The prolonged lockdown and health safety concerns arising out of COVID-19 outbreak is going to change the buying behaviour of consumers, says Kamal Nandi, business head and executive vice-president, Godrej Appliances. Edited excerpts:
How has the company changed its business model to adjust to the new normal?
Addressing customers’ safety concerns through the provision of contactless sales and service delivery is one of the key goals we are catering to through various digital initiatives.
This includes amplifying the digital presence of our trade network on various e-commerce platforms and social media platforms, implementation of cashless transaction facilities for consumers, be it online (e-stores) or offline (retail shops), empowering consumers with DIY service videos, and most importantly, a paradigm shift in mindset and processes of doing business for the entire ecosystem.
Essentially, the changed environment calls for a pivoting around digital systems in various aspect of the business.
Internally we have been working with SalesForce to deploy it across the sales front. We are also working with partners for a more efficient product supply planning tool. Microsoft tools such as Teams and Kaizala have been the key levers across the lockdown period for organisational productivity and external engagement.
To take our trade partners on the digital transformation journey, we are using services provided by various entities like FaceBook , Google, Benow, Pine Labs.
What is the demand forecast for different products as people would prefer to be self-reliant amid fear of contamination?
We expect that sales will not pick up immediately, which means that summer sales will undergo a steep drop.
The COVID-19 impact is playing out in different ways. A set of consumers are now more open to try new but relevant products and services, some are now more open to a different way of product purchase and service and new users are emerging as well across different segments.
For example, in the post COVID-19 world, consumers may opt for a larger refrigerator with higher storage capacity with better health and hygiene features, to reduce visits to the market.
Washing machines with anti-germ and hygiene wash technology will be preferred for better protection.
With ‘work from home’ becoming a norm, and given the heat, AC consumption is expected to show some spike.
Likewise, microwave ovens that help consumers in the kitchen is also seeing some demand. There is a rationale for demand across the segments.
However, this demand is getting stifled due to many factors like — uncertainty about economic environment, personal finances, delays in home constructions and renovations, availability and delivery issues across markets with different zones being impacted in different intensity, uncertainty about market opening status of the appliance stores and the overall fear of safety.
We are seeing pockets of demand therefore, more in markets which have less red zones. Markets like Maharashtra and Delhi will be a key concern even in the coming months and these markets contribute to the industry in a big way.
We also anticipate more demand for eco-friendly appliances in the times to come.
We will continue on our journey of bringing newer innovative green technologies for consumers.
This summer is a washout for AC business and the season is almost over. What is the strategy to make up for the losses?
We are in peak summer season and demand for cooling products namely air-conditioners, refrigerators, air coolers and chest freezers are usually high during this period in normal times.
The first quarter contributes almost 36% of the annual revenue for Godrej Appliances. The month of March, which is the last month of the previous financial year, contributes to an additional 12% in which we lost up to 60% of sales.
The loss in April is 100% while there was a 70% drop in sales for the month of May. Lockdown is being lifted in a phased manner with social distancing and other precautions in place.
Hence, we expect that summer sales will undergo a steep drop and we do not foresee a fast recovery in this financial year for the industry as a whole.
What are your contactless initiatives including safe servicing?
We are taking all the necessary precautions against the spread of the COVID-19 pandemic. We have made arrangements to help consumers buy appliances without having to step out of their homes through our video-assisted remote selling initiative.
The initiative is already seeing signs of acceptance and we have been able to sell successfully to consumers across branches and stores with this initiative.
We have also shared store opening guidelines to follow and good practices across the trade network espousing social distancing, maintaining hygiene standards, sanitisation of appliances and work surfaces at retails shops and staff guidelines.
In light of the current scenario, we have ensured that our service technicians have undergone comprehensive training on safety measures and precautions to follow during customer visits. Similarly, guidelines have also been laid down for our store-based advisors and shared with our retailer partners.
Has COVID-19 impact changed your investment plans?
Owing to the pandemic, it has become more crucial to work towards local manufacturing. In line with ‘Make in India,’ we have been working towards upping our indigenous manufacturing capabilities and in the past three years, much investment has been done to ensure that we are able to move close to 100% indigenous manufacturing.
This will also help in averting such operational crisis in future. We stand by these investment commitments. We are not changing our launch plans or slowing down efforts towards them given that it will impact long term revenues.
What are the steps taken towards cost reduction?
Obvious measures like discretionary spend cuts, reducing overhead costs, liquidity management, proper forecasting for spends are being done. We have also rolled out some salary deferments and cuts (latter not applicable at junior management levels).
Fixed cost heads like office infrastructure are also being re-evaluated across the organisation given the work-from- home norms and the new normal way of working. It goes without saying that cost-cutting will be a key deliverable across the board, chipping away at all redundancies.
We have been conducting a holistic assessment of operations across the organisation. Prioritising transformation efforts to optimise investments is also being done.
Owing to the COVID-19 crisis, digital transformation has come to the limelight in a big way. It is considered not only a means for cost savings but, can provide a framework for speed, accelerated efficiency and organizational change – for organisations to remain ahead of the curve.
With the growing reliance on digital channels to meet demand we are driving multiple initiatives. Implementing a more robust digital system is also expected to drive more cost efficiencies in both immediate and long term.
Have you formed any partnerships during these trying times?
We have been registering our exclusive outlets on e-com platforms like Amazon, leveraging the digital wave creating synergy on both sides — with Amazon being able to reach customers in tier 3 and 4 cities.
Since cashless transactions are very important for consumer safety assurance we have tied up with the new age merchant platforms like Benow – which is primarily digital payments (and EMI) platform along with product cataloguing facility and Pine Labs ePOS, which enables customers to make payment via multiple modes like UPI, QR code, cards, net banking, payment wallets while availing EMI options and not having to download any app.
The dealers now can provide cashless payment on home delivery as well.
