Whirlpool shifts gears
As the durables company forays into commercial appliances, it looks at differentiated features and durability to woo highly evolved consumer segment
Whirlpool has forayed into commercial appliances with the launch of products manufactured and largely sold in Europe, such as dishwashers, ovens and ice makers, in the metros. The entry into a highly evolved category is part of an aggressive strategy of the third largest consumer durables player in India — behind LG and Samsung — to grow beyond consumer durables.
The consumer durables market is estimated to be $15 billion as of May 2017 and is expected to reach $20.6 billion by 2020. With the number of restaurants, hotels, institutes, hospitals and food service businesses growing, Whirlpool sees a huge opportunity for commercial appliances in India. The business-to-business market size of kitchen equipment in India is ~1,900 crore and the market is growing at the rate of 10-12 per cent annually. In the next 12 to 18 months, the company is eyeing a five per cent market share in the kitchen equipment segment.
Commercial appliances is a world apart from consumer durables, with significant difference in terms of product design and consumer requirements. Whirlpool has therefore set up its commercial appliances venture as a separate division.
Natarajan A, head, new business unit, Whirlpool of India, says: “The consumer durables market is all about design and products that offer aesthetically beautiful user interface. They are a reflection of the lifestyle of the user. Whereas the commercial appliance segment is focused more on usability and durability of equipment. Sturdiness and functionality is the key here.”
While catering to the commercial segment, companies have to be more tuned in to the intended use of a product. Features and specifications have to be built in accordingly, since the product is likely to be used by skilled as well as semi-skilled professionals. A case in point is dishwasher. Commercial equipments do not have to sport a sophisticated and high-tech electronic interface. The emphasis has to be on its usability (ease of use) and durability instead. Whirlpool is thus looking to introduce commercial products that are functionally superior, utilitarian, durable and can help save buyers’ labour cost and time.
Initially, the company has made its commercial products available in larger cities like Chennai, New Delhi, Mumbai, Bengaluru, Kolkata and Pune. It slowly plans to expand to other cities.
Whirlpool’s commercial products are suitable and targeted at medium-size restaurants and small hotels. A major chunk of such establishments and population that supports such commercial establishment resides in the metros. A majority of such restaurants and small hotels are running their operations manually. For example, before its launch the company carried out extensive market research in Chennai which alone has 30,000 restaurants. Only 10 per cent were using commercial appliances.
“It makes sense to tap into clients in metros and make a business case for using commercial equipments to save labour costs and time by standardising routine chores such as washing dishes. Or to reduce losses by opting for an ice cooling machine by reducing the dependence on delivery of ice by local sellers,” says Natarajan.
Whirlpool’s sales team is tapping into a wide network of hotels, institutes, restaurants, bars and hospitals. The team is drawing up the advantages that the use of commercial appliances can lead to in terms of hygiene and turnaround time with return on investment within 10 months.
The company discovered that since the market is dominated by European players and most of them are not based out of India, customers face aftersales issues. Unavailability of spare parts emerged as a key concern among users. Whirlpool recognises that maintaining uptime and ensuring minimal loss of man-hours with 24x7 running of commercial equipments is the key to success in the segment. With its existing nationwide network of service centres it is hopeful of offering commercial establishments a more fulfilling consumer experience. It is currently importing all its commercial appliances from Europe, and has stocked spare parts placement that can serve it for next five years.
Whirlpool says its products are priced competitively. On the one hand, a 24-kg ice cooling machine costs ~90,000. On the other, its heavy-duty dishwasher is priced at ~600,000. A separate sales team is pushing commercial equipments. These are sold based on technical specifications, detailed comparison with rivals accompanied with longer sales window period.
European players dominate the Indian commercial appliances segment. The leading players include Winterhalter (dishwasher), Minto (ice-cooling machines), Hobart and Rational (microwaves). Whirlpool will have to compete with IFB and Electrolux (which offer the full range).
“It makes sense to tap into clients in metros and make a case for using commercial equipments” NATARAJAN A Head, new business unit, Whirlpool of India