Meet the new generation of retailers who are taking the
battle to Amazon and Flipkart’s den
Rising income, normal monsoon, easier
access to credit and populist government measures drive up consumer durables
sales.
In the 1970s, white goods manufacturer Philips launched
a oneband transistor named Vikram. The product failed to click with
value-conscious Indian customers as it required six batteries — priced at Rs
1.50 apiece. Philips was hesitant to scrap truckloads of unsold Vikrams and
decided to ‘push-sell’ through their best distributors.
It pinned its hopes on resellers such as Ram Mewani of Ganesh Radio Centre, Ambernath (a Mumbai suburb), who had been in business for hardly five years, but had overtaken several large distributors’ sales. Mewani simply printed thousands of handbills and placed them inside newspapers circulated in and around Ambernath and Ulhasnagar area.
“We sold thousands over the next few weeks. Buyers queued up in front of our shop for hours. We sold Vikram transistors like peanuts,” reminisces Mewani (72), founder-chairman of Kohinoor Televideo, new-age avatar of the erstwhile Ganesh Radio Centre.
While Mewani was honing his sales skills and serendipitously launching a novel EMI scheme, Nanu Gupta of Vijay Sales — then a bunk-sized shop at Mahim — was explaining ‘valve-set television’ to a prospective buyer for the 200th time. The customer would visit the shop daily with the same questions about price, quality, after-sales service…“People thought I was mad to entertain a customer who only asked questions. But on the 256th day, he bought that TV from me,” says Gupta.
Mewani and Gupta started their respective businesses in 1967. The duo, along with Nirmal Baid of Great Eastern Appliances, Anand Swarup Agarwal of Capital Electronics (both Kolkata) and Kodandarama Setty of Viveks Ltd (Chennai) perfected the art of selling electronic goods in India.
They sold Usha sewing machines, Murphy transistors, Crown TVs, Hitachi VCRs, Allwyn refrigerators and Bush radios to a generation of innately reluctant buyers. To attract customers, they offered EMIs, after-sales service and passed on cost discounts scrimped from manufacturers.
The ‘fab five’ of Indian electronics carved a niche for themselves, which their children are now trying to master. “My eldest son has spent more time with me in business, so he’s as good as me. My younger son is still learning. I encourage him to learn from his mistakes,” says Mewani, widely referred to as Rambhai in the industry.
SPEAKING VOLUMES
The consumer durables market in India registered 15%+ growth every year between 2012 and 2017 to cross Rs 1 lakh crore, as per data sourced from Care Ratings.
Rising income, normal monsoon, easier access to credit and populist government measures drive up consumer durables sales. That apart, quick-loan providers such as Bajaj Finance and ecommerce platforms like Amazon bear out the ‘ease of buying’ element.
Last year, Amazon marketplace’s India revenue grew 105%. Ecommerce in India has grown at a CAGR of over 35% from 2009 to over $30 billion last fiscal. Global investment firm Nomura expects this segment to top $70 billion by 2020. But traditional brick-and-mortar retailers don’t seem overly concerned.
“Competition is good for us. It’ll widen the market and help us be nimble-footed and evolving at all times,” reasons Nilesh Gupta, managing director, Vijay Sales, the older of Nanu Gupta’s sons. “We’ve done well whenever we faced existential problems. We survived low volumes growth of the 70s and 80s and fended off competition when multibrand retailers set up shop in 2007. We’ll survive this one too.”
Off line retailers such as Vijay Sales, Kohinoor and Great Eastern plan to expand and conquer. “Despite stiff competition, margin shrinkage has not affected us much,” reports Vishal Mewani, executive director, Kohinoor Televideo, Ram Mewani’s eldest son. “In the 1990s, our margins were 15-20% but sales turnover was low. Now, margins have dropped a wee bit but we sell more… Higher sales volume offsets margin compression.”
BURN THE ECOMMERCE BULLY
According to offline resellers, Amazon and Flipkart log higher sales only on big sale days, when they “burn” their own money to push discount sales. On other days, retailers such as Vijay Sales and Kohinoor are able to match online prices 70-80% of the time.
“We are able to survive because customers still want to touch and feel what they buy,” says Prashant Agarwal, director, Capital Electronics, whose father Anand Swarup Agarwal started off selling watches and radios in Kolkata. “We also take special interest in after-sales service. Offline retailers enjoy people’s trust. We only sell genuine products at right prices. We never dreamt of supernormal profits.” But he worries that predatory pricing is damaging the ecosystem beyond repair.
