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Aug, 09 2011

SIZE DOESN’T MATTER

A BOOSTING FACTOR IN SPECIALTY RETAIL IS THE THE EMERGENCE OF THE LOW-COST KIOSK FORMAT THAT HAS TAKEN THE FANCY OF INDIAN ENTREPRENEURS. THE UPFRONT INVESTMENT FOR A KIOSK OR A CART RANGES BETWEEN RS 1-9 LAKH AND TODAY KIOSKS HAVE THE POTENTIAL TO BREAK

WORRIED that in a world dominated by big retail giants how will your small business make a big difference? Trust in your small deals, simply because they are sure to get you big returns, as you have nothing much to lose! While visiting a mall or any other high traffic area, specialty retailing kiosks are sure to catch your eyeballs. Now, how can you miss those fancy, colourful jewellery items, perfumes, artifacts, flowers etc, that does not come at a price! This phenomenon of retailing products via kiosk shows the popularity of low-cost format in the specialty retail sector that has tremendous scope in franchising as well. According to a specialty retail report, kiosks are an easy way to get a foot in the door with lesser risks.

Specialty retail engulfs selling of specific types of products like electrical goods, flowers, gift items etc. These items are usually retailed only via big outlets, standalone and showrooms. However, after witnessing the rising popularity of kiosks in malls and high traffic areas, many specialty retailers took the plunge of expanding through this low-cost format. Specialty retailing through kiosks offer innumerable benefits for both franchisors and franchisees as well as for consumers. Regarding the preference for retailing through kiosks, Pawan Gadia, Chief Executive Officer (CEO), Retail & Online, Ferns N Petals Pvt. Ltd said: “Kiosks, due to their small space requirement, are a popular model for brand awareness and also add to the sales of the brands. For Ferns N Petals, the kiosk model has added in terms of brand presence and also helped us as low-cost option presence.” Similarly, Smriti Dalvi, Managing Director and Chief Executive Officer, Florista India Pvt. Ltd, says: “Kiosks are the most convenient source to boost the speciality retail sector. For Florista, kiosks have definitely encouraged its growth. This is mainly due to its location that adds as a plus point and thus increases demand in the market. Fresh and exotic flower kiosks are ideally placed at the entrance of malls and airports, which gives us high visibility.”

What's favourable for kiosk retailing?

More accessible: Specialty products like books, perfumes, flowers etc have become more accessible for middle class customers.

Viable for franchisors: A kiosk is a small set-up, requiring less investment as well as employees, as compared to a standalone or an outlet. Therefore, it is more viable for retailers/franchisors, who want to experience rapid expansion of their brand in short time.

Source of advertising: Kiosks, due to their compact size, act as a popular model for spreading brand awareness and also boost their sales.

Opportunities galore: Another benefit that has encouraged specialty retailers to opt for kiosks is the increasing number of entrepreneurs, who are interested to start a kiosk of a particular franchise as a way of venturing into entrepreneurship. Aspiring entrepreneurs find it easier to dig out a small investment for starting their venture rather than investing a huge amount of capital in a specialty outlet. Moreover, running a kiosk has less risk involved as compared to a full-fledged retail outlet.

Company-owned or franchised?

The present success of a kiosk can be attributed to the concept of franchising, which has added to its variety as well. Earlier, franchising had given a boost to ice-cream, coffee and other food and beverage kiosks and carts. Now, it's time for specialty retailing to be benefitted from this concept.

Presently, we see an increasing number of specialty products like watches, jewellery, perfumes, toys, dry-fruits, flowers etc being retailed via kiosks and carts. Moreover, it can also be seen that most of these kiosks are franchisee-owned and operated. According to Gadia, “Real estate is available at premium prices and there is a scarcity of good locations in a mall/ markets. Thus, small space requirement with low cost to start a kiosk is one of the favourable ways of expanding.”

Gadia further said, “We have six kiosks so far and they are all franchised.” Dalvi also shares, “Out of our 27 retail locations, 10 are kiosks and they are franchisee operated.” As shared by Anil Sharma, Chief Executive Officer, French Perfume, “We have more than 50 kiosks of French Perfume, mostly all are franchised. We have seen that franchised kiosks fare better than our own. They collect better revenues and are more popular.” The most valid reason for this can be that kiosks need a lot of personal attention that can't be given by a care-taker or a kiosk manager in case of a company-owned kiosk. Due to unavailability of kiosk owners, the manager does not really care about consumers being happy or excited to see products like flowers, perfumes etc retailed via kiosks. However, in case of a franchised kiosk, franchisees give a lot of care and attention to make it a success, as their future entrepreneurial success depends on the venture. Therefore, specialty retail via kiosks can do wonders in franchising.

On the flip side

Besides innumerable benefits, there are a few shortcomings that have to be faced by retailers and franchisees. Sharing her views about challenges Dalvi said, “Limited space poses a challenge. Supply chain, storage of large quantities of stock can be an issue. Therefore, it becomes difficult to handle large volumes from the location. Florista faced this issue during Valentine's Day. We had no option but to request additional back office space from the authorities concerned for a day.” On the other hand, Pawan Gadia said, “The viability of these formats are always a challenge, thus having it in the correct place with the targetted customer is one way of ensuring success. Also, ensuring no pilferage and motivated manpower is a must for the success of the same.”

To sum up, it can be said that specialty retailing via kiosks is a favourable concept, but can do wonders with proper care and attention. They can add to brand’s visibility as well as popularity.

Journey ahead

Considering the sudden growth of kiosks, it can be predicted that kiosks specialty retailing has a bright future in Indian market. With the mall culture catching up in India, specialty retail kiosks are well suited option for strengthening brand's existence. Therefore, the future holds a lot of potential for this concept. Gadia feels: “We expect 10 per cent of our future outlets to be in kiosk format, as this format is here to stay. The staff requirement, stock investment etc are less and therefore will be popular in various high traffic areas.” Dalvi said, “Looking at the growth of the speciality retail sector in the past years, most of the brands will extend to the kiosk format in addition to the store format. It is the fastest and most economical way to expand a brand's presence.”

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