Small kitchen appliances a hit during pandemic
Sales of small kitchen appliances dramatically shoot up by 50 percent during this pandemic period, but still not enough to offset the overall 50 percent decline in sales of Concepcion Industrial Corp. (CIC) in the first semester this year.
Raul Joseph Concepcion, chairman and CEO of CIC, the country’s leading provider of aircondioning, refrigeration, consumer durables, home appliances and business solutions, revealed this during the company’s announcement on its tie-up with Oracle for digital transformation that is expected to push its e-commerce to account for as much as 40 percent of total business.
“It is really funny, the most in demand products have anything to do with kitchen equipment and small appliances for small businesses, anything that relates to cooking and baking,” he said citing items like small blenders, chest freezers and equipment for stocking food that are useful for creating small businesses.
The publicly-listed CIC is one of the most established and leading providers of home and business solutions in the country. It operates principally through six subsidiaries — Concepcion-Carrier Airconditioning Company, Concepcion Durables Inc., Concepcion Midea Inc. Philippines, Concepcion Otis Philippines Inc., Concepcion Business Services Inc., and Cortex Technologies Corporation.
In terms of product mix, Concepcion said that the share of small kitchen appliances is just between 10 to 15 percent but sales from the segment surged by 50 percent during the pandemic. Notably, he said, sales of small blenders in the e-commerce market grew a thousand folds.
These are some of the smaller things that CIC did not think of but were strong during this period of time, Concepcion noted.
Even the air conditioners, which have been traditionally strong over the years, was also picking up during the pandemic. “Even aircon has been very strong partly because people are now staying home 70-80 or 100 percent of their time when they’re supposed to be working in the office, so they want to upgrade their air conditioning,” he added.
Still, the unexpected performance from its small kitchen appliance business was not good enough to avert an overall 50 percent decline in sales in the first semester.
Following a dismal performance in the first semester, Concepcion said they were recovering in the third quarter at 90 percent of the 2019 level. Moving forward, Concepcion said it would be difficult to forecast what it would be like for CIC as 2021 has remained very uncertain. “What happens if in December there is an outbreak and we have to shut down,” he said.
But if they can sustain the recovery in third quarter to the fourth quarter this year, Concepcion said they may be able to stay within the 25-35 percent drop for the entire 2020. “That will be a good sign,” he said.
What is important, he said, is for the company to move on how to address logistics and market situations. Thus, the partnership with Oracle would help pivot into the e-commerce, help them understand data and how to address consumer needs and position themselves for the bigger e-marketplaces.
With its digital pivot through Oracle, Concepcion targets the e-commerce business to account for 30-40 percent of its overall business. He noted that the mall traffic has remained still at 60 percent capacity.
“What Oracle would do is allow us to pivot and second allow us to see different areas that otherwise we’ve not competed with in the past,” he said.
With the help of Oracle, he expressed hopes that the first quarter of 2021 can beat the first quarter of 2020 just by going back to 2019 level.
Selecting Oracle Cloud Applications will enable CIC to take advantage of an integrated suite of best-of-breed applications that deliver advanced reporting and analytics capabilities.
Oracle Cloud Customer Experience (CX) will help drive more predictive service models and empower field service operators with real-time intelligence, enhancing customer data management capabilities to provide a better view of the customer. In addition, Oracle Fusion Cloud Supply Chain Management (SCM) will improve order fulfillment for the company’s eCommerce business, enabling a direct-to-consumer service. Linked with Oracle Fusion Cloud Enterprise Resource Planning (ERP), CIC will have greater business visibility to improve decision-making, reduce costs and increase productivity.
“Changing customer demands are driving companies to reconsider traditional business models and how they serve their customers. As a recognizable brand in the Philippines, CIC is not only creating new revenue streams and service offerings with technology, but also engaging with customers directly to ensure that it remains a household name into the future,” said Siva Ganeshanandan, head of Oracle Cloud CX, ASEAN. “Only Oracle Cloud Applications has the ability to tie finance, supply chain and customer experience together on a unified cloud platform, supporting CIC in both its short and long-term goals.”