New face of I-T retail

With growing demand particularly for PCs and computer peripherals, market trend in IT retail is changing swiftly. Consumer durables of national and international quality and repute have become easily available. A look at the market or even a window-shopping suffices to affirm the changing trend. A PC is no longer a utility machine whose application is limited to some complicated calculations. Now, a PC and its peripherals like scanners and printers are more of a lifestyle statement. Dual-colour monitors and multi-colour cabinets have become household items. Manufacturers of PCs and peripherals are giving as much emphasis to aesthetics as to the technology. And showcasing these products has become a challenging task for manufacturers. Manufacturers in every IT segment including PCs and peripherals are feeling the need for venturing into organised retailing. Today, a lot of PC accessories and peripherals are available, and coming of new technologies is on the rise day by day. Products like modems, joysticks, gaming solutions and software, floppy disks, CDs, webcams, digicams, headphones etc. are finding their way into the organised retail segment in a big way. With the market flooded with all types of accessories and peripherals, there is increasing need for end-consumers to know these products in terms of their requirements and have a touch-feel experience.

IT shops get facelifts

Recent trend of IT retail has seen the emergence of different types of shops. There are some exclusive shops of a particular brand like that of Hewlett Packard, Apple, HCL and Acer.  On the other hand, retailing wing of HCL Infosystems Ltd has opened its outlet chain – Digilife - to showcase not only IT-related commodities like PCs and peripherals, but also digital commodities like mobile phones and TV. Some IT companies prefer marketing their products through multi brand outlets where their brand is showcased at a particular zone. As for product display, exclusive shops always take immense care to set up a plush interior in tune with sleek, futuristic models of various products on display. Presence of customer-friendly, well-trained salespersons scale up the services and enable customers to find right products that fulfill their needs. 

Tie-ups with large format chains

IT vendors are tying up with various large format retail chains to build up their market. HCL has tie-ups with Croma, Reliance Digital, E-Zone, Big Bazaar and other chains. Acer India has also adopted large format retail as another main channel of retail. Dinesh Nair, Manager, Retail Operations, Acer India, says that the company has tie-ups with MBOs like Croma, HyperCity, Metro Cash & Carry, Jumbo Electronics, Reliance Digital and RPG Cellucom. However, he informs that their sales are higher by over 50 per cent in exclusive brand outlets. He identifies three major reasons for this:

a) Better showcase of product identity

b) Salespersons’ expertise in terms of product knowledge and

c) Availability of entire range of the brand

Alok Bharadwaj, Vice President, Canon India, expresses his opinion about large format retail as a huge opportunity and catalyst for causing paradigm shift in buying behaviour of the Indian consumer. The company has tied up with several superstores like Croma, Metro Cash & Carry, Next, E-zone and Reliance. Despite HP’s unwilling to divulge its tie-ups with retail chains, Mr V Krishnan, GM, Consumers Sales, Imaging & Printing, HP India, acknowledges that large format idea is going to be a serious threat and the heat will be experienced by the channels. Mr Kartik Ramaswamy, General Manager, Channel Enablement, Lenovo India, informs that the company has tie-ups with the large format retailers like Croma, IT Junction, Next, E-Zone and RPG Cellucom. According to him, “Exclusive stores provide a comprehensive experience of the products offered to consumers. Whereas, with MBOs, vendors are able to ride on a wider network across the country.”

Some of the exclusive brand outlets (EBOs) are as follows.

Experience Zone: Hewlett Packard

Mr Krishnan says, “Today, HP leads the IT retail space with 1,900 retail outlets in the country. These include 1,500 multi brand retail outlets and 400 HP Exclusive Experience Zones spread across the country, which offer HP consumer products. ‘Experience Zones’, were introduced to provide consultative and hands-on experience to consumers to enable them to make informed-purchase-decision regarding products that would best meet their needs. These stores target offering one-stop shopping solution to both SOHO (small office, home office) users and consumers with HP’s world-class performance imaging and printing products.” Through ‘Experience Zones’, HP aims at showcasing its complete range of solutions and applications. These stores are set up as a part of overall expansion plan of HP. The stores will also cater to children and home segments as well as offer fine-tuned applications for SMB segment. The genre of premium stores is playing a crucial role in IT retailing since there is a lack of clarity among customers about what they purchase and what they need. Until customers reach a point where they know exactly what they need, such personalised stores will help in expanding the market further. Presently, the company has 400 such exclusive premium retail outlets in India.

