Rising costs, tougher retailers, and cautious consumers are slowly reshaping profitability in India’s consumer durables industry.
The consumer durables industry in India is heading towards a margin squeeze that may not make headlines but could deeply impact balance sheets by 2026.
Across categories like fans, home appliances, and electronics, companies are facing a perfect storm. Input costs are volatile. Logistics is expensive. Service costs keep rising. Large retailers are gaining negotiating power. At the same time, consumers are delaying purchases and demanding more value for every rupee spent.
The danger is not sudden collapse. It is slow erosion.
What’s Driving the Pressure
Over the last few years, cost inflation has become structural rather than temporary. Steel, copper, plastics, and electronic components continue to fluctuate. Labour and service costs have risen steadily due to higher wages, installation expenses, and after-sales service requirements. Logistics costs are climbing because of fuel prices, last-mile delivery, and reverse logistics for returns and repairs.
On the demand side, consumers are becoming cautious. Big-ticket purchases are postponed. Negotiation expectations are higher. Discounts are no longer seen as incentives but as entitlements.
Meanwhile, retail power is concentrating. In many categories, three to five modern trade chains or large regional dealers now control over 40 percent of sales, putting additional pressure on brand margins.
Fact Box:
| Industry Reality Check:
Raw materials and components: Steel, copper, plastics, electronic partsCost pressure: 6–10% annually Labour and service: Manufacturing, installation, after-salesCost increase: 8–12% per year Logistics and warehousing: Fuel, last-mile delivery, reverse logisticsCost increase: 15–25% Retail structure: Large MT chains and big dealersControl 40%+ sales in many categories Consumer behaviour |
Margin Outlook:
2024 2025 2026 (no corrective action) 2027 trajectory |
Why Traditional Responses Are Failing
Many brands respond to rising costs by increasing prices. This often leads to volume loss, consumer down-trading, or delayed purchases. Market share quietly shifts to aggressive value players.
Others protect volume through higher discounts. That keeps sales moving but erodes margins, weakens cash flows, and forces cuts in brand building, R&D, and service quality.
Both approaches lead to the same outcome: lower profitability and higher long-term risk.
For a ₹4,000 crore consumer durables company, this could mean a potential gross profit erosion of ₹300–500 crore by 2026–27. The damage is gradual, but the impact is significant.
How Winners Will Respond
Leading companies are not relying on one lever. They are redesigning the business model.
Cost restructuring is the first step. This includes better demand forecasting, reducing overproduction, standardizing components across models, redesigning packaging, optimizing factory-to-dealer movement, and moving supplier relationships from transactional to strategic. This alone can protect 2–4 percent of margins sustainably.
Portfolio optimization is equally critical. Winners are cutting low-margin and slow-moving SKUs, applying the 80/20 rule, simplifying good-better-best price ladders, reducing discount-led models, and investing in margin-accretive innovation. The result is cleaner growth and 2–3 percent margin improvement through better mix.
Direct-to-consumer and controlled channels are becoming powerful margin levers. Strong brand websites, selective marketplace presence with price discipline, reduced distributor layers, and monetization of services, AMCs, accessories, and subscriptions can deliver 15–25 percent higher margins on direct sales. Even a 30–40 percent D2C mix can lift overall margins meaningfully.
The Bottom Line
The 2026 consumer durables margin crisis will not explode overnight. It will erode profitability year after year.
Companies that survive will not chase volume blindly. They will redesign costs, clean up portfolios, and own the consumer relationship.
Margins are not just an accounting outcome.
They are the result of strategic choices made today.
The real question is not whether 2026 is coming — it is whether companies are preparing for it now.
Author Bio
Kamal Kumar is a Business Head and Sales Transformation expert with over two decades of leadership experience in India’s consumer durables and appliances industry. He has led large-scale distribution, category expansion, and go-to-market transformations and is the author –The5C Sales Growth Model.
