Bengaluru: According to the latest report released by homegrown firm RedSeer Consulting ‘Opportunity in digitizing the consumer durables value chain’, India’s enormous durables industry is set to become a $34 Billion dollar industry by 2025, with Tier 2+ cities contributing 68% (~$23 billion) of the incremental sales.
The consumer durable industry is mostly driven by general trade, accounting for 69% of the current market share by channel. Despite the growth in online channels, general trade will remain the biggest channel within durables- and will continue to remain so by 2025 as well. It is now becoming common to see retails shops having QR codes and card machines at the point of sale. Retailers are also open to expanding their online presence for driving sales. As these traders are getting aware of the benefits of digitization, they are getting in line to embrace it, indicating a large opportunity for front end and back-end digitization.
The report also observes that consumers purchase durables through both offline and online channels which has its own share of obstacles. Key challenges in online purchasing of durables is a lack of support and touch/feel of the physical product, Offline purchasing while working great on assistance and physically reviewing of the products, is hampered by a lack of selection and exorbitant pricing.
The report suggests that the Omnichannel model can debottleneck this market, especially with the support of video commerce + D2C play. Consumers are actively embracing video in their shopping experience across categories, and are eager to do the same in durables. As per the report, ~46% of consumers watch videos before buying and 49% Of consumers are willing to try video commerce offerings for electronics. Review videos from other customers who have purchased the product and Tech Reviews on YouTube are two of the most popular options.
It is expected that ‘digital-enabled general trade’ in the durables category will grow rapidly to account for >$3.8 Bn in procurement in this category by 2025. General trade retailers in durables are gradually embracing digitization in operations. This digitization means increased margins, greater competitiveness against online and organized B&M, higher online sales, and easier access to working capital for retailers.
The new age omnichannel models, D2C and Video commerce in durables will leverage their unique strengths to bridge the gap between traditional e-commerce and offline channels. Digital-enabled general trade, along with Increasing online penetration and expansion in the Tier 2+ cities will put the industry on a fast track to growth.
