The $1 Trillion Growth Industry

The India consumer electronics’ market size was worth USD 32.5 billion in 2016 and is expected to grow further over the forecast period. India provides a worldwide opportunity for short to medium-term growth in consumer electronics’ spending. Minimal penetration rates, as against other upcoming markets, portray a better prospect to sell to first-time buying households, along with replacement devices to the middle class. Increasing disposable incomes has led to increased consumer demand for electronic products, especially TVs, mobile phones and household products. The surge in demand is huge and casts a positive outlook on the industry as a whole.

A growing customer base and increased penetration of consumer durables have provided enough scope for the growth of the Indian electronics’ sector. Consumer electronics is expected to be the major driver for the Indian electronics industry in the coming financial year. In addition, increased broadband penetration in the country will open up further avenues of growth for the electronics industry. Considering the huge demand for communication and broadband equipment, including mobile handsets and their accessories, this segment is also likely to drive the demand for electronic components and products.

Changing Consumer Behavior

The Indian consumer durables’ industry has witnessed a considerable change in the past couple of years. Changing lifestyles, higher disposable incomes coupled with greater affordability and a surge in advertising has been instrumental in bringing about a sea change in the consumer behaviour pattern. Apart from steady income gains, consumer financing and hire-purchase schemes have become major drivers in the consumer durables’ industry. Most income tiers in the country now have knowledge and means to buy and use smart phones, due to penetration of offline stores in tier 2 and 3 cities of brands like Mi, Vivo etc.

In the case of more expensive consumer goods, such as refrigerators, washing machines, colour televisions and personal computers, retailers are joining forces with banks and finance companies to market their goods more aggressively. Due to changing sociological conditions in the nation such as nuclear families, the rise of women workers in the economy, and the millennial workforce, the consumption of products such as washing machines, laptops and coloured TV have increased phenomenally. Owning electronics has changed from a necessity and ease to a ranking of social class in circles. Hence, consumers opting for the latest models and are willing to shell out the cash to support their growing appetites.  The Indian consumer electronics’ industry therefore, represents immense growth potential for years to come.

Requirements of an Electronic Store

To start electronics’ outlet, the investment required is around Rs 30-35 lakhs in a metro city for a store ranging 400-1,000 sq. feet in size. Out of this initial investment, 12-15 lakhs will go in to the merchandising of the products, and Rs 10 lakhs on lighting and interiors. Brands, in addition, may or may not ask for a franchise fee costing up to 1.5 lakhs, but the operational expenses of the outlet will run up to 2-3 lakhs easily, including lights, AC, employee salaries, security, and other miscellaneous expenses. The return on investment is between 25-35% and the franchisee can break-even within a year.