The Goan home appliances market is estimated to be in the region of Rs 300 crore and is growing by 15 - 20 per cent year-on-year. In terms of growth markets in India, Goa ranks third behind Maharashtra and Gujarat. With attractive loan financing options on offer, the task of purchasing a home appliance has now become a lot easier. With rising incomes and changing lifestyles, home appliances have become more of a necessity than a luxury, thereby fueling demand. Home appliance dealers are now looking to close the year with a double digit percentage rise in turnover, writes MICHAEL FISHER
Goa consumers are creating new trends in the home appliances market which is estimated to be Rs 300 crore and is growing by 15 per cent to 20 per cent year-on-year. The pattern of spending has become more liberal than Goans known for they conservativeness. Today, a home would have in each room an LCD television, a minimum of two fridges and a freezer, which is the trend. The days of one TV or one refrigerator for one home are of yesteryears.
With each customer spending an average of Rs 50,000 to Rs 1 lakh in the home theater, LCDs and LEDs segment, retailers known as dealers have mushroomed to 150 and are still counting from the 50 odd stores 10 years ago. Ideally located shop space measuring 15sqm x 15sqm is now rejected. Home appliance traders want much, much bigger retail space to showoff their wares.
Over three lakhs of the Goan population is in the age group of 10 to 25 years and this is the purchasing power, says Samsung dealer and Prime Electronics proprietor Mr Felipe Alvares. About eight consumer durable brands are looking at revenues growing by 20 per cent in 2013, riding on robust performance by its home appliances division.
Maharashtra and Gujarat are well-known growth markets in India, but for all the talk about them being big spenders and the fastest growing consumer economies, don’t lose sight of other promising geographies. If anyone would like to know which state is number three, then finance companies will tell it is Goa. This is taking into account its population.
“In this year, we are expecting to grow our business by 20 per cent. Our growth driver will be our strong portfolio of home appliances,” Samsung Chicalim dealer Mr Alvares informs. He has a retail showroom in Panaji as well.
The three fastest selling appliances this summer are refrigerators, air-conditioners and flat screen LCDs and LEDs and are foreseen to contribute double digit percentage this year compared with 2012 summer. LCD and LED flat panel televisions are making a big impression with consumers, as prices keep coming down while quality and screen options increases. The other essential products are micro ovens, washing machines, water coolers and filters, stoves among others.
Dealers are, however, expecting a drop in big value items such as the 46 inch panel screens and double door king size fridges, said Margao’s biggest dealer, Mr Gautam Talaulikar. This is probably due to the stoppage of mining activities in the state. TVs will soon be extinct products as they are being replaced by LCDs and LEDs. Electric induction cookers which were fast sellers are now stagnating.
Loan financing has made it fast and easier for purchasing latest household products. Full cash payment and loan financing are running neck and neck, says Bajaj Finserv Lending manager – sales, Mr Sandeep Patil. In less than 12 months, the installments are paid in loan financing.
“We have two seasons in a year. From April to June demand is for financing ACs, washing machines and refrigerators. And from October to December, the festive season demand is for flat panel screens and home theatres. This is the time when brand manufacturers offer exciting schemes, which include I-pads worth Rs 25,000 and a Zita Volkswagen in the All India contest,” he adds.
Bajaj Finserv gives an EMI card with a value of Rs 30,000 - one lakh to good profile customers. The customer need not start the paper work, which is already with the Bajaj Finserv. The EMI card is only for purchasing home appliances at Bajaj registered dealers, says Mr Patil.
Bajaj also offers life insurance to its customers, whose products are first insured. The policy premium is paid by Bajaj Finance for Bajaj customers. It comes with zero per cent interest. In case of defaulters, a legal notice under section 138 from the court is served to get the money back from the defaulting customers. Then, under section 9, the notice is served to get back the product.
For instance, some 62 per cent of households earning less than Rs 30,000 a month owned between two and four televisions, according to Bajaj FinServ survey. That compares to 68 per cent of those earning Rs 1 lakh or more a month.
Marketing pundits point to spending patterns, saying consumption is a better indicator of living standards than income. Using that metric, the state’s poor are living better than they have been in decades, enjoying many of the amenities that the middle class have. This is attributed to the financing companies and personal loans division of banks.
Manufacturers are embracing new consumer behaviours, says Mr Sudesh Shetye, proprietor of Shetye Sales Syndicate, with showrooms in Panaji and Duler. “People are not as badly off as one would think,” he points out.
The changing lifestyles of the new generation who are exposed to the materialistic world coupled with spending power from NRIs, expatriates and new owners with a second home in Goa are creating a huge demand-supply gap for home appliances.
For quick delivery, most dealers have tied up directly with the manufacturers, cutting off the dealer network. The most affordable product brands are Haier and Videocon. Mr Sheyte also points to other appliances and electronics that are now commonplace in the homes of those with the lowest incomes, including microwaves and air-conditioning.
Air-conditioning in Goa has become more of a necessity rather than a style. This is not what you think of when you think of poor. The fact that people can afford these things suggests improvement in living standards over time, Mr Shetye’s research explains.
He remembers in 1996-97 when LG and Samsung brands entered Goa, there were a few showrooms. The payment mode was 90 per cent cash down payment without a fuss, and about 10 per cent through financing schemes from banks. Over the years, Goans shrugged off shame of taking loans, and the loan bubble started growing by banks and financing companies. A huge under cutting is going on, with every brand trying to grab a higher share.
There is a lack of skilled technicians to install the products. What dealers have are just handymen whose knowledge of functioning of the products is very little, rues Mr Shetye. During a breakdown, the dealers don’t have skilled people to send. There is a shortage of loaders, drivers and helpers, which is hindering the growth of the home appliance market in Goa.
Sharp, which went in for a revamp, has entered the Goan home appliance market. CEO and managing director, Mr Sunil Sinha, said that Sharp’s products are fitted with AC to DC inverters which will cut down energy consumption by 60 per cent. Sharp fridges have been built with a hybrid cooling unit to keep vegetables fresh, and it will not become dry.
Goan home appliance dealers are looking to close 2013 with a double digit percentage rise in its turnover. They are also planning to invest between Rs 50 lakh to Rs 1 crore on various segments. Per se, this growth is being stunted due to lack of qualified manpower technicians.
It is not too far when the traditional television will be challenged by the rise of internet video sites, the person owning a flat-screen TV ... or two, would really look poor.