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Doing business despite LFRs

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DQW Bureau
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The theme of the panel discussion held at Com-IT Expo 2007, which was

organized by Traders Association of Information Technology (TAIT), was 'How to

do business despite large format retailers or LFRs'. Needless to say, this was

the discussion that was widely awaited by a lot of dealers who have been

suffering from loss of business, thanks to the mushrooming of LFRs.

The panel discussion was moderated by Vinita Bhatia, Executive Editor, DQ

Channels. Voicing the concerns of the retailers was Naresh Popat of Checkmate

Computers and Shashank Dalal of Unicomp Systems, while Paras Shah, MD, Neoteric

Infomatique and Ashutosh Ghavi, Retail Head, Intel tried to come up with

workable solutions for this business dilemma.

LFR: A threat



For long, partners have been ruing that the advent of LFRs has signaled

diminished business for partners. This is because LFRs buy products in bulk from

vendors or distributors at lower price than the market-operating price at times.

In turn they can sell the stock at lower prices as compared to smaller

retailers. Plus, they offer a mall-like ambience which customers are

increasingly getting fond of.

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But the lead question at the panel discussion was: 'Are LFRs truly a major

threat for the channel?' Shah admitted that LFRs are a threat to the channel

community, but rather than lament about their existence, it would be better for

the channel to gear up and deal with it. “Partners need to find their own niche

and develop their own specializations. We should not think of LFRs as a threat,

we should take them as an opportunity and develop business as per that.”

Agreeing to this, Ghavi from Intel added, “Partners now need to look into

innovations and create a differentiator between themselves and LFRs. They need

to see what is it that LFRs offer to customers and what is it that they can

offer better.” One good example he gave was that of urging partners to bundle a

few hours of PC usage training with every machine they sold. “This will be of

great interest to old people who often buy PCs to keep in touch with their

children abroad,” he added.

The panelists (L to R): Naresh

Popat of Checkmate Computers, Shashank Dalal of Unicomp Systems, Paras Shah,

MD, Neoteric Infomatique and Ashutosh Ghavi, Retail Head, Intel
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Another example was of giving kids an opportunity to develop their own PCs by

giving them various assembling options. This can be followed with a certificate

that states that the child had personally designed the entire PC, which will

attract the youth to buy PCs from small time retailers as against the LFRs.

The retailers on the panel agreed with these suggestions and added that

specialization is the niche of the channel and this will hold them in good stead

in times to come. Popat, who owns a retail shop in Borivali added that it was

difficult for LFRs to employ skilled manpower but partners have skilled

manpower, which they only need to develop. He added that retaining people was

not easy when they were offered hefty packages by LFRs, but if the staff were

given conducive working environments and a scope for growth they would be

willing.

“In most retail outlets the back office job is done by the retailer himself.

He just needs sales people who can deal with customers very well and educate

them on the right products to purchase,” Popat added. Keeping this scenario in

mind, it was important to impart soft skill training to these sales staff so

that they are able to convert prospective customers to loyal ones easily.

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Dalal also laid emphasis on constant investment into the business to grow it

and improve the quality of their work. This could be in training, marketing or

even word of mouth publicity. Agreeing to this, Popat added, “Positioning of

ones brand properly is a very important for partners. We now need to pose our

brands as a solution. We need to take on the retail outlets by giving value adds

to customers, like services on a call and engineers on a single call.” He even

suggested giving customers the option that if they want certain services they

ought to pay a nominal sum for it or go for packaged services at a discounted

price. “We have to rely on services more rather than box pushing, because that

is our key strength,” Popat noted.

The other challenge that smaller retailers face vis-a-vis LFRs is retaining

customers. LFRs can attract customers in droves with their marketing gimmicks,

which a retailer might not be able to do. In such a situation, a retailer should

strive harder to retain his existing base of customers rather than spend time

and money on acquiring newer ones. “There was a time when a customer would call

me asking for a product at a lower price, because another dealer had offered him

the same at a reduced price. I would then tell the customer to go to that dealer

if he wanted. Now, I make the customer understand that though I might be

offering the product at a slightly higher price, I would take responsibility of

the service and outline what other services I could offer him,” recalled Dalal.

All agreed that personalized services would distinguish the smaller retailer

from the LFRs and therefore the former ought to invest in it. Shah said, “The

most important for the channel now is to leave the traditional type of behavior

and be very polite and generous to the customers. This will help the channel to

retain the customers that it already owns and in turn this will be a win for the

channel against the LFRs.

One benefit that LFRs have over retailers is the breadth of products that

they offer under a single roof across a spacious outlet and in a comfortable

ambience. One suggestion that came forth from Shah to counter this was setting

up a hub for IT so that customers were given a wider choice of products in the

same area. This could be in the form of housing dealers in a single building or

in an area. While the thought was very good, the implementation is not as easy.

Speaking on behalf of TAIT, Umang Mehta an executive council member said, “We

have been thinking about getting a designated area where a lot of dealers can

operate from, just like Nehru Place. But this calls for a lot of investment,” he

maintained.

However, he added that this suggestion would be the ideal way to beat LFRs

because customers can touch and feel different models and brands in a single

place and make quicker purchase decisions.

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