THE CONSUMER SPENDING RIDDLE

ONCE GROWING AT A FAST CLIP, THE RURAL MARKET AND THE MASS-MARKET CONSUMER GOODS CATEGORIES HAVE BEEN UNDER STRESS FOR THREE YEARS. WHILE GREEN SHOOTS ARE VISIBLE, WITH RURAL GROWTH RETURNING FOR FMCG AND TWO-WHEELERS, MANUFACTURERS' HOPES ARE RIDING ON A GOOD MONSOON AND GOVERNMENT SPENDING

- ARNAB DUTTA & SURABHI

EVER SINCE THE Covid-19 pandemic introduced the work-from-home routine, Ramesh Sharma (name changed on request), a corporate professional living in Delhi, started spending more on his food and groceries. Sharma, 45, has always been particular about the quality of his diet. But now, he buys more organic groceries and cold-pressed cooking oils and juices even though they are costlier and add to the general inflation in his food and grocery bill. Meanwhile, domestic worker Kusum is scouting for a second-hand refrigerator for her family of five. After multiple repairs, her fridge stopped working this summer. Kusum's husband is a driver, but they don't have ₹10,000 for a new fridge. Her budget: ₹3,000-4,000 for a second-hand one. With rising expenses, buying new appliances remains a dream.

Consumers like Sharma and Kusum are familiar to Kamal Nandi, Business Head & EVP of Godrej Appliances. A veteran of the consumer durables industry who tracks purchasing patterns, Nandi says the inflationary cycle that began in 2021 has throttled demand for mass-market home appliances. "For the past two to three years, the mass-market categories of essential appliances like refrigerators and air coolers have been subdued," he says.

In refrigerators, sales of single-door direct cool models have been contracting 5-10% a year since the pandemic. These models account for 70% of volumes. "Whatever growth was recorded was in the premium segment. Last year (2023), the refrigerator market remained flat as the mass segment de-grew by 6-7% [by volume]. In 2022, the mass segment was flat, but premium grew by 20-22%," Nandi says. Overall growth was 7%, against 10% in 2021.