The Indian retail segment is one of the fastest-growing markets in the world. Globalization is the need of the day and with the advent of designer malls and large format retail chains, the Indian retail market has been attracting a lot of interest from foreign companies.
As such, the segment has tremendous potential opportunities waiting to be explored and is already showing a steady growth rate. And, as the economy grows, so does India's middle class who will fuel the need for world-class IT products.
The Indian retail market, the fifth-largest retail destination globally, has been ranked as the most attractive emerging market for investment in the retail sector by AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009.
Further, organized retailing is growing at 50-55 per cent in small towns compared to 30 per cent in large cities. According to the estimates by Ernst & Young, while there were some 50 superstores (including malls and hypermarts) in 2006, this figure is likely to quadruple to 220 by end-2007. Organized retail is expected to grow four-fold from $7 billion to $30 billion by 2010.
Since the mainstay of the Indian retail market is the unorganized sector, we plan to increase our base and following in the same segment, whilst at the same time focussing on any opportunities in the organized retail segment as well. “We have been closely observing the trends of Indian consumers and understand that most people who visit LFRs for IT products go there because they associate them with better customer experience compared to traditional models and also for a wide variety of choices available with them. Overall, the number of people coming to trust the retail segment has been largely improving over the years,” says Alex Huang, Country Manager, System Business at ASUS India.
“The year 2009 is seen as a year of consolidation for the Indian retail sector. By ushering in best practices and restructuring business models, the retail industry in India is expected to adjust to the changing market conditions and ensure new opportunities for growth. The retail sector is expected to grow at 8 to 12 per cent in 2009-2010,” says Hiroshi Takashina, Managing Director, Nikon India.
Nikon has been following the retail channel since its inception in India. The leading camera manufacturer has already spread its footprints by scaling up its retail presence through 1,800 retail counters across photo, CE, IT and also LFRs. “To add on it the company already has over 50 D-SLR and COOLPIX Zones with a target to take the count to 80 by March 2011,” says Hiroshi. He adds, “It is the level of transparency maintained across the channel and the responsiveness to the requests that ensures smooth rebate disbursement.”
Though the entry of Asus into the retail channel is fairly new, the company is fully aware that the retail business is huge in India and is showing a steady growth rate. “With the growing malls and LFRs, the business is going to grow further and ASUS would definitely want to be a part of the growth story. Since ASUS has diversified its product line and different product segments including components, system & handheld devices have a different channel structure. So, in order to effectively reach the end-users, we have partnered with national level distributors like Rashi Peripherals, Ingram Micro and Netplace for our component and system business. Through them, we reach out to other distributors, resellers and end-users.
Currently, Asus’s mainstream products like Netbooks, Notebooks and Handheld Devices are being sold through retail. “We are also planning to introduce more mainstream and consumer-oriented products like our monitors and media players like the hugely popular ASUS O!Play through retail stores,” says Alex.
Retail has developed over time and consumer expectations have increased. LFRs have come up very quickly in the last 2-3 years. Some are doing well, while some are not doing that good. It suits the kind of products that Targus deals in. Indian consumers seem to be responding well as it has given rise to a whole new shopping experience. Targus has got a strong presence with Croma and built on good relations with Reliance Digital. The reality is that IT channel being so huge in India, it cannot be ignored. “So, Targus remains equally focussed on the IT channel by bringing out programmes and products that sell in big volumes and do really well both in channel and in retail. So, it wants to be in both channel and retail,” says Steven Norman, Managing Director, Asia Pacific, Targus
With presence across 1,800 retail outlets and more than 50 zones for Nikkon, the response has been great both in terms of visibility as well as sales. Majority of its sales come through the photo channels, while only a small percentage is contributed through IT, CE, Mobile and LFRs.
Asus has had reasonable success in the retail model so far since the company is very new to the retail model. “ASUS has been focussing on multiple platforms for sales and retail is just one of the components. As of now, we are focussing more on strengthening our channel structure,” says Alex.
On the channel front, the company has recently launched the ASUS AGP programme where the company will offer exclusive discounts and rebates to its partners participating in the programme and the company will showcase its flagship models in the system business in its exclusive showrooms. “We are also focussing on increasing the brand awareness for our high-quality products in the channel by conducting channel seminars, dealer meets and technical training sessions,” says Alex.
Different strategies need to be implemented to reach out effectively to resellers and retailers. Asus conducts regular training sessions for resellers where the company informs them about the new technologies and features of the ASUS product line. “For our channel partners including retailers, we regularly hold dealer meets and channel seminars to inform them about the product roadmaps and the benefits of ASUS products and technologies involved with them. Our key focus is to provide them feasible and profitable business module and thus making it mutually beneficial activity,” says Alex.
Targus also has the concept of Targus Corner, which is a branding exercise helping the company display its products in an allotted corner in any of the IT shops across the country. Targus has rolled up around 100 of them and is planning to bring up another 100 in a year. Targus has, thus, clearly spelt out its two-fold strategy; besides making its presence felt in the LFRs, which would contribute to its branding, having good displays, good ambience and digital signages. But since most people end up buying in an IT channel, we have kept alive our association with the channel as usual. Targus had a multi-distributor strategy before signing on Rashi and after that it continues to work with the distributor’s own set of sub- and regional distributors.
“We are really excited with what is happening at the LFR space, and can just see that continuing to grow very quickly. We have aggressive plans with them to keep growing,” says Norman.
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