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Panasonic turns focus on tier 2 and tier 3 towns, bets big on first time buyers

IBEF:  July 23, 2020

Local arm of Japanese consumer electronics major Panasonic has speeded up the plan to take its products into India's smaller towns, as COVID-led lockdowns have encouraged shoppers in these markets to buy new home appliances and electronics while they spend more time at home.

Bharat Marketing was set up by the company as a separate function internally. The main work of Bharat Marketing is to connect with more trade partners, use technology to gather real time information on its inventory in smaller markets and also customize products to suit needs of shoppers in the country's tier 2, 3 cities and rural pockets.

“What we are doing we are now mapping India separately—which is the bigger cities and urban markets. All the universe of trade channels, the display of products and partners whom we deal with—will be separate for bigger towns and separate for smaller towns. So we have formed a function in our organization called Bharat Marketing with a focus group to create and execute a strategy towards smaller towns, rural markets," Mr Manish Sharma, president and CEO, Panasonic India and South Asia said.

There was increase in first time buyers in small towns and semi-urban areas, once the COVID lockdown restrictions were eased. This, said Mr Sharma, has prompted the company to accelerate its plans.

"Ideally this was planned for next financial year i.e. April 2021. But we really understood that it was important for us to set up this focus group as immediately as possible because the opportunity is exponentially shaping up," he said.

Panasonic has portfolio in range of home appliances such as direct cool refrigerators, one tonne air conditioners, semi-automatic top load washing machines, and small screen television sets that has already reached India's smaller markets.

This increase is on the back of COVID-19 and the following restrictions on movement, which has left millions spending more time at home. It has pushed consumers to upgrade appliances and go for bigger refrigerators and television sets; shoppers also bought laptops and mobile phones as they work and study from home. In order to ease the household chores, first time buyers have also shown up at stores asking for washing machines and refrigerators.

Furthermore, with consumers turning frugal and cutting back on discretionary spends in a post-COVID world, Mr Sharma reckons they are spending on items they urgently require.

Although, most retailers mainly apparel and footwear, are still struggling with sales severely affected by COVID, appliance and consumer electronics retailers have seen a surprising uptick in demand.

Sales in the month of June across retailers of electronics and appliances was 70-75 per cent pre-COVID levels.

Mr Sharma says the uptick in home appliances and consumer electronics is likely to sustain, especially as penetration of white goods in India is still low. For instance, refrigerator penetration in India is at 34.1 per cent, while that of washing machines is 14.3 per cent, for air conditioners it is much lower 4.8 per cent. While, LED TVs have a much higher penetration rate at 61.9 per cent.

"This is a tectonic shift in the way we live, so in some sense it isn't just a pent up demand situation we are looking at, this is a situation which is going to continue," he said.

The company also plans to accelerate customizing products for such markets. The group will simultaneously focus on identifying products that need to be customized for those markets, Mr Sharma said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.