These are interesting times. Many mobile phone brands have forayed into the television space; most are already in the wearables space; and some storied brands have gone into seemingly unrelated sectors. Earlier this week, a brand which has become quite popular in India thanks to its reasonably priced televisions, entered the home appliances space in the country.
Thomson, a brand which is more than 120 years old, forayed into the space with the launch of their range of semi-automatic washing machines. However, it is not as if Thomson is new to home appliances—in fact, it launched its first washing machines in 1963. The company has announced that it will pump in ₹1,000 crore into India over the next five years to strengthen its overall presence in the consumer electronics sector.
Like its televisions, Thomson’s washing machines will be made entirely in India. The brand’s India licensee and manufacturing partner, Super Plastronics Pvt. Ltd. (SPPL), has invested in a new plant in Uttar Pradesh, which will be operational soon.
The brand, which is owned by French multinational firm Technicolor SA, claims to have captured more than 5% of the smart televisions market in India after entering the segment in 2018. In fact, SPPL CEO Avneet Singh Marwah said that the brand has witnessed 300% growth in the past one month and business seems to be getting back on track. The company has a pipeline of new launches in the coming months and will broaden its portfolio across the home appliances category every year.
In an email interaction with Fortune India, Marwah and Sebastien Crombez, sales and marketing manager, trademark licensing at Technicolor, talk about the Indian market, Make in India, changes in the manufacturing process because of the Covid-19 pandemic, and lessons from the lockdown. Edited excerpts:
The economy is going through a difficult time. Why did you venture into a new category now?
Marwah: The reason we entered the washing machines was simple: We noticed that during the lockdown, the washing machine was one of the most-used appliances… Consumers are spending more time at home, and with the absence of domestic helps, they want to be self-reliant. This has created a demand for washing machines… there is a spike to upgrade to new machines, as well as a spike in first-time buyers.
For the past one year, we had been planning to expand to the appliances portfolio since Thomson is a top home appliance brand in Europe with a great legacy like what they have in televisions.
All our washing machines are under the Make in India initiative; the value addition is more than 70%. Thomson will be investing more than ₹1,000 crore in next five years for appliances under the Make in India initiative.
What would constitute a chunk of this investment of ₹1,000 crore?
Marwah: The chunk of the investment would be on land, machinery, tooling. And of course, we will be spending hugely on R&D, so that we can do maximum value addition. Apart from this, we are creating a local ecosystem, with complete backward integration. Our intent is to produce all the models of home appliances in India, same as that for our smart TVs.
How big is the Indian market for Thomson in the global scheme of things?
Crombez: In term of revenues, the Indian market is Thomson’s fastest-growing market, even though it still represents a small share of our total turnover. Our biggest market remains Europe which accounts for more than 70% of our revenue, with around 40% in France.
How do you plan to use Thomson’s brand value in terms of pushing sales? Will you stay only in the digital space?
Marwah: Apart from televisions, Thomson has high brand equity in home appliances. This will give us an edge. As we are exclusive to Flipkart while expanding our portfolio, we will get the maximum eyeballs on this platform. And our customers will always get amazing deals. Thomson always offers premium technology at affordable prices.
Our strategy revolves around digital as we focus on customers who have high intent to buy that product. We are not going offline because of the pandemic as customers are restricting themselves to their homes. We are trying out a new 5D technology catalogue so that the customer can get the look and feel of the product digitally.
Crombez: While people have a positive image of this brand, it can also be a huge challenge. Indeed, we cannot disappoint our customers and always need to meet their high expectations. Thomson offers technology that is useful, at attractive prices. As an example, Thomson managed to close a deal with Google to deliver official Android TV to its customers ahead of many other reputed brands. Also, the products are made in India and designed only for Indians.
What changes did you make in the manufacturing process because of the pandemic?
Marwah: Keeping the safety of our employees in mind, we have made it mandatory for everyone to maintain social distancing, mandatory temperature checks, and use of masks and gloves. At the Thomson facility, we have bought a human sanitising machine that has been installed at the entry gates so that anyone who is visiting or works here is sprayed before entering the facility. We have also made sure that if any employee feels ill or exhibits symptoms, that person stays at home. We have a floor manager to do the necessary temperature checks. And we sanitise our premises twice a day.
Besides all our products being 100% made in India, we are looking at sustainable manufacturing. Currently the value addition to television for Make in India is 10%-15%. In the coming years with the kind of narrative that has been set, it can go up to 60%.
What are the lessons from the lockdown?
Marwah: With the halt in production of movies and TV shows, we saw a spike in OTT content viewership. There was a huge jump in first-time viewership, especially in the age group of 35 years and above. This led to rising demand for smart TVs, and subsequently a spike in first-time online buyers in the country.
While there were a lot of discussions around OTT content on social media, the biggest disruption happened when a star-studded movie was released on these platforms. This is a new beginning as major movies have started releasing on OTT and people are realising that instead of spending money on a visit to the theatre, they can enjoy the same entertainment in the comfort of their homes. As a result, the demand for smart TVs has increased, as consumers are shifting from smaller screens to bigger screens. The trend in the market has shifted towards affordable brands, as customers want technology at affordable prices.