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Summer heat sends sale of ACs, refrigerators soaring

Smaller cities, towns see big sales growth, as easy finance also aids demand.

, ET Bureau|
Updated: Jul 17, 2019, 04.09 PM IST
Sales of air-conditioners and refrigerators scaled to a five-year high this summer.
KOLKATA: Overall consumption growth in rural areas might have been in the red, but soaring mercury and easy finance seem to have set the sale of white goods on the boil in these markets this summer. Companies, however, do not see this as a revival of consumer sentiment.

Smaller cities and towns with less than half-a-million population recorded 1.6 times growth in sales of air-conditioners and 1.2 times in refrigerators between March and May as against last year, according to recent data from market research firm GfK India.

Overall AC sales surged 29% and refrigerator sales were up 13% from a year ago during this period.

GfK estimated that these semi-urban and rural markets account for one-fourth of the sale of premium frost-free refrigerators such as those with three doors or more, and side-by-side door models. Sales of these products have grown nearly four times (22%) faster in these markets as against a pan-India growth of 6% during the period under review, it said. In step, these markets have shown higher propensity for pricier split ACs, too.

“Consumers are not shying away from spending on necessities as has been witnessed by the surge in AC and refrigerator sales in smaller towns which are facing liquidity issues,” said Godrej Appliances business head Kamal Nandi. He also pointed to the lower base effect behind the trend.

Nikhil Mathur, managing director – India at GfK, said the sweeping heatwave in most parts of the country has pushed category sales growth, which is driven largely by first-time buyers and up-graders. “Consumption demand in lower-tier cities is picking up and holds immense potential for growth,” he said.

Sales of air-conditioners and refrigerators scaled to a five-year high this summer, despite a slump in discretionary spending. Spending on white goods has been traditionally considered as discretionary spending. Durables sales in 2018 recorded a marginal 2-3% rise over the last year. White goods makers, however, said the latest rural trend does not mean the overall industry is buoyant, since television sales remained flat despite the cricket world cup and washing machine sales failed to pick up in the monsoon. “Consumer sentiments are still low,” Nandi said.

Pradeep Bakshi, managing director at India’s largest AC maker Voltas, said AC and refrigerator sales depend on climate and economic conditions.

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