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Teji Mandi: Channel check helps to understand the latest trends in durable space

07:53 PM Jan 15, 2021 | Teji Mandi

With life returning to normalcy, the consumer durables segment has seen a positive momentum. Good festival demand has lifted sales during the December quarter.

A channel check from Motilal Oswal stated the trends in the consumer durables segment. Their report suggests that footfalls continue to remain weak for offline retail merchants. But, E-commerce channels have continued to gain traction in the home appliance segment. The extended work from home has also contributed to the demand for home appliances.

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Teji Mandi: Three things investors should know on January 15, 2021

The latest trends :

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In January, commodity prices have increased. This has prompted various consumer durables and electrical companies to start price hikes. As per the report, various commodity prices are up 15-30% since last year. For instance, copper is up 28%, steel over 30%, and aluminum more than 14%.

As companies announced the price hike, dealers and distributors stocked up on materials in December. This helped leading brands to end December on a strong note. Due to this, most channel partners are indicating high inventory levels. Increased stocking up at lower prices will delay the benefit of price hike till the next quarter.

Covid trends moderating :

The report indicated that products that were high in demand during lockdown are witnessing moderate demand.

For example, dishwashers and dryers were in high demand since the entry of maids in households reduced. Washing machines and microwaves were also in healthy demand. Now, with a gradual easing of restrictions, the demand for dishwashers is now moderate.

The television segment is seeing a unique trend. Sales have increased. Consumers are even updating to larger screens and better sound systems. The industry expects this trend to continue as theatres are operating at 50% capacity. Growing viewership of over-the-top (OTT) platforms has also increased the demand for television.

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Online vs Offline :

The Consumer durables segment has been a weak terrain for E-commerce. But, since Covid-19, this channel has been able to achieve high penetration in the market.

Products in personal grooming, juicers, mixers and coffee machines are getting traction online. For appliances like fans, ACs, refrigerators, and washing machines, consumers prefer offline channels.

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