Demand projection is an area where ecommerce companies beat offline retailers fair and square. According to Pulkit Baid, director, Great Eastern, son of founder Nirmal Baid, the use of data and artificial intelligence gives online sellers the edge. “Ecommerce companies use a lot of data and predictive tools to project demand. They also use customer footprint (on the internet) to their advantage. They’re able to push-sell more products using digital tools,” says Baid. “This will stop only when customers feel their privacy is being impinged upon by ecommerce companies. When that happens, there will be a level playing field between online and offline sellers.”
To counter this, new-age managers such as Baid are trying to understand customers better. Great Eastern consciously segregates product needs of rural and urban buyers. They are trying to expand faster to emerging states with high population and rising literacy and unconquered territory.
Even ecommerce giants do not underestimate the power of these large family-owned consumer durables chains. Amazon has already partnered with offline resellers for programmes such as Amazon Easy, which “empowers small corner stores” to be “digital assistants” to first-time online shoppers. “Growth of ecommerce has opened up many avenues of additional revenues for offline retailers,” reads Amazon’s email response. But such offers do not excite offline electronic goods chains. “They can tie up with small bunk stores for that. We cannot be secretaries to ecommerce companies. We don’t have to,” says a smallsized white goods reseller from Kerala.
Offline retailers, in sharp contrast to ecommerce companies, prefer to keep an ‘asset-heavy’ model. Most electronics chains operate out of their own premises. Biggies such as Vijay Sales and Kohinoor operate on a 70:30 model, where 70% of their showrooms are owned, cutting down rentals. “We open shops only where people have the money to buy our wares. Buying power is important for any electronics reseller,” says Ram Mewani. “If we like the place and the land is at a fair price, we acquire it. There’s some real estate play in what we do.”
Resellers such as Vijay Sales and Kohinoor are practically debt-free companies. They have no external investors or any plans to list on the bourses anytime soon.
Venugopal Dhoot, founder-CMD of Videocon Group, places high hopes on the survival of offline dealers and distributors. According to Dhoot, touchand-feel is an important factor in consumer durables retailing and will continue to be so. “Globally, over 90% of consumer durables are sold offline. People trust shopkeepers and dealers more than portals,” Dhoot says.
CHANGING TASTES
Customer-centricity helped white goods resellers such as Mewani and Gupta grow their business. When valve-set TVs were launched in India in the 1970s, they sometimes took 10-15 minutes to ‘warm up,’ leaving buyers panicking that they brought home a faulty set. Gupta would swing by customers’ houses to assure all was well.
1982 was a watershed for consumer durable sellers, when India hosted the Asian Games (Asiad) in Delhi Resellers such as Kohinoor and Vijay Sales booked orders for 250-300 television sets daily. Mewani reminisces selling an unbooked Crown TV (bearing a tag of Rs 4,000) for Rs 14,000. “Shelves would be empty by the time we shut shop every day. The rich bought TV sets while low-income earners purchased quality radio sets then,” he says.
Prior to the Asiad, offline home appliances retailers were not white goods sellers in the real sense of the word. Along with radio sets (Bush, Murphy and Philips), sewing machines, singledoor refrigerators (Allwyn) and basic television sets (Bharat TV, Crown, Dynora, Solidaire, Orson, Weston), they also sold bedding, cots, furniture and kerosene stoves.
The real boom in electronics retailing started after the games, when brands such as Videocon, Onida, Kelvinator, Voltas, Hitachi and Nat ional Panasonic tied up with these distributors. “With newer brands came newer products and variants. Resellers like us grew our showrooms. In the early 2000s, we also started selling mobile phones. This attracted more customers. The focus then turned to making shopping more comfortable and experiential,” says Gupta of Vijay Sales.
Vijay Sales and Kohinoor like to keep large showrooms while Great Eastern prefers mid-sized shops for easy management and tighter display. “We work on very thin costs,” says Baid. “Large stores are good but it can increase your running cost. We want all our stores to be profitable. So store sizing is entirely dependent on what kind of revenues we can generate from a location.”
GENERATIONAL SHIFT
Ask Nanu Gupta to evaluate his sons and he says, “Bilkul zero hain dono.” Ashish, his second son, readily agrees, saying “We don’t have it in us to be like Baba. He’s a master salesman. He would not let any customer walk out without buying a product.”
The brothers have had major arguments with their father about having fixed closing hours. “Baba would be irked when store watchmen draw half-shutters at 9.30 PM. We try to tell him it’s for security reasons but he feels we’re limiting our customers by doing so,” chuckles the elder brother.
Baid siblings Pulkit and Pooja have been trained to negotiate with manufacturers. “The idea is to extract maximum benefits which can be passed over to customers,” says Pulkit.
Mewani disapproves of son Vishal’s approach. “He’s too transparent. You don’t need to divulge all your cards. Manufacturers should not know your weaknesses,” he warns. “I don’t think so,” Vishal shoots back. “It’s best to be transparent in business.”
