Monday, July 28, 2003		Guest Speak

Slowdown boosts IT retail
R. Manikandan

MARKET trends have always been a reflection of changing consumer needs and IT retailing is no exception. If we look at the trend in home segment, we realise why IT retailing is suddenly catching the imagination of everyone. Gone are the days when a PC was a simple utility device placed idly at some remote corner of our homes. Now a PC and its peripherals like scanners, printers, etc are more of a lifestyle statement than innocuous utility boxes. A simple survey of the market or even plain window-shopping reflects the changing trends aptly — dual coloured monitors, multi-coloured cabinets have become the norm of the day. Manufacturers of PCs and peripherals are giving as much emphasis on aesthetics as on the technology behind it. Today a whole lot of PC accessories and peripherals are available and newer technologies are emerging. Products like modem, joystick, gaming solutions and software, floppy diskettes, CDs, Webcams, digicams, headphones, consumables are finding their way into retail segment in a big way.

With the market inundated with all types of PC accessories and peripherals, the need for the end-consumers to understand the products in sync with their requirements as well as have a touch and feel of the products is becoming more and more salient. It is here that IT retail has to play an important role. Interestingly, the slowdown in the IT market has given a fillip to the IT retail in India. The slowdown has brought channel margins under greater pressures forcing the channels to move up the value-chain and has indirectly led the end-consumer to go in for more value additions. The definition of value-addition has certainly undergone a sea change. A simple warranty with good after-sales services is no longer looked up as big value additions. End-consumers in this competitive market with myriad options are always asking for more.

Venue options

Before delving more into IT retail scenario, let us take a broad look on the types of retail venue options available and ideas associated with it. Broadly there are four categories of retail venues and they can be classified as:

Brand shoppe: This category can be defined as a retail shoppe associated with one single brand and displays all products of that particular brand. This concept is gradually picking up in India and brands like LG can be called a pioneer in this kind of exclusive shoppe.

However, this kind of retail can do well only when the brand being sold has incontrovertible credentials and the customers have full faith in the brand. The advantage of this category is that brand loyal customers get to see all products under one roof. Moreover, the retailer also gets exclusive attention from the principal or the vendor.

Multi-product retail store: This category unlike the exclusive shoppe is associated with multiple brands and is more prevalent in India at present. These stores give the customers more options and is generally a good place for customers not associated with a single brand.

Shop in shop: This category can be defined as a hybrid of the above two categories. Here exclusive space is earmarked for different products and brands. This category is quite advantageous from the retail owner’s perspective, as every brand owner will include the retailer in his or her promotions. Further, it also facilitates enhanced walk in. The customer gets to see excusive options under the same roof.

Web retail store: This category can be classified as the virtual store on the Internet.

This store is easy to set up at a low cost. However, there are many limitations to it. On its own, this kind of a set up has problems in getting customers. Lack of Internet penetration and proper e-commerce infrastructure are some constraints to this model.

Key ingredients

In this scenario it becomes pertinent to look at some of the factors involved in IT retail and ideas associated with it. These factors are generally common to all types of retail outlets.

Retail space: It is the very foundation of any retail set up. There is a lot of speculation regarding what should be the location of the retail outlet. Should it be centrally located? How much should one invest initially? And so on. Initially, rented space is better than a self-owned one as it saves a lot on the working capital. Moreover, prime location is not as important

In-shop d`E9cor: This factor is of great importance in IT retail as the attractiveness of the shop is dependent on it. A good shop d`E9cor creates a pull factor for the customers and can even attract window shoppers. In this, retailer can seek the support of the principals, as the investment is generally a one-time factor.

Display product: Product display is also a critical part of IT retail. Here the retail outlets should display the whole range of products wide and deep. Moreover thrust should also be on displaying accessories and trendy hardware. The idea behind the product display should be that the customers should get a good feel of the range of products.

In shop demonstrators: All efforts of a good retail outlet would come to a naught if the shop does not have good salespersons. Since the needs of all consumers are different, it is pertinent for the sales staff to understand and recommend products best suited to the customers need. Here principals could be of help to the retail owners, as they can train respective sales staff on their brands.

Security systems: Since retail shops have high value products, security of the shop is needed. Here CCTV is most recommended. The retailer should also display dummy samples of tiny products. At a later stage, magnetic decoder alarms are also recommended.

High marketing cost: This is one aspect where the retail owners have to do meticulous planning, since a lot of sales depend on the right marketing strategy. The idea behind a good marketing strategy is high visibility at low cost. Here retailers can look for co-op funded promos with principals and vendors. Moreover, low-cost promotions like paper inserts, outsourced telemarketing, cable TV stripes etc, can also comes handy. Further game events, movie show, free Internet browsing etc can also attract end-user audience.