Seasonal Appliances Demand Dented This Summer

 

In view of the unprecedented healthcare crisis created by the COVID-19 pandemic, businesses across the world are bracing for the economic fallout that is unfolding. India had already been experiencing a slowdown in the second half of the FY 2019-20 but we were expecting the upcoming summer season to bring some cheer to a few markets notably those of air coolers, fans and air-conditioners. The lockdown has created uncertainty on how the season is going to unfold.

Market Pulse while keeping a close eye on the markets, decided to gauge the retailers' sentiments during the current lockdown situation. Here, we are presenting some interesting findings from a dipstick survey carried out in the first week of April.

Demand Post-Lockdown

Approx. 25% of the retailers opined that demand willpick up albeit slowlyif the lockdown is lifted after the 21-day period on April 15. They were confident that weather conditions will be favourable for fans and air coolers. However, they viewed transportation bottlenecks and supply position as potential impediments.

Retailers in South zone were most optimistic(30%) on demand getting back on track, closely followed by North & East. However, only 10% of the retailers in West were optimistic with respect to demand.

~55% of the retailers expected demand to be impacted due to multiple factors, as listed below:

  • Loss of peak months (March and April) to the lockdown
  • Financial squeeze on customers
  • Lower customer footfall in marketplaces due to fear of spread of Coronavirus
  • Fear of Coronavirus spreading due to lower temperatures induced by air coolers

Likely Impact on Electric Fans vs. Air Coolers

Around 20% of the retailers were of the opinion that demand for fans would be back on track after the lockdown is lifted primarily because of 2 reasons:

  • Longer selling season for fans
  • Lower selling price as compared to Air Coolers

Sales of fans will be dented in the immediate term according to a majority of the retailers. New product launches particularly in the upper price bands and the energy saving BLDC fans are likely to have marginal impact on the market in this season.

Air coolers had witnessed good offtakes in the first 3 weeks of March. Now, very few retailers from Hyderabad — one of the biggest markets for Air Coolers, expect the market for Air Coolers to see any demand pick-up. Sales of air coolers is likely to be impacted to the extent of 30%+. However, the established brands are likely to gain market share and thereby not slide as much as others.

Only a few retailers stated that, looking at the current scenario, brands that have anti-bacterial/ anti-germ products in their portfolio, might benefit.

Lockdown impact on retailers' financial position

Retailers will push to liquidate the existing stock of air coolers and fans as soon as the lockdown is lifted. Almost 80% of the retailers claimed that their financial position has been stressedby the current lockdown. They added that there was additional pressure to pay staff salaries and rent.

Retailers also mentioned that pending payments to distributors / companies for stock already purchased would put them under immense pressure.

Only 26% of retailers stated that they could invest further in purchasing fresh stocks but only after analyzing the market trends and demand.

Retailers have not received any indication from their bank or finance company till date regarding financing for working capital or any EMI moratorium on the current loans availed by them.


This dipstick survey was carried out telephonically amongst approx. 100 Category-A retailers out across 18 Tier-1 and Tier-2 towns in India spread across all zones. All the retailers stocked either air coolers or fans while a majority of them stocked both the products. In view of the summer season, the survey focused on Fans and Air Coolers and aimed at obtaining the retailers' opinion on likely impact of the current scenario on sales.

 

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