News feature Mar, 22 2016

Building network via the franchise route

By TFW Bureau
Building network via the franchise route

The iPhone maker plans to set up a flagship Apple store pan-India on the lines of the famous one on Fifth Avenue in New York and a string of smaller outlets.

Leading real estate brokerage companies are already scouting for 15,000-20,000 sq. ft on high streets and in malls, prompting rival Samsung Electronics to look for space to set up a similar flagship outlet and revamp its existing 1,100 smart phone brand stores, reported Economic Times.

Three senior industry executives said brokerage firms are looking for prime retail locations in Mumbai, the National Capital Region, Bengaluru and Pune for Apple's first phase of company-owned stores.

The company wants to set up most of the Apple stores of over 2,000-3,000 sq. ft in India, including space for technical support and holding small workshops. The flagship store will have the same design and architectural grandeur for which Apple is famous and even holds several patents.

Samsung runs its smart phone brand stores under the franchise model, the company is directly involved in the revamp of the outlets, which includes new fixtures and design and more space for tablets and wearable’s, industry executives said.

The Korean company plans to set up at least one flagship store in India of over 15,000 sq. ft on the lines of its 'Samsung D'Light' located in the Samsung headquarters building in Seoul, which showcases and sells all its products under a single roof.

"The retail war between Apple and Samsung will further intensify, since getting prime location is a problem which both of these brands will soon realise, considering not all space owners may show interest since these are low-margin products," said the CEO of a leading mall in New Delhi.

Apple recently re-filed its foreign direct investment application to set up company-owned stores in the country after the government had sought some clarifications. Chief Executive Officer, Tim Cook recently talked about investing more in India to gain a lead globally.

Samsung is yet to decide whether it will file an FDI application for retail stores since it already has over 2,000 exclusive stores in India under the franchisee model selling smart phones, televisions and home appliances. Of these stores, about 1,100 are dedicated to smart phones. An executive also said Samsung does not want to antagonise its trade partners in India and, hence, FDI is not a priority.

Recent market share reports have failed to identify a clear leader in the segment as both Apple and Samsung are fighting to dominate the premium smart phone segment in India, where handsets are priced over Rs 30,000.

Apart from Apple and Samsung, Sangeetha Mobiles, multi-brand mobile phone retailer has plans to open at least 650 stores beyond south via the franchise route. The brand seeks multi-unit and master franchisees for expansion.

On the same note, L. Subhash Chandra, Managing Director, Sangeetha Mobiles Pvt. Ltd said, “We are keen to expand further via franchise route only. Sangeetha Mobiles will offer full support to its franchisees in terms of marketing and training support.”

Chinese manufacturer of mobile phones, Gionee is all set to increase the number of franchise outlets to 100 by March and 250 by December. The handsets will be available across 1000 plus stores aiming to sell 35000 plus additional devices every month. Gionee has been rapidly expanding its footprint in India by opening brand stores while it also has 800 service centres up and running and aims to have 1000 by this year.

Related: Negotiate well for best location deals

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