The older men can take it easy now, for the sons have risen.
It pinned its hopes on resellers such as Ram Mewani of Ganesh Radio Centre, Ambernath (a Mumbai suburb), who had been in business for hardly five years, but had overtaken several large distributors’ sales. Mewani simply printed thousands of handbills and placed them inside newspapers circulated in and around Ambernath and Ulhasnagar area.
“We sold thousands over the next few weeks. Buyers queued up in front of our shop for hours. We sold Vikram transistors like peanuts,” reminisces Mewani (72), founder-chairman of Kohinoor Televideo, new-age avatar of the erstwhile Ganesh Radio Centre.
While Mewani was honing his sales skills and serendipitously launching a novel EMI scheme, Nanu Gupta of Vijay Sales — then a bunk-sized shop at Mahim — was explaining ‘valve-set television’ to a prospective buyer for the 200th time. The customer would visit the shop daily with the same questions about price, quality, after-sales service…“People thought I was mad to entertain a customer who only asked questions. But on the 256th day, he bought that TV from me,” says Gupta.
Mewani and Gupta started their respective businesses in 1967. The duo, along with Nirmal Baid of Great Eastern Appliances, Anand Swarup Agarwal of Capital Electronics (both Kolkata) and Kodandarama Setty of Viveks Ltd (Chennai) perfected the art of selling electronic goods in India.
They sold Usha sewing machines, Murphy transistors, Crown TVs, Hitachi VCRs, Allwyn refrigerators and Bush radios to a generation of innately reluctant buyers. To attract customers, they offered EMIs, after-sales service and passed on cost discounts scrimped from manufacturers.
The ‘fab five’ of Indian electronics carved a niche for themselves, which their children are now trying to master. “My eldest son has spent more time with me in business, so he’s as good as me. My younger son is still learning. I encourage him to learn from his mistakes,” says Mewani, widely referred to as Rambhai in the industry.
SPEAKING VOLUMES
The consumer durables market in India registered 15%+ growth every year between 2012 and 2017 to cross Rs 1 lakh crore, as per data sourced from Care Ratings.
Rising income, normal monsoon, easier access to credit and populist government measures drive up consumer durables sales. That apart, quick-loan providers such as Bajaj Finance and ecommerce platforms like Amazon bear out the ‘ease of buying’ element.
Last year, Amazon marketplace’s India revenue grew 105%. Ecommerce in India has grown at a CAGR of over 35% from 2009 to over $30 billion last fiscal. Global investment firm Nomura expects this segment to top $70 billion by 2020. But traditional brick-and-mortar retailers don’t seem overly concerned.
“Competition is good for us. It’ll widen the market and help us be nimble-footed and evolving at all times,” reasons Nilesh Gupta, managing director, Vijay Sales, the older of Nanu Gupta’s sons. “We’ve done well whenever we faced existential problems. We survived low volumes growth of the 70s and 80s and fended off competition when multibrand retailers set up shop in 2007. We’ll survive this one too.”
Off line retailers such as Vijay Sales, Kohinoor and Great Eastern plan to expand and conquer. “Despite stiff competition, margin shrinkage has not affected us much,” reports Vishal Mewani, executive director, Kohinoor Televideo, Ram Mewani’s eldest son. “In the 1990s, our margins were 15-20% but sales turnover was low. Now, margins have dropped a wee bit but we sell more… Higher sales volume offsets margin compression.”
BURN THE ECOMMERCE BULLY
According to offline resellers, Amazon and Flipkart log higher sales only on big sale days, when they “burn” their own money to push discount sales. On other days, retailers such as Vijay Sales and Kohinoor are able to match online prices 70-80% of the time.
“We are able to survive because customers still want to touch and feel what they buy,” says Prashant Agarwal, director, Capital Electronics, whose father Anand Swarup Agarwal started off selling watches and radios in Kolkata. “We also take special interest in after-sales service. Offline retailers enjoy people’s trust. We only sell genuine products at right prices. We never dreamt of supernormal profits.” But he worries that predatory pricing is damaging the ecosystem beyond repair.
Demand projection is an area where ecommerce companies beat offline retailers fair and square. According to Pulkit Baid, director, Great Eastern, son of founder Nirmal Baid, the use of data and artificial intelligence gives online sellers the edge. “Ecommerce companies use a lot of data and predictive tools to project demand. They also use customer footprint (on the internet) to their advantage. They’re able to push-sell more products using digital tools,” says Baid. “This will stop only when customers feel their privacy is being impinged upon by ecommerce companies. When that happens, there will be a level playing field between online and offline sellers.”
