Consumer goods companies step up exclusive retail play

Favour any particular brand of consumer electronics? Chances are the company has an exclusive outlet in your very neighbourhood, stacking its entire range of television sets, refrigerators, washing machines and microwave ovens etc under one roof.

Consumer electronics firms are increasingly waking up to the need for having exclusive outlets to help increase awareness about their products and enhance their brand value.

Toshiba has one such store in Noida and plans to have 30 by June-July.

Pranab Mohanty, head of consumer products, Toshiba India said the stores will showcase everything from refrigerators to laptops.

“They will primarily be in tier-I and tier-II cities.”

Rival Mirc Electronics, the promoter of Onida, said late last year it was planning 10-12 stores dedicated to the brand in a year. While some of these would work on a franchise model, the others would be company-owned.

Havells, which makes lights, switches, fans and motors, among other things, intends to treble its Havells Galaxy stores to 200 by end-2011. The company recently forayed into geysers and plans to further diversify by launching air-conditioners.

Sunil Sikka, president, Havells India, said the company was primarily into switchgears earlier but is now focused on the retail segment. “We want to leverage our brand when we come out with new products in the future.”

Franchise-operated Havells Galaxies, the first of which opened over a year back, will come up in several cities and towns, he said, adding that the company is adding 6-8 stores every month.

Clearly, the companies aren’t motivated by the sales they can garner through such outlets —- their dealer networks would suffice to that end — as much as the visibility they allow.

The consumer durables market in India is said to be worth about Rs25,000 crore, growing at 17-18% annually. The rural market, given the poor penetration of companies there, is growing at twice the pace as its urban counterpart.

The overall retail market in the country is valued at $500 billion, the fifth-largest in the world.

“Exclusive brand stores not only allow us to convey the unique brand identity, present the complete product-solution range from home entertainment, appliances to home decorative lighting, but also enable us to give the complete brand experience to consumers,” said Vivek Sharma, chief marketing officer, Philips Electronics India, which has one store named One Philips in Noida.

He did not share its expansion plans in this regard.

For all that, some exclusive shops aren’t doing too badly in terms of sales.

“Nearly 90-95% of Galaxies have been growing quite well in terms of business. The one in Chennai has had a turnover of `20 crore in a year which is quite good,” said Havells’ Sikka.

Samsung India, which has 300 outlets in the metros and tier-II cities under the moniker Samsung Plaza, is also seeing a rise in their revenue contribution. Small wonder, the company is planning an even more aggressive spread. Ruchika Batra, general manager, corporate communications, Samsung South West Asia, said this year the company set up 100 stores.

“Next year, we will grow the number by 40-50% and get largely into tier-III areas besides increasing our footprint in cities.”