Consumer Durable Goods Industry

Consumer Durable Goods Industry

Highly durable goods such as refrigerators, cars, or mobile phones usually continue to be useful for three or more years of use, and hence durable goods are typically characterized by long periods between successive purchases. These durable goods are referred to as Consumer Durables and examples of consumer durable goods include cars, household goods (home appliances, consumer electronics, furniture, etc.), sports equipment, and toys. As the second purchase for durable goods lags time difference, generally they are sold on a higher margin.

The Consumer Durables industry consists of durable goods and appliances for domestic use such as televisions, refrigerators, air conditioners and washing machines. Instruments such as cellphones and kitchen appliances like microwave ovens are also included in this category. The sector has been witnessing significant growth in recent years, helped by several drivers such as the emerging retail boom, real estate and housing demand, greater disposable income and an overall increase in the level of affluence of a significant section of the population. The industry is represented by major international and local players such as BPL, Videocon, Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, etc.

The consumer durables industry can be broadly classified into two segments: Consumer Electronics and Consumer Appliances. Consumer Appliances can be further categorized into Brown Goods and White Goods. The key product lines under each segment are as follows.

White Goods

Kitchen Appliances





Refrigerators





Washing Machines





Air-conditioners





Speakers and Audio Equipment



Kitchen Appliances / Brown Goods Consumer Electronics

Mixers





Grinders





Microwave Ovens





Iron





Electric Fans





Cooking Range





Chimneys



Consumer Electronics

Mobile Phones





Televisions





MP3 Players





DVD Players





VCD Players





iPad



Performance:

In the past 10 years, the global market has witnessed a surge in demand as economies such as Brazil, Mexico, India and China have opened up and begun rapid development. The consumer durables industry has always exhibited impressive growth despite strong competition and constant price cutting. There exists a very strong correlation between demand for durables and income. Leading players in this sector include Sony Corporation, Toshiba Corporation, Whirlpool Corporation and Panasonic Corporation.

Developing countries such as India and China have largely been shielded from the backlash of the recession, as consumers continued to buy basic appliances. In fact, China has been ranked the second-biggest market in the world for consumer electronics. Despite the recession, their strong domestic economy and growing high-income population have buoyed demand leading to aggressive market growth.

Challenges in Consumer Durable Industry:

The challenges faced by Consumer Durable Industry are listed below:

Local industry dynamics





Supply-related issues pertaining to distribution and infrastructure





Demand issues due to competition from imported goods





Lack of well-developed distribution networks





Penetrating fastest growing rural areas





Electricity availability





 Road infrastructure





Systematic production





Labor availability





Increasing choice from both domestically produced and imported goods





Superior technology





Steady flow of capital





Well-acknowledged brands





Extensive distribution network





Insight in local market conditions



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