time after the lockdown in May and June for the industry to cater to the market requirement for room ACs.