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Retailing, the way forward

DQW Bureau

02 May 2006 00:00 IST

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Retail seems to be the key focus area for almost all vendors in 2006. And
they are looking at reaping dual benefits out of this strategy. For one, retail
gives a different color to their brand philosophy, enabling them at the same
time to derive better marÂgins. Vendors like Samsung, LG, Canon, Acer or HP who
have built a strong retail focus are positioning their products as belonging to
the digital lifestyle category to make them fall in tune with this new strategy.
With most lifestyle products falling into the touch-and-feel category, retail is
likely to receive a big push this year.

The retail wave is already visible: Canon currently has 105 retail centres
known as Canon IT Image Zone, where customers walk in and get a live
demonstration of all Canon IT products. It is now planÂning to launch around 13
retail chains this year, that would translate into around 100 stores. These
would include Hypercity stores in Shoppers Stop, E-Mart in a JV with Videocon
besides other arrangements with Metro, Woolworth, Reliance and Pantaloon. While
Samsung already boasts of 80 SamÂsung Digital Home Plazas that work in a
franchisee model, it now plans to have 15 IT Brand Stores in place this year.

Retailer
yesterday, consultant today

Most technology
hardware companies today, especially MNCs, have realized how important
branding is. But some of them have failed to link it up to a customer's
retail experience in India. The result is almost horrible-most of us
walk into stores that have a physical presence, which is the least
welcoming, worse, you are not able to experience technology as it should
be. And, often, it's the channel partner's ignorance.

Today, hardware specs
of a machine is not what consumers are interested in. “How many times do
they show you how to download and store music? We have experienced that
with our new Media Center PC, which has been successful despite the poor
retail experience-most of the time you go to buy it, the retail guy will
not be able to talk about its features,” says Ravi Venkatesan, Chairman,
Microsoft India. Whichever way you look at it, this is everybody's loss.
Can companies ignore the loss of goodwill capital (and business) because
of a reseller's disregard? Or can distributors afford to annoy a
potential customer who might never walk into his store again?

The point is, our
resellers need to understand the deeper ecology of human beings-the
consumer's lifestyle. How do you create zones in the same retail shop
that allows the consumer to experience different things like
entertainment, education or digital memories?

Brand evangelist Harish
Bijoor, who believes that most stores today are run with a focus on the
glitz and tech visual merchandising, also reiterates the need for hardware
stores to pay attention on the content-delight side of the business:
“This can be attempted in a multi-media manner. Delight in such stores
need to be technology-enabled. Further, training of the people within the
store and access to trained folk at a central location are missing
aspects. The Apple store is attempting this, but we are still far away
from where we want it all to be.

Today's intelligent
customer, when he walks into a retail store, examines if one is just
trying to push products or playing the role of a consultant. This is a key
differentiating factor for the customer, says an Epson spokesperson.

But retail, for him, is
also not just about branding. “The main thing is how you manage sales in
a counter. We are expanding stores to create visibility of the brand. But
we are not going in for exclusive Epson stores. Therefore, we have put a
lot of our retail staff in the field to manage what's happening in the
stores-we would like to know, for example, what is Epson's share in a
shop-and then see how to increase that share and mindshare,” the
spokesperson informs. So there are a lot of engagement programs, end-user
promotions. Epson now has 700 Epson retail stores in place. By end of
2006, it will have 1200.

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Acer has even greater dependence on retail-25 percent of the company's
turnover in 2005-06 came via its two retail formats, viz, the 200 Acer Points
and Acer Malls across the country. The Acer Points that stock multiple brands
contributed two-third of the revenues, with the rest coming from the exclusive
Acer Malls. S Rajendran, GM, Sales and Marketing, informs of plans to double
these retail points this year and generate 35 percent of the revenues from them.

All HP's reseller retail stores carry the entire portfolio of HP's
imaging and printing products. These stores offer a one-stop shopping experience
for both SOHO and other consumers. HP aims to have such reseller retail stores
in almost every major shopping centre in the country soon. Currently, the
company has around 700 retail outlets spread across 226 cities. It has also
introduced the Concept Store, which provides consumers consultative and hands-on
experience to make an informed purchase decision.

When one observes the moves made by top-rung vendors and the trends that took
place last year, it is clear that companies are likely to compete with each
other not only in terms of technical features associated with their products but
also on their overall look and feel.

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But can such retail strategy cannibalize a section of the channel,
particularly the wholesalers and sub-distis. Bharadwaj does not rule out the
possibility. Rather, he believes that is probably the way ahead when retail
chains would wipe out the ground level wholesalers. Rajendran and Singh,
however, feel that it would not be a complete cannibalization, but retail focus
is only a sign of market maturity. That anyway is evident from the IDC report on
retail that states the total value of hardware shipments through the retail
channel stood at Rs 212.1 crore last year. Despite the promising number, the IT
retail experience in India still seems to be grappling with its problems.

Rajneesh De

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