Conventional durables off shopping list

Traditional categories in consumer durables are declining in their popularity, while higher-end products are catching up with middle-class consumers.

The Index of Industrial Production (IIP) for February, released by the Central Statistical Organisation, has shown a huge dip in production of consumer durable goods. The rate has fallen to 1.6 per cent in February 2006-07 from 20 per cent in the corresponding period last year.

Anil Khera, CEO and director, Sansui India, said products such as colour televisions, direct cool refrigerators and window ACs, had few takers now.

While these conventional white goods are witnessing a slowdown, the higher-end products, which are gaining acceptancy, are still to achieve the critical mass.

Khera further said, "Tremendous growth is taking place in some segments such as microwaves, washing machines and LCD TVs, but these segments still contribute a small per cent to the market size."

According to a Ficci survey on consumer durables goods, there is a shift in consumers' preference for high-end, technically advanced and branded products.

"Luxury goods are now being perceived as necessities. Demand is being spurred by increasing consumer awareness, preference for new models, falling prices owing to competition and declining import tariffs," said the report.

The largest category of consumer electronics, the Rs 10,000-crore television industry, is growing annually at 8-12 per cent. Khera said, "Cathode ray tube (CRT) televisions are seeing stagnant growth. There are 11 million CRT televisions being sold a year, so even a 1 per cent growth is a no loss situation."

Flat panel display TVs are witnessing phenomenal growth and occupy 50 per cent of retailers' shelf-space in urban " areas.

A manager at electronic goods retailer Vijay Sales said, "In a year, CRT TVs will be placed in the corner of the shop "� a space which was assigned for state-of-the-art LCD TVs till last year. The LCD market is surging by 150 per cent year-on"� year, it currently constitutes only 1 per cent of the total TV market."

"Music stereos and two-in-one music systems are vanishing from the market because of the entry of newer technologies such as digital device players, MP3 players and mobile phones with radios," added Khera. Production and sales of air-conditioners are growing at a rate of 20 per cent on average. Pradeep Bakshi, GM (sales and marketing), Voltas, said, "Even as the growth rate for window AC market has flattened out at around 10 per cent, the split ACs category is witnessing growth rate of 35 to 50 per cent."