With consumers increasingly buying products through online stores, consumer durables major Haier Appliances India is set to increase its digital focus. Satish NS, President of the company, spoke to businessline on the outlook for the year, the shift in consumer behavior, the industry impact of the spike in Covid cases in China and expectations from the Budget. Excerpts:
What will be the outlook for Haier Appliances India in 2023?
The company is ready infrastructure-wise with our manufacturing plants in Pune and Noida being operational and we are looking at 40 per cent growth in 2023. We are expecting the demand for air-conditioners to increase with the weather playing up.
There is also a paradigm shift in our strategy. Earlier, we were heavy on advertisements on television and print which was right to build brand awareness and reach the mass. Now, we need to be specific to the target audience — 60 per cent will be digital media and 40 per cent traditional media. Earlier, it was 80 per cent traditional and 20 per cent digital media. The advantage of digital media is that you can target the consumer with the right product. Both rural and urban audiences can be reached with specific products.
How did the company perform in 2022?
The growth was 30 per cent. The year was not good for the industry and the market went down post Diwali. It was due to inflation, the impact on rural economy and the fear factor. Even though the economy is doing well with GDP being in a stable position, there is some fear factor in consumers’ minds and they pulled back their discretionary spending.
With demand taking a hit, will there be production cuts?
We did take a production dip in November, but not now. The season is starting for us and we have to ensure the production is done at full capacity of our product range.
Do you see the consumer durable industry being impacted again due to the rising Covid cases in China?
We see disruption happening which is why we are trying to prepone certain production. Also with the Chinese New Year, we are trying to prepone as many shipments as possible. There will be some disruption on the supply side but we will be able to salvage it. However, if this continues, there will be a shortage in the next quarter.
It could impact sales in the April-June quarter. Most companies have planned aggressively but if the situation is like last summer, then there will be a shortage.
When do you expect the rural demand to come back?
Demand should pick up in March and April. Penetration in rural is low and if topped with good rains and crops, the consumer durables industry will do well among entry-level consumers as well.
What are the trends in the industry?
Consumers are shifting their focus from visiting showrooms and learning about the products to online research. As many as 50 per cent of the consumers do their research online and then purchase it. People are looking for energy-efficient and feature-rich products. The younger generation is well-informed and they know what they want. Consumers do not mind paying extra to buy better quality and serving products.
Consumer finance and credit card trends are growing faster wherein consumers don’t mind paying EMI with better quality products.
What are you expecting from the upcoming Budget?
The PLI scheme should continue which will push ‘Make In India’ ahead. GST for air-conditioners, which is one of the highest, is one area they could probably look into.