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In a conversation with Retailer Media, Dinesh Nair, GM, Lenovo, talks about the brand’s SCD stores and how these stores will fillip the CDIT market.

How has been the journey of Lenovo in India?         

In 2005, we came in this country and we were largely seen as a very commercial brand because of the forward focused approach and IBM was a much bigger brand in India. Over the last years, as the PC market has evolved, we have seen the market going quite flattish, whether it is in India or worldwide. Lenovo has morphed itself over a period of time from being pure play PC Company to what we refer as being present across the personal technology space. So if a consumer uses a PC for his personal space, personal computing etc. we want to be there.

How did this concept of SCD stores came into existence?

The movement into tablets was a very important part of that transition where a PC company moved into devices as well. In terms of devices, the distribution, marketing, consumer base, specification, influencing factors all are very different from those in a PC industry.

As we did that over a period of time, it is important that our brand stores i.e. LES (Lenovo Exclusive Stores) reflect the ambition of the company. From business perspective, we sell more tablets and phones in terms of units than PCs worldwide. Given that context, it was very important that our brand stores reflect that. We wanted to make sure that our front facing point of sale - the consumer reflects this and hence, came the whole concept of SCD as a name for our stores. Main part was to convert this notion at the retail store. Earlier, one could walk in to a store and identify if that was a PC store or one for Smartphone. Today, almost 40 per cent of the Real Estate space is for phones followed by tablets. Then the entire space is dedicated to PC section.

What innovations have been the breakthrough for your brand?

Lenovo was the leader who took the initiative to provide a breakthrough amidst similar designs of all notebooks and PCs. Lenovo did certain innovations and lots of investments to make the PCs little more edgy and we got multi-mode devices and 2-in-1 devices which offer the charm of PC, but at the same time, can be converted to tablets. The 2-in-1 device can be used as full-fledged productivity device, but it can also be flipped and would function as a tablet.

We have almost 50 per cent of market share in multi-mode devices. That’s because we have invested a lot in making our core product line a lot more innovative and not just in terms of simple upgradation. These things, even on the PC side, are making the store stand out from what the earlier stores were.

Is sales all about brick-and-mortar space or online has a say in that?

It depends from category to category. From a PC market perspective, online business is around 12-13 per cent today. It went up during October ’14 as these guys pumped a lot of money into the channel, but the consistent level is not going to be more that 11 to 12 per cent. There is a massive market for Brick & Mortar and a lot of business which happen online actually gets sold offline. The trading does take place online, but the final sale to the customer happens offline. From the perspective of PC, the Brick & Mortar market is here to stay.

Even in the most mature markets, online is merely 30 per cent and rest is physical stores. Yes, the contribution of online would go up in India, but we don’t see any dramatic change in market for PCs.

What about tablets and mobiles selling online?

When it comes to tablets, there is a different story. Share was much higher from online perspective, but what is happening is the flattening out of online market for tablets because a lot of smaller brands moving out of regulatory reason, the not-so-great quality online. Even in tablets, the commoditised part of market, which is more content heavy and at the entry level is a logic to the online market, but higher level where lot of productivity is involved is all about going the Brick & Mortar way.

Smart phones is one category, where significant traction is online. At the same time, the market is so huge, that all can accommodate. Brick & Mortar market and business from stores are definitely here to stay.

Will these SCD stores act as experience point or will be a selling point?

We are into hardware market and we don’t do anything just for fun or just for experience. These are points to clearly showcase company’s changing image and what it stands for, to the consumers. These are absolutely strict selling points for us and we see very credible results coming out of these stores in terms of business growth, conversions and mix of the business.

How many stores do you have at present?

We have 26 stores in SCD format right now across the country. We started with Pune about a year and half back. Yes, the number is less because we are extremely choosy about where to put these stores as these stores require higher investment.

How profitable has been the SCD stores over LES?

From business result perspective, I can give you comparative numbers. In general, SCD retail is about 25 to 30 per cent business per month per quarter over what our normal LES are able to generate. The numbers are much higher in case of mobile and tabs. What we classify at Lenovo is premium mix which is around 34-35 per cent in case of LES, while it is 35-45 per cent in SCD stores.

What are your preferred Real Estate choices while opening a new SCD store?

Malls are definitely the priority followed by high-streets, but again we are quite choosy about the malls because there have been horror stories even in malls. We make sure that we have some tie-ups with some agencies and we have flanking strategy of going and looking at anchor tenants. Our preference is A1 malls in key cities. We avoid going to the shopping hubs or old destinations of a city, but prefer the locations where new consumer is going.