Consumer electronic companies and finance organisations are tying up to make essential consumer electronics available at easy payment options in rural areas
There are uncountable number of finance organisations, banks and credit card providers giving urban people the liberty to buy their favorite smartphones in easy monthly installment options. The scene, in rural India, however, is a complete paradox. Not only is there a dearth of dealers and retailers agreeing to set shop there, but the needs of the the people living in such areas are also very different from those living in metropolitan cities. While the one in cities may dream of owning bigger smart TVs and inverter compressor powered ACs, many in rural areas are still to get a taste of consumer electronics as basic as a washing machine.
Recently TTK Prestige and Satin Creditcare made news by collaborating to provide induction tops to rural consumers in Tamil Nadu and Karnataka, at easy payment options. While the industry may have seen this as a strategic move by TTK Presitge and Satin Creditcare, what remains underlined is the fact that such alliances create a win-win situation not only for brands, but for consumers as well, especially the unprivileged ones.
K. G. George, SVP (Retail and Alternate Channels) about TTK collaboration with Satin Creditcare said, “At TTK Prestige, we believe that it is every person’s right to have access to healthy cooking tools. We are immensely pleased to partake in this initiative with SCNL to empower rural households with the right cooking solutions.”
Dev Verma, COO, Satin Creditcare Network Limited said, “Making TTK Prestige products easily accessible to a large number of disadvantaged rural households can bring about a significant improvement in the way they cook and consume food.”
Consumer electronics market still untapped in rural India
Indian appliance and consumer electronics (ACE) market, as per India Brand Equity Foundation, was worth Rs 2.05 trillion (US$ 31.48 billion) in 2017. It is expected to increase at nine per cent CAGR to reach Rs 3.15 trillion (US$ 48.37 billion) in 2022. The foundation said that there is a lot of scope for growth from rural markets with consumption expected to grow in these areas as penetration of brands increases.
IBEF’s report read, “Also demand for durables like refrigerators as well as consumer electronic goods are likely to witness growing demand in the coming years in the rural markets as the government plans to invest significantly in rural electrification. The S&P BSE Consumer Durables Index has grown at 16 per cent CAGR between 2010-18. The consumer durables sector in India is expected to grow 8.5 per cent in 2018-19. Consumer durables index under the Index of Industrial Production (IIP) has grown 6.4 per cent year-on-year between April 2018-February 2019.”
Consider this real case scenario. Jeetu Chauhan, who lives in a small village named Nangla Mohadinpur near Khurja, Uttarpradesh wants to save on LPG cost by cooking food on an induction top. Electricity is available almost 16 hours everyday in the village, however, he cannot yet afford to own an induction cook-top. His small pocket size does not allow him to spend Rs 4,000 in one go, but he is sure that he can pay the amount in five or six installments. But no major bank is ready to finance that small a amount, plus his village falls in the negative zone for a lot of banks. The irony, this village is only around 80 to 90 kms away from Noida!
The finance firms can step in here
This is where finance firms like Satin Creditcare can step in. Not only can these help small pocket size consumers buy essential consumer electronics, but they can also help consumer electronics brands reach hinterlands of the country. Interestingly, a lot of these firms have strong networks in rural areas and they specialise in providing small ticket loans to users interested in purchasing essential consumer electronics.
These loans are directly transferred into company’s account and the appliance is handed over to the consumer. The ticket size of these loans is not usually more than Rs 5000. So what all does Rs 5000 buy in terms of consumer electronics? The answer is essential consumer electronics like induction cook-tops, small size TVs or entry level smartphones.
Dev Verma said, “In past, we have disbursed loans products related to water and sanitation, clean energy, solar panels and bicycles. Our endeavour has always been to foster spirit of entrepreneurship by providing timely credit to more than 3.5 million women across India.”
The end result – both the consumer electronics company as well as the consumer wins. Company’s are able to take their brands into lands that are usually untamed by the biggies. Consumers, on the other hand, get to improve their lifestyle. This is also a way that a lot of consumers in the rural areas lay their hands on a consumer appliance for the first time ever.
That’s a start – Big players can jump in the next phase
Yes, while the loan ticket size seems too small, the long term effects are not. These firms can eventually make a list of users who are regular in payments, and offer them the opportunity to buy bigger consumer electronics. For example – People who have paid Rs 5000 loans they used to purchase a induction cook top or a smartphone successfully, can then be offered washing machines or air-coolers that do not cost more than Rs 10,000, off-course divided in equal EMIs. What these firms can also do is increase the tenure of repaying big ticket size loans.
This is also where players like Onida, Whirlpool, Panasonic, Godrej and Intex can jump in. All of these players are offering some washing machines models at prices below Rs 10000. There are also companies that retail single-door refrigerators below the same price band. Prices of a lot of branded 32-inch TVs are also below Rs 10,000 mark in India. Appliances powered by solar lights can also be financed using these small ticket loans. Recently, a Gurgaon based brand that goes by the name of Detel, introduced a 17-inch LED TV at a price of Rs 3,699. This is another superb example of a product that can help rural consumers and brands help each other.
Yogesh Bhatia, founder, Detel told Electronics For You, “A lot of people still do not have access to consumer electronics as basic as TVs in India. The TV penetration rate in states like Bihar is only 30 per cent. The same in states like Rajasthan and MP is 50 is no more than 50 Per cent.”
Time for the consumer electronics brands to start thinking as rural India still remains a market untapped. All the villages in the country, as per BJP Government, have access to electricity. Narendra Modi, Prime Minister, India, had recently tweeted, “I am delighted that every single village of India now has access to electricity.”
