Retail electronics firms scale up inventory, anticipating demand surge soon

This buildup is owing to the fact that demand peaked before Diwali and then drastically declined afterwards due to high inflation and thus retailers cut down inventory levels

Consumer electronics manufacturers have started to increase their stock levels of both components and finished goods in anticipation of a recovery in demand in the upcoming quarter and to protect their operations from any potential supply chain disruption in China, as it has been recently due to an increase in Covid cases, Economic Times reported.

Executives from a number of companies told ET that this buildup is owing to the fact that demand peaked before Diwali and then drastically declined afterwards due to high inflation and retailers' reductions in inventory levels.

Deepak Bansal, vice president at LG India, the country’s largest appliance manufacturer said, "We are running full production capacity for most products such as AC and refrigerator. The stock of finished products and components are being built up since demand has picked up from this month itself with some products like AC already growing sales at double-digit year-on-year."

Senior executives from Voltas, an appliance manufacturer owned by Tata, said to ET that the company is increasing its inventory levels to reduce risk during the upcoming summer season due to a potential supply chain disruption caused by Covid and lessons learned from the past.

Due to a significant reduction in demand after Diwali, which persisted until the Republic Day sales in the week before January 26, the industry had to reduce production by 40–50 per cent. But, since the end of the pandemic, demand for mass-produced goods has improved as well, which has given the industry a reason to be optimistic about the future.

The demand for consumer products, notably in rural areas, is expected to increase starting in April, according to manufacturers of consumer goods, who also expect summer temperatures to be high and inflation to moderate. The business head of Godrej Appliances Kamal Nandi claimed that this month alone saw a rise in demand for mass-produced goods.