BSH Hausgeräte GmbH is the largest manufacturer of home appliances in Europe and is ranked number 3 in the sector worldwide. Today, BSH operates in about 42 factories in 13 countries in Europe, the USA, Latin America and Asia. Together with a global network of sales and customer service firms, the BSH family is today made up of about 70 companies in 46 countries, with a total workforce of nearly 61,000 people. It had a turnover of 13.4 billion Euros in 2018.
With a portfolio of 13 brands, BSH covers a wide range of consumer needs. Alongside the Global Brands Bosch and Siemens as well as Gaggenau and Neff, the portfolio comprises the Local brands, namely Thermador, Balay, Coldex, Constructa, Pitsos, Profilo. In an exclusive conversation with Neeraj Bahl, Managing Director And CEO, BSH Home appliances sheds light on the growth strategy of the company.
How do you see the growth scenario of home appliances market in India. According to you, what are the factors propelling growth in this segment? Kindly highlight few numbers to quantify the same.
The Indian home appliances market has a huge growth potential. Some of the key growth drivers include rising disposable income, easy access to credit, coupled with changing lifestyles. Apart from cities, rural markets also offer a vast opportunity especially in segments like refrigerators, small appliances, etc on the back of Government’s progressive policies and initiatives to enhance rural electrification. India’s revenue in the household appliances segment amounts to about US$1,678 million in 2019, and is expected to show an annual growth rate (CAGR 2019-2023) of 13.9 per cent, resulting in a market volume of US$2,821 million by 2023. As the number of participants in the kitchen appliances industry increases, so does the possibility of market expansion
Tell us about BSH Home Appliances. How is your experience working in Indian market so far?
BSH stepped into the Indian market in the year 2010. Back then, our major focus was on built-in appliances and washing machines with the premium brand – Siemens. We started off by importing Siemens products to the country. However, after closely studying the Indian market, we launched Bosch appliances across categories and targeted the mass premium market. With Bosch, we entered the Washing machines, Refrigerators and Dishwashers categories as well as developed India-specific appliances. 2014 represented our first milestone in India with the launch of a washing machine in the 7 kg category, especially because these were manufactured in the state-of-the-art Indian Manufacturing Plant at Chennai. On April 2018, the plant completed the production of 5 Lakhs washing machines.
Recently, we have reached a milestone on selling 1 million washing machines to our customers which is a breakthrough for us.
At BSH, the company has been on its journey of transformation. In 2018, BSH household appliances became the first triple brand player in India, catering to varied segments with its unique three brands Bosch, Siemens and Gaggenau. We further fortified our presence by launching small appliances under the Bosch brand. As we move ahead, we aim to keep this momentum and introduce products and solutions while constantly localising and innovating to cater to an evolving social milieu.
What kind of distribution you are planning for online as well as offline channels? Any plans to adopt franchise model to scale up the distribution? Also shed light on your Omnichannel strategy?
BSH optimizes multiple channels of distribution including sales through direct dealers, e-commerce platforms and franchise owned brand stores for both Bosch and Siemens brand. Franchising is an important part of our strategy to penetrate the Tier II and Tier III cities. We have several thousands of direct dealers, 61 exclusive Bosch & 21 exclusive Siemens stores run by franchise owners spread across the top 20 to 25 cities across the country. As we continue to expand our footprint, we are looking at growing our franchise brand stores base to about 100 by the end of 2020. We observe heavy traffic of consumers in the digital platform, making ecommerce a thriving platform, especially for the household appliances industry. Lastly, for the franchise models, we believe that 100% involvement of the franchisee is absolutely necessary for the business to be successful. Our retention strategies for franchisees include exclusive models for brand stores, attractive discount structure, focus on sell out, exclusive finance schemes as well as neighbourhood marketing schemes to drive foot-falls, cook-off events for influencers and prospective customers
Who do you see as your competition in this market.
When it comes to competition, I think instead of competing, we focus more on delivering high quality products to our customers based on consumer insights. With consumer centricity at the heart of our business, our top priorities include product quality, ease of use, environment friendly, and safety of our customers. Top class customer service is the back bone of any product and we truly believe in serving this purpose on a continuous basis.
Kindly shed light on your price points, brand USP and the largest category. Going forward, what are the plans to expand the category range?
Against a vibrant consumer durables industry, BSH Home Appliance is one of the fastest growing players in India. Within a short span of time, BSH under its two distinct brands has grown exponentially and has executed a triple brand strategy with luxury brand – Gaggenau added to its portfolio.We are market leaders in the built-in category with Siemens brand and have a healthy double digit sharefor Bosch’s washing machine front loading. Even in emerging segment like dishwasher, BSH is leading the category creation and growth in India. With the company’s recent foray in small appliances with the launch of Mixer grinders, the products have received a good response. Backed by best in class German Engineering and innovations for the Indian markets, BSH will continue developing products to cater to Indian homes. Our brand’s USP entails German technology, robust products through understanding of Indian consumer requirements and customer service. We are working towards addressing more categories in the near future. In our premium and mass premium segment, we have competitive price points across our products.
What are plans to expand the brand via online channel?
Over the years, with majority of shoppers going the digital way, ecommerce is fast becoming a popular platform especially for the household appliances industry. We will be present wherever customers are looking for a purchase. Digital platforms will remain a critical element of our retail strategy, given the power of the platform to reach out to mass audience and cater to their needs more efficiently.
At last, kindly mention your growth plans. What kind of investments you are mulling for Indian market by end of current fiscal?
India is one of the priority markets globally. We believe there lies immense growth potential owing to its vast populace and its aspirational customers who are contribute to its growing Indian home appliances market. At BSH, we will continue to invest in our strategy of dynamic and healthy growth and set the course to benefit from future business opportunities in the country. Additionally, we will continue to localise products for India with our brand Bosch as well as expand our category portfolio. We will also invest in the brand campaigns to build awareness for the brand.