Digilife stores: HCL

In 1995, HCL made the foray into retailing by setting up HCL outlets in two formats – HCL Store and HCL Points. Keeping in tune with organised retail, the company has adopted a new format of retailing by launching HCL Digilife stores. Designed to be complete ‘House of Convergence’, HCL Digilife store offers a wide panorama of products and services and fulfils every digital need of any individual. HCL Digilife showcases the best of international brands including HCL, Apple, Canon, Toshiba and Casio in a seamless and integrated manner. The objective is making the store a one-stop shop by converging various gizmos that can be picked for the best possible use.   HCL Digilife store is the next-generation retail offering that takes care of individuals or professionals and SOHO customers. These stores are company’s flagship retail outlets that offer latest digital products like gaming consoles, MP3 players, digital cameras, home theatres and mobile phones. With existing 37 Digilife stores across India, the company plans to set up many more stores focusing equally on metros, state capitals and tier II cities.

Imagine: Apple

Apple computers in India retail their products through company-authorised resellers who sell these products to end-users through retail outlets under the brand name, ‘Imagine’. Wide range of Apple products at these outlets include complete range of ‘desktops and portables’ and iLife suite of applications (iPhoto, iTunes, iMovie, iDVD etc.). The store exhibits an extensive range of third-party products that include various accessories for Mac and iPod, digital devices such as digital still and video cameras. Presently, Apple has Imagine stores in cities like New Delhi, Bangalore, Mumbai, Kolkata, Ahmedabad, Goa, Cochin, Pune, Gurgaon and Noida.

Exclusive Store: Lenovo

At present, the company has 98 Lenovo exclusive stores and 652 multi-brand outlets. Its product range consists of notebook, desktop, monitors and peripherals comprising projectors, cables and adapters, audio equipments, dock and port replicators, printers etc. In order to enhance market penetration, Lenovo plans to help its distributors serve resellers in terms of credit. Company is planning to initiate different models to consolidate its place in the retail sector. While explaining Lenovo India's retail plan, Kartik Ramaswamy, General Manager, Channel Enablement, informs, “We have aggressive plans to strengthen and grow Lenovo’s retail presence, focusing on tier III and non-metro cities. In the last two years, we have ramped up our retail presence across India. In fact, between April 2006 and March 2007 only, number of our Lenovo exclusive stores (LES) went up by more than double while it was more than thrice in the case of multi-brand outlets (MBO).” 

Acer Mall and Acer Point

Acer’s retail stores fall into two broad categories of IT specialty stores and large format retail. IT specialty stores comprise the conventional retail outlets. This is further divided into two categories. The first is a brand store called the ‘Acer Mall’, which consists of Acer products and non-competing products. This outlet showcases the entire range of Acer desktops, notebooks and consumer peripherals, which would include the latest Aspire series of consumer PCs, the TravelMate notebook series and projectors. The second category of stores is known as ‘Acer Point’. In the second category, one section of the store displays Acer products and the entire space is allotted as an Acer brand zone within the multi brand store. Presently, the company’s paramount interest lies in expanding its retail presence in the B and C category cities. The company is looking forward to set up 350 outlets, comprising Acer malls and Acer points, in 175 to 200 cities and towns across the country.  Acer follows a 100 per cent indirect sales model worldwide, and, in keeping with the tradition of working with local partners, all of its stores are given for franchise.

Future prospect

Regarding the fate of IT retail, Rajendra Kumar, Executive Vice President, HCL Infosystems Ltd, says, “Today, customers, SOHO and SMB consumers would like to experience the best of international brands. The new format of IT retail model targets distinctly consumers and spontaneous buyers of the latest IT and digital products. IT retail will not only target metros or large cities, but would also see an expansion into non-metro cities in near future”. On the other hand, Kartik Ramaswamy of Lenovo India stresses on the onus that lies in IT vendors and observes, “IT retailing in India is quite promising and will undergo extensive experimentation in 2007. Success in IT product retailing will depend on the differentiation factor vendors offer. The vendor must invest in adopting the best practices, skilled manpower, high visibility and experimentation in retail format, in-store and on-site promotion, exciting bundle offer and alternative payment options to woo customers.” Reflecting on neighborhood convenience stores and large organised retail chains, Dinesh Nair of Acer India observes that, despite burgeoning organised retailing, what matters most is building strong customer relationships, trust and giving customers what they need. He comments, “The entry of large organised retail chains in India is set to bring in the science of retailing into what is pretty much an unorganised sector. Our belief is that the neighborhood convenience stores would still remain very competitive as long as they realise that, to stay competitive, they too need to create a certain niche for themselves within their respective catchment areas and build closer relationship with the customer base.  However, the entry of large superstores will give the average customer a chance to experience the products in an environment, which would be vastly different. Also, one of the major challenges that most convenience stores face in the IT retail environment - the challenge of driving footfalls - would not be an issue. Supply chain management and inventory management would be the key areas where such chains will have an advantage.”