IT Retailing: Bright prospects ahead
Gautam Ghosh,
Country Director,
MMD India
The retail industry in India has emerged as one of the most dynamic and fast-paced industries with players like Future Group, Reliance, Godrej, Wal-Mart, etc. entering the Indian market. The industry is gradually inching its way towards becoming the next boom industry. But it has not yet tasted success because of the heavy initial investments required to break even with other companies and compete with them.
In India, the vast middle class and its almost untapped retail industry are the key attractive forces for global retail giants wanting to enter newer markets, which in turn will help the Indian retail industry to grow faster. By 2012, the rural retail market is projected to have a total of more than 50-per cent market share. The total number of shopping malls is expected to expand at a compound annual growth rate of over 18.9 per cent by 2015. According to a market research report by RNCOS, the Indian organized retail market is estimated to reach US$50 billion by 2011.
MMD, a wholly-owned company of TPV Technology established in 2009 through a brand licence agreement with Philips, announced its retail presence during the official launch of the company in India. Since it is a new entrant, Philips would initially look at consolidating its presence through IT retail shops and majorly focus on the retail sale which is part of its distribution and sales strategy. About 45% of its total sales is presently happening through IT retail shops. But, going forward, it has plans for covering all the Big & Large Format Retails stores in India for robust retail presence.
“Philips is a known brand to any Consumer in CE segment and to capitalize on this belief, we thought to adopt the retail sales strategy and therefore planned to reach the consumer through IT retail shops. However, we are still in the developing stage and presently clutching the space at the IT retailers so far. We are still working out on designing a structured Retail Programme,” says Gautam Ghosh, Country Director, MMD India.
McAfee has been involved in the retail segment for the past five years. Three years ago, the security vendor decided to refocus its efforts as the retail channel has enabled security to become a mainstream “must-have” addition to a new internet connected device. In McAfee's opinion, the retail channel plays a crucial role in demystifying security to end-consumer, increasing usage and thereby expanding the industry. The whole of retail business accounts for a healthy percentage of the revenue generated from the McAfee consumer business in India.
Ben Wark,
Biz Development, SEA & India, Consumer, SMB & Mobile Div,
McAfee
“We have a dedicated team of retail channel partners who sell McAfee products across metros and tier 1 and 2 cities of India. Further, we have tied up with large format retailers to stock our products and engage in special promotional schemes with such stores. In India, we have forged such partnership with Croma and eZone,” says Ben Wark, Business Development, SEA & India, Consumer, SMB & Mobile Division, McAfee.
Philips has got quality monitors to offer that are high in standard and technology. The company is offering LED backlight monitors in India with smart contrast ratio and fastest response rate. Its LED monitors with POWER SENSOR technology that saves almost 80% of the energy bill are also introduced in the Indian market. “Moreover, a few models of Philips monitors come with the key salient features which are unique when compared to others, and hence it becomes very important that such feature-rich products are well communicated to the end-consumers and we feel that this can happen only through retail showrooms,” Ghosh further added.
Bobby Joseph,
Country Manager - India,
Plantronics
Plantronics, a company that is broadly into manufacturing mobile headsets and headquartered in Santa Cruz, USA, has started operations in the Indian market in 2002 by deploying sales teams. Over the years, it established its retail presence and aligned its retail strategies with that of the products that it is selling by tying up with leading LFRs like Croma and Reliance Digital. Though it continues to focus on the key markets like Delhi, Bangalore and Mumbai (Bluetooth headsets usage are found to be maximum here), it has built up its presence in tier-II and tier-III cities as well. “We have priced our products at Rs.1,500 for the simple reason that we wanted to have our markets extended to every corner of the country. We have got around 700 retail outlets in 700 cities in India and we are doing good business despite facing stiff competition from brands like Nokia and Samsung,” points out Bobby Joseph, Country Manager - India, Plantronics.
Traditional v/s Modern Retail
When it comes to its channel distribution, Philips follows the regional distribution model and has appointed four regional distributors taking care of the four zones of the country. “We have got Roop Technology Pvt. Ltd. for western India region, Global Infonet for northern India region, Technocrat for eastern India region and Nook Micro for Southern India Region,” explains Ghosh.
On the other hand, McAfee has a 3-tier channel distribution network. It has Ingram Micro as its exclusive national distributor and one sub-distributor each in 11 cities of Mumbai, New Delhi, Kolkata, Bangalore, Chennai, Jaipur, Gurgaon, Pune, Guwahati, Chandigarh and Ahmedabad. There are plans to increase the number of sub-distributors to 22 this year. Since McAfee has also been working with retail channel partners in India for over three years, it is looking forward to growing its already extremely robust and successful partner network.
“We began expanding our base of tie-ups to focus on the regionally strong retailers in 2010 and we will continue to target the upcountry and tier-II towns through 2011 and beyond. In addition to our traditional PC- based products, we will be launching and the McAfee Mobile Security Suite compatible across all mobile mainstream platforms,” informs Ben Wark. The company does organize special channel programmes for its retail channel partners from time to time. Only recently, it has introduced “Win a Holiday” scheme that entitles partners to win exciting cash rewards of up to Rs.60,000 where top performers also stand a chance to win an exciting international holiday.
Plantronics, on its part, has designed its go-to-market strategy in a way that would benefit both its enterprise as well as its retail business. For its contact centre business, the company has signed up with national distributors, namely Wipro, Avaya Global Connect and Enexter, while Rashi Peripherals has been appointed to look after its overall retail business. Bobby says, “We also have Redington as our service provider and have got our service centres in the key markets that I have mentioned. There is a technical assistance centre in Gurgaon that addresses to customer grievances and takes up every kind of queries that our customer might be having with our products.”
The company also invests heavily in its partners. “Connect” is a channel programme that Plantronics conducts and it tries to identify and bring accessibility to their partners different online training programmes that would help them deliver the best results in terms of profitability and business development.
Going Forward
There is no denying the fact that the role of retail industry in the distribution of technology products has evolved to a great extent and IT brands are increasingly choosing this path for selling their products. There has been tough competition though in the retail sector ever since modern retailers started to play a part alongside traditional retailers. Many small retailers have been marginalized from the market as they are unable to compete with larger modern retailers. “I think to some extent, yes, traditional channel trade is hampered by the sudden boom in modern retailing, but only in A-class cities. The purchasing power of Indian urban consumer is growing and branded merchandise in categories like apparels, cosmetics, shoes, watches, beverages, food and even jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer,” says Gautam Ghosh.
But, nevertheless, both modern and traditional retail will continue to exist and will constitute the entire retail landscape of the country. Gautam sums up by saying that he foresees a partnership happening between organized large retails and small retails houses in the near future. “This would give inorganic growth and thus increase the presence of large retail brands in smaller cities. Wal-Mart has recently announced their thoughts in the similar lines,” he adds.
For more contact:
samrita@varindia.com
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