Small Retailers versus Biggies

Mike Dhall
President and CEO, ZenFocus

IT hubs like the Nehru Place in New Delhi or the Lamington Road in Mumbai are a conglomerate of small retailers who are the still the backbone of the IT industry in India. Indian market is a price sensitive market and the buying decision is largely governed by the   touch and feel of the products. The masses still do not have the proper knowledge of technology and its usefulness and this makes them dependent on the vendors especially when an assembled product is sought. However, the trends are seeing a shift, Large Format Retail Stores or the Speciality stores gives a vantage of the products allowing first hand experience of the product to make an informed decision for the consumers. 

"Small retailers in IT Hubs at Nehru Place and Lamington Road have been the backbone of IT distribution and they still play a vital role in Mercury Distribution. We have a fraternity of partners who form these IT hubs and we respect their contribution," opines, Sushmita Das, Country Manager India, Kobian Pte Ltd.

Emphasising on this, Maurizio Grassi, CEO, Defenx says, 'The presence of our brand in IT hubs is significant for marketing purpose and it has a strategical role to spread the word of mouth about our product features." 

Future of Small Retailers with the onslaught of Retail Giants…

Small Retailers were so far so good. But with the changing times and the technological advancement in almost all the phases of life, consumer's expectation is seeing a wider spectrum, which may give a dent to traditional retailers.  

Mike Dhall, President and CEO, ZenFocus says, "Nehru Place and Lamington Road will eventually become wholesale hubs. We feel they will not just focus on IT but also on consumer electronics and telecom as more convergence takes place. The small retailer will have to create value by focusing on the distribution of certain products at large volumes. If right strategy is developed, these two markets have the potential to become the likes of SEG place in Shenzhen which acts as wholesale market for China." 

M A Mannan, Country Manager, Corsair Memory India, opines that with the opening of the LFRs and speciality stores in every nook and corner of the streets where everything is available at a single store, the smaller retailers will be at a loss. Reality is that these stores are in a stronger position as they purchase in bulk and offer a good price, display and credit facility which forces the end user to go to these stores. 

However, Sushmita Das of Kobian holds a different view, she says, "No, we do not think that there shall be an end for these retailers. The LFRs and speciality stores are more for the product feel of the huge range of products available, but a huge segment of customers still prefer to walk to Nehru Place or similar place and discuss the pricing and make the final purchase. In addition to that customers may feel more comfortable purchasing from smaller retailers as they know that they can come back to these retailers for any issue which is not possible in the LFRs." 

Maurizio Grassi, CEO, Defenx gives a similar view, "I believe that Indian market is such a fragmented one that small retailers still detain a big part in it. The distribution network for small retailers is such dislocated over the country and outside metros which is much closer to the majority of end user compared to LFR. Their strength is the close relationship with the customer in term of location and culture. That is why Defenx is still betting on the small retailers' channel." 

Maurizio Grassi CEO Defenx	M A Mannan Country Manager, Corsair Memory India	Sushmita Das Country Manager India, Kobian Pte Ltd.

Survival Strategy for the Small Retailers…

M A Mannan of Corsair suggests that small retailers need to think innovative and plan out activities to drive the customers to their stores either at price points or exclusive brands displayed at their stores. They should immediately get aligned with a brand and work for mutual growth.

Mike Dhall of ZenFocus says that small retailers will have to create a value by focusing in the market so that people get attracted via price or value. 

"Small retailers do need to create some value addition services along with the personalized feel and they have an assured business in the future too," says, Sushmita Das of Kobian. 

Maurizio Grassi of Defenx  opines that  small retailer still have the power to control a big share of the market, their success depends on their good partnership with providers.

Co-existence Mechanism… 

To be grounded in the market even with the advent of Large Retailers, small retailers should think in term of long term association as an exclusive brand store, drive customers at price point, and carry innovative products.

Mike Dhall of ZenFocus suggests that the best way to deal with this is to get united and create a hub. If they will focus on price only, the small retailers will extinct. Rather than this, small retailers can complement each other so they specialize in an area. SEG market in Shenzhen is full of small retailers but they complement each other very well. This helps the customers to source different items much more easily.

Finally…

The Large Retail Giants and Speciality stores will attract the general consumers and will impact the small retailers. But this does not mean the end of the road for small retailers, there is orientation of their business model to create value addition for the consumers.