Smart Appliances Industry will Regain its Growth Trajectory from 2021

Industry Outlook Team

In an interaction with The Industry Outlook, Manu Tiwari, Industry Principal, Industrial Practice, Frost & Sullivan explains how the Smart Appliances market is evolving and how new technologies are being implemented in the sector.

How do you see the current Smart Appliances market in India? What are the major factors driving its growth?

According to Frost & Sullivan's analysis, the smart home appliances market in India is set to generate revenues of around ₹245 billion by FY25 from ₹92 billion in FY20 growing at a compound annual growth rate (CAGR) of 21.6%. Smart televisions, smart air conditioners, and smart refrigerators are propelling the smart appliances market in India.

Major factors driving the growth are:
• Increased dependence on mobile applications

• Acceptance of new technologies by a growing young population

• Rising awareness about energy efficiency and eco-friendly solutions

• Easy availability of consumer financing benefitting the lower and middle-class population

• Dual-income family groups with high disposable incomes.

What are the major challenges thrown up by the pandemic and how are manufacturers addressing those challenges?

Major challenges in this sector include:

• A downtrend in consumption demand for smart appliances - A sharp fall in volume demand of more than 40% YoY is expected in electronic products during the first quarter of FY21, according to industry experts. Smart appliances are still considered a luxury by the middle-class population and they will delay the purchase of smart products.

• Plant Closures - Due to the temporary shutdown of factories, India has fallen back in smart appliances production in 2020.

• Supply chain disruption - There is a shortage of components imported from China and ASEAN. Media reports indicate that the price of electronic goods is expected to shoot up to 5-10% due to supply chain disruptions.

• Clearance of old stock - Disruption in supply has created a void in the industry; manufactured goods are piled up which is a key challenge due to less demand.

Manufacturers are addressing those challenges by putting on hold new product launches and expansion of new projects until the industry is back on the growth path.

What role is IoT playing in the evolution of Smart Appliances market? How can it bring the much sought after automation?

IoT (Internet of Things) has a penetration of around 5-6% in home appliances (according to industry estimates), which helps in monitoring, controlling, optimizing appliances, and ensuring comfort in usage, energy efficiency, and security.

With the ubiquitous use of smartphones in everyday life, smart appliances such as smart television, smart air conditioner, smart refrigerator, and others are becoming more prevalent. Participants are trying to capitalize on the increasing demand for integration of functionality for IoT-enabled devices in the market.

Automation technologies are increasingly impacting homes. The increase in the adoption of smart services will provide growth opportunities for the home automation market.

Smart home appliances need to be integrated to function more effectively. Technological advancement and the importance of such integration are expected to drive demand for smart home appliances.

With the increasing popularity of voice assistants, how do you see their integration with smart appliances?

Voice-enabled devices are the future of connected application which goes hand-in-hand with smart appliances. Currently, this feature is available only in a few appliances such as smart television, smart air-conditioner, etc.

Participants should enable digital transformation by having a partnership with suppliers of voice-enabled devices (Alexa, Google Home) to provide a bundled product.

How can security of data and privacy be ensured in a scenario where all smart appliances are connected to each other and operate on knowledge sharing basis?

Data privacy and security should be provided with help of cybersecurity, to mitigate threats such as data breach, identity theft, and device hijacking.

Standards and regulations play a vital role in the adoption of connected home appliances. Parameters, such as electromagnetic capability, wireless interoperability, privacy, and information security should be well established.

On the upcoming data protection law, the Srikrishna committee report recommends that companies processing large amounts of data should be registered with a data protection authority. This could increase the compliance costs, as compliance would require regular data audits for accountability.

With the Supreme Court ruling favoring the right to privacy as a fundamental right, the government could be stringent in its compliance rules soon.

Smart appliance companies can go for secured and encrypted communication between devices which cannot be read or understood by other mediums. This may require them to partner with third parties specializing in cybersecurity and safe communication.

Which new technologies are being leveraged by businesses in order to manage and monitor operations effectively?

Home automation applications predominantly evolve due to the convergence of various technologies. The key enabling technologies include smart sensors, voice-activated technology, smart home hubs, smart lighting, robots, wireless charging, and wireless communication.

Which technologies do you think have massive potential for this sector but are yet to be implemented in the industry?

Gesture control and touch-less sensing are two key features that are yet gain prominence in the smart appliances sector. Advanced robotics, usage of micro/nano sensors, integration of smart home appliances, increased voice control integration, remote assistance of service, and AI will also be explored to a greater extent.

Where do you see this industry post-pandemic from a technology and business transformation standpoint?

According to our analysis, the industry is expected to regain its growth trajectory from 2021. The emphasis on smart appliances will be on the rise, primarily due to growing technological advancements and associated benefits of using smart appliances.

OEMs are likely to invest to have in-house capabilities to develop, design, and manufacture the product. Many companies may invest heavily in upgrading their capabilities, which will enable them to function efficiently in the future, even in the case of downturns.

The commercial and industrial sectors will opt for more touch-less devices and therefore the need for connected self-controlling devices may see an uptick in demand.