Opportunity Oct, 04 2014

Making a mark in CDIT Retail

With the continuous inflow of disposable income and the advancement of technology, the need for various Consumer Durables Information Technology (CDIT) goods is increasing in India. According to the latest statistics, the total CDIT retail market is worth

By Rashi Mathur, TFW Bureau
Feature Writer
Making a mark in CDIT Retail

The niche retailers are becoming aware of the fact that for the growth and expansion of their business, technology implementation is a necessity, which further creates a lot of potential for the players in the CDIT industry. Various players in the consumer durables sector have emerged successfully and created their pan-India presence. For instance, Reliance Digital and Croma are reckoned as the leading large format CDIT stores.  In the consumer durables segment, Philips Lighting India offers lighting solutions across the country. Close to 90 per cent of Philips Lighting India’s revenue come from products and solutions which are designed and manufactured in India. With 30 per cent market share, Philips currently leads the lighting market in India. It recently inaugurated its sixth Light Lounge in Bangalore. Based on franchise model, the ‘Light Lounge’ is an experience zone offering a diverse range of more than 800 world-class home decorative lighting designs and concepts from Philips. Rahul Taneja, Business Head – Consumer Luminaires, Philips Lighting India, says, “Lighting is a key business division of Philips and we remain committed to strengthening the business with growing retail presence across all important cities in India.” Philips Electronics India Limited deals in different kinds of consumer durables in the national market. Another player, Dell India has been among the fastest growing technology companies in the country. “An engine for Dell’s global growth, Dell India is a strategic component of Dell’s transformation into a true IT solutions partner and a trusted IT advisor, focused on end-to-end offerings,” says Ritu Gupta, Director Marketing Consumer and Small Business, Dell India.

South-India based, UniverCell Telecommunications, was one of the first players in the market to organise the mobile retail segment. “We believe in innovation and rolling out new initiatives that focus on customer satisfaction. The innovation started with UniverCell LIVE and now, to the launch of UniverCell SYNC which aims at helping customers understand better in this age of smartphones,” says Sathish Babu, Founder, UniverCell Telecommunications.  In this segment, The MobileStore Ltd is another one-stop telecom solution shop that covers all aspects of telecom retail including retailing mobile phones to service providers, mobile phone accessories and even warranty, theft insurance and after sales service like mobile repairs. Sangeetha Mobiles offers mobile phones, tablets, accessories and operator products. Whereas Nokia is famous for its innumerable products related to mobile telephones and is one of the leading mobile telephone brands in India. This brand has got a flair for introducing new models updated with the latest technologies, which meets the requirements of the modern tech savvy people of the country. Sony is a Japanese company of Sony Corporation that started its business operations in India from November, 1994. The brand is one of the leading consumer durables brands in India, offering goods like televisions, music systems, mobile telephones and laptops.

Among leading electronics brands, LG Electronics is known for consumer goods like air conditioners, CDMA handsets, DVD players, home theatres, optical storages and radios.

Hopping on to franchise route

Franchise model gives entrepreneurs control over their own business under the canopy of a successful and powerful brand. Based on proven concept, it is a fast track to success. L Subhash Chandra, Managing Director, Sangeetha Mobiles, says: “Franchise route offers a win-win model for the local entrepreneur and also gives a faster reach for the brand.” Franchising enables business expansion and helps the brand in spreading its presence throughout the country. It facilitates overseas expansion as well. Babu of UniverCell Telecommunicationsexplains, “There is a huge potential in the market across geographies including tier II and tier III cities. While we are going to have our own company-owned outlets in the metro cities, the opportunities in tier II and III cities are driving us to go for franchise. We decided to choose franchise route for exploiting the surging demand of smart phones in the country and enhancing the shareholder value by geographic expanding of the brand.”

Spreading wings

The Mobile Store presently has 700 company-owned units and 90 franchise stores. The brand has been franchising since July, 1987. By the end of 2014, it aims to have 125 franchisees. UniverCell plans to roll out 700 more retail stores by the next fiscal year. This will include 500 flagship stores and 200 franchise stores. The brand has just entered Mumbai and by the end of this fiscal year and it plans to enter cities like Delhi, Ahmedabad and Surat in an attempt to take its presence nationally by expanding widely in the tier II and tier III cities in the South, focusing more on West and North India. Dell India launched its 200th exclusive store recently. After establishing a noticeable presence in the tier I cities which are fairly receptive to computing and technology, Dell has made an effort to take not only technology but also technological awareness to tier II and tier III cities as well. Dell currently has 250+ Dell exclusive stores in 140 cities across India and is hoping to increase the count to 400 by the end of FY 2015. Sangeetha Mobiles aims to open 300 outlets this year. The brand aims to tap rest of India other than South.

Building a right biz model

CDIT business model must focus on targeted customers. The integrated operating model must be constructed around critical make or break moments with the customer, namely, pricing of inventory, sales team facilitation, store layout and transactional fulfillment. Services like home delivery, home installation and after sales services encourage brand success by fulfilling customer expectations. Explaining about the business, Gupta of Dell India says: “Dell has followed its direct sales model across the world and uses the same method to target customers in India as well. While the Dell Exclusive stores are owned and operated by franchisees it is not simply a retail outlet. Our Dell Exclusive store partners work very closely with Dell to create a space which acts an interface with the brand, its philosophy and a showcase of our entire range of consumer products.” UniverCell Telecommunications has three format stores, which are: the regular format store, UniverCell LIVE stores and the new UniverCell SYNC stores. Sangeetha Mobiles operate through multi-unit franchise model. The Mobile Store is a one stop telecom solution which makes it unique and thus, beneficial for its franchise partners. “Having our supply-chain, marketing and goodwill in place, the three most essential elements for franchising, has also helped us to take this leap into the franchising model,” says Himanshu Chakrawarti, CEO, The MobileStore Ltd. The CDIT market is led by retailers like Reliance Digital and Croma with multi-brand offerings.

The electronic pacemaker

E-retail has given a great boost to CDIT market. All major brands have adopted e-commerce model for reaching out to a wide audience. Dell products are available for consumers on the Dell website, either directly through Dell or using our online purchase sales affiliate partner called Dell Exclusive Shipping Affiliate (DESA), an exclusive online store for Dell, and on other e-commerce portals. Alongside this, in the physical space Dell also has tie-ups with multi-brand retail stores, which have been the traditionally preferred platform for purchase, as well as large format retail stores in order to make products accessible for our consumers. Dell believes in a retail model where online and offline are able to complement one another, thereby reaching out to customers through whichever medium best suits their needs.

Franchise facts

Brand

Area

Investment

RoI

Breakeven

UniverCell

800 sq. ft

NA

40%

2 years

The Mobile Store

200-400 sq. ft

Rs 8-10 lakh

NA

2 years

Sangeetha Mobiles

500+ sq. ft

Rs 10 lakh

NA

Operational:
1 month

Related: Non-traditional retail formats are the new hotspots

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