To counter this, new-age managers such as Baid are trying to understand customers better. Great Eastern consciously segregates product needs of rural and urban buyers. They are trying to expand faster to emerging states with high population and rising literacy and unconquered territory.
Even ecommerce giants do not underestimate the power of these large family-owned consumer durables chains. Amazon has already partnered with offline resellers for programmes such as Amazon Easy, which “empowers small corner stores” to be “digital assistants” to first-time online shoppers. “Growth of ecommerce has opened up many avenues of additional revenues for offline retailers,” reads Amazon’s email response. But such offers do not excite offline electronic goods chains. “They can tie up with small bunk stores for that. We cannot be secretaries to ecommerce companies. We don’t have to,” says a smallsized white goods reseller from Kerala.
Offline retailers, in sharp contrast to ecommerce companies, prefer to keep an ‘asset-heavy’ model. Most electronics chains operate out of their own premises. Biggies such as Vijay Sales and Kohinoor operate on a 70:30 model, where 70% of their showrooms are owned, cutting down rentals. “We open shops only where people have the money to buy our wares. Buying power is important for any electronics reseller,” says Ram Mewani. “If we like the place and the land is at a fair price, we acquire it. There’s some real estate play in what we do.”
Resellers such as Vijay Sales and Kohinoor are practically debt-free companies. They have no external investors or any plans to list on the bourses anytime soon.
Venugopal Dhoot, founder-CMD of Videocon Group, places high hopes on the survival of offline dealers and distributors. According to Dhoot, touchand-feel is an important factor in consumer durables retailing and will continue to be so. “Globally, over 90% of consumer durables are sold offline. People trust shopkeepers and dealers more than portals,” Dhoot says.
CHANGING TASTES
Customer-centricity helped white goods resellers such as Mewani and Gupta grow their business. When valve-set TVs were launched in India in the 1970s, they sometimes took 10-15 minutes to ‘warm up,’ leaving buyers panicking that they brought home a faulty set. Gupta would swing by customers’ houses to assure all was well.
1982 was a watershed for consumer durable sellers, when India hosted the Asian Games (Asiad) in Delhi Resellers such as Kohinoor and Vijay Sales booked orders for 250-300 television sets daily. Mewani reminisces selling an unbooked Crown TV (bearing a tag of Rs 4,000) for Rs 14,000. “Shelves would be empty by the time we shut shop every day. The rich bought TV sets while low-income earners purchased quality radio sets then,” he says.
Prior to the Asiad, offline home appliances retailers were not white goods sellers in the real sense of the word. Along with radio sets (Bush, Murphy and Philips), sewing machines, singledoor refrigerators (Allwyn) and basic television sets (Bharat TV, Crown, Dynora, Solidaire, Orson, Weston), they also sold bedding, cots, furniture and kerosene stoves.
The real boom in electronics retailing started after the games, when brands such as Videocon, Onida, Kelvinator, Voltas, Hitachi and Nat ional Panasonic tied up with these distributors. “With newer brands came newer products and variants. Resellers like us grew our showrooms. In the early 2000s, we also started selling mobile phones. This attracted more customers. The focus then turned to making shopping more comfortable and experiential,” says Gupta of Vijay Sales.
Vijay Sales and Kohinoor like to keep large showrooms while Great Eastern prefers mid-sized shops for easy management and tighter display. “We work on very thin costs,” says Baid. “Large stores are good but it can increase your running cost. We want all our stores to be profitable. So store sizing is entirely dependent on what kind of revenues we can generate from a location.”
GENERATIONAL SHIFT
Ask Nanu Gupta to evaluate his sons and he says, “Bilkul zero hain dono.” Ashish, his second son, readily agrees, saying “We don’t have it in us to be like Baba. He’s a master salesman. He would not let any customer walk out without buying a product.”
The brothers have had major arguments with their father about having fixed closing hours. “Baba would be irked when store watchmen draw half-shutters at 9.30 PM. We try to tell him it’s for security reasons but he feels we’re limiting our customers by doing so,” chuckles the elder brother.
Baid siblings Pulkit and Pooja have been trained to negotiate with manufacturers. “The idea is to extract maximum benefits which can be passed over to customers,” says Pulkit.
Mewani disapproves of son Vishal’s approach. “He’s too transparent. You don’t need to divulge all your cards. Manufacturers should not know your weaknesses,” he warns. “I don’t think so,” Vishal shoots back. “It’s best to be transparent in business.”
The older men can take it easy now, for the sons have risen.
Shailesh Menon
https://retail.economictimes.indiatimes.com/news/consumer-durables-and-information-technology/consumer-electronics/meet-the-new-generation-of-retailers-who-are-taking-the-battle-to-amazon-and-flipkarts-den/66819948
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