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CDIT Retail 2011-05-15

Beat the heat with cooling opportunity

Summers bring happier times for consumer durables retailers as the purchase of electrical goods reaches its peak. Though the role of electrical goods is equally important during winters but considering its lesser duration, summers are the best time for re

By Ramanjit Kaur Feature Writer

Increasing need for various household chores to be finished at the click of the button, fast pace of life and changing lifestyles have led the retailers dealing in consumer durables to capitalise on this evergreen opportunity. Here come summers and the best time for retailers to cash in. Electrical goods though have become an indispensible part of today’s lifestyle irrespective of the season still the demand of electrical goods increases especially during summers. With changing lifestyles, working couples, increased disposable incomes and fast pace of life everybody prefers work to be done at the click of a button. Today home appliances like include refrigerators and freezers, washing machines, toasters, dishwashers, microwave ovens, juicers, grinders, mixers, water purifiers, built-in ovens, and air conditioners have become more than a necessity. A household seems to be incomplete in the absence of even a single electrical good. Keeping all this in mind, several national and international companies including Voltas, Videocon, Bluestar, Godrej, Kenstar, LG, Samsung, Whirlpool, Kenmore and IFB have initiated to cater to the rising need of the consumers by expanding their retail ventures across the country. Some of these have opted for franchise route for expansion creating a huge opportunity for aspiring entrepreneurs.

Industry speak

Rising economy, brand consciousness, steady rise in the income levels, changing mindset, and interest to buy latest evolving technologies (that not only helps the consumers in saving time and energy but also consumes less power supply) play a major role in driving the home appliance industry towards growth. It is estimated that this Rs 300 billion home appliance industry will reach Rs 500 billion by 2015. To this, rural market for home appliances is contributing a major portion, which is growing at the rate of 30 per cent annually as against the urban market which is growing at an annual rate of nine to 12 per cent.

Taking this into account, the various companies in the industry are aggressively eyeing towards franchise expansion to capture a major share of the market. IFB is looking at launching 50 IFB Artkitchen franchises across the country within 24 months to offer a combination of lifestyle solutions and appliances. The companies like Whirlpool, IFB, Haier India, NEXT Retail (a leading organised retailer of consumer electronics and home appliances), Lakhera Planet (a luxury status home appliance store from Lakhera) and so on, have taken up the franchise route to sell the modern day home appliances across the nation. It is the best route to capture such a rapidly emerging market. According to Eric Braganza, President, Haier India, “To suit the need of the Indians, it is important to bring the people in proximity with the world class Haier products. Hence, Haier India took the franchise route, so that our customers can stay connected with us and our products. This not only encourages our customers to access our range of products but also experience it in a multi-brand scenario.” Whereas Sunil Mehta, CEO, NEXT Retail says, “Franchising is the best available option for any company to expand its business. After opting for franchising, we have become capable to expand our network rapidly and generate good revenue out of it.” These companies are successfully expanding pan India by setting up franchised outlets at every nook and corner, so that the consumers do not have to travel to far places to get the desired products.

Opportunity lies in

This is making enough room for the aspiring entrepreneurs to enter this emerging industry via franchise route and cater to the surging demands for latest home appliances. To be a part of this domain, a potential franchisee requires being financially sound to invest in a franchise business that differs from company to company. For instance, Whirlpool requires an investment of Rs 15- 25 lakh, while the franchises of Lakhera Technologies asks for an investment that may range from Rs 50 lakh to one crore. Similarly, area to open the franchise outlet also varies with 2,500- 3,500 sq.ft for Lakhera Technologies, 1,000–2,500 sq.ft for IFB Artkitchen franchises, a minimum of 800 sq. ft for Whirlpool and so on. However, the area for opening the franchise outlet must be located in a strategic location with high footfalls and good catchment areas.

According to Mehta, “We usually look at retailers with thrust of business and dedication. These are the prime key requirements to secure the franchise of NEXT Retail.” Besides this, a franchisee must know the selling skills and willing to partner with the brand and co-operate in branding the store as per the companies’ norms. As per Braganza, “For Haier Experience Centre, the franchisee should be in a strategic location with high footfalls and should be able to sell hi-end products. For a shop-in-shop, the franchisee should have a multi brand showroom located in a strategic location with high footfalls, rest of the criteria remain the same.” With the fulfilling of these eligibility criteria, a franchisee secures innumerable leverages and bright future for himself. The franchisees usually enjoys the handholding from the parent company through an extensive training session, along with the help in selecting the site for opening the franchise outlet, marketing the franchise business locally and nationally, regular monitoring on the franchisee’s performance, and most of all ongoing support.

The future of the home appliance industry is robust as with every passing day, the demand for modern home appliances is on the rise. So, if you have a positive attitude, desires to succeed in life and aspires to own a business in this flourishing industry, franchising paves your way to success. It provides an opportunity to the young and experienced entrepreneurs to establish themselves through this wonderful mode.

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