IT retail concepts have gone through many transformations over the last decade and a half. While there exists a huge consumer base ready to be tapped via the retail mode, only a combination of key strategies can help retailers reach the desired success levels.
In my last 15 years in the IT industry, I have seen companies experimenting
with several IT retail concepts. In the late 80´s when
PCs were just coming into vogue with the introduction of strong national PC
brands, retailers put up outlets to provide visibility for these brands as also
to display and sell peripherals, accessories, books and software.
This was the non-Internet era and these outlets provided the much-needed
touch-and-feel opportunity to knowledge-hungry potential IT users. However, the
initial craze waned off as consumers realized the high premium being extracted
by these outlets. Also, home markets were not mature and hence low business
volumes could not sustain high the infrastructure costs.
CHANGING FACE OF THE 90’S
With the arrival of MNC brands of PCs in the 90´s, a new breed of retailers
came into existence. Most of them were funded by MNC vendors who insisted on 100
percent brand loyalty in return. Retailers were left with little choice but to
succumb to this demand, due to the low RoI on non-funded retailing.
Retailers must display maximum brands under a single roof, to ensure that serious buyers can take immediate buying decisions and not go elsewhere to compare between brands. |
While this concept did work for certain top brands, margins were under
pressure due to proliferation of these outlets and continuous price wars between
rival brands. In this melee, while the consumer did get the best price, he was
denied the luxury of choosing between rival brands under a single roof.
The same period also saw another breed of mini-retailers proliferating in the
midst of the IT wholesale markets in all major metros. These outlets were
primarily retail fronts for sub-distributors, who leveraged their price
advantage on volume purchases and hence were in a position to provide a variety
of brands to consumers looking for bargain prices.
Y2K also saw a spurt in web retailing which fizzled out expectedly due to
lack of touch-and-feel and concerns on web payment security
SOME FACTS
So, where do we go from here? Have we collectively reached a consensus on
how to effectively address the burgeoning lot of retail consumers who demand the
best for the least?
Let´s start with a few facts:
l The Web has
succeeded in feeding continuous information and data on the latest technology
innovations and introductions. Potential IT users are sufficiently aware of what
they need to standardize on prior to visiting a retail outlet. On the flipside,
the sea of information has also succeeded in thoroughly confusing the consumer
on which technology he/she must standardize on.
l Price lists for
virtually every PC component are readily available on the Web. Hence, potential
customers are armed with individual component prices.
l Powerful brand
advertisements by vendors has resulted in excellent brand recall for specific
brands. This has also provided variety for consumers to choose from.
l New product
introductions are in sync with worldwide launches. Hence, customers demand the
latest at the lowest price.
l After-sales service
support has become a priority. Consumers seek foolproof assurances on this
count, prior to making a purchase decision.
INGREDIENTS FOR SUCCESSFUL RETAILING
Given the population demographics, the next few years will see a flurry of
new retail consumers entering the market for technology product purchases. These
will consist of highly informed persons looking for mature retailers to make
their purchases from. So what are the possible ingredients for successful
retailing :
l The retail outlet
must cover sufficiently large floor space to provide potential customers with a
hassle-free atmosphere and for them to be enthused to spend the requisite time
required to make a buying decision.
l The informed
customer needs choice. Retailers must ensure that they display maximum brands
under a single roof so as to ensure that serious buyers are in a position to
take immediate buying decisions and not go elsewhere to compare between brands.
l Proof of concept
centers must be set up and trained sales representatives must be at hand to
unravel technology issues, making it easier for customers to select the
technology most suited to their individual applications.
l To provide a
feel-good factor to potential customers, the retailer must act as a single point
support center for all products sold. Customer relationship executives must be
assigned to each customer as single point contact for all post-sales service
support. Regular service camps must be organized in league with vendors.
l Retailers must
advertise value-added services like technology consultancy, buy-back programs,
on-site installation and training, Web-based technology updates and finance
options.
l Conduct continuous
in-house technology awareness programs in the vicinity through impromptu
roadshows, competitions, contests and the like.
l Maintain competitive
prices to suit customer expectations. Retailers selling at high price tags get
negative word-of-mouth publicity and attract few repeat customers.
l A separate section
for accessories, gaming products and gizmos to appeal to children and home users
with experience zones to build a traffic of potential buyers.
l A future technology
corner where vendors can provide sneak previews of upcoming technologies and
products. This will ensure repeat visits from customers seeking newer
technologies or wanting to upgrade their existing products.
l Complimentary
product offerings for family audiences.
PG Kamath is GM, Lexmark |
BOTTOMLINE
There is never a single mantra to get things right in one go. All one can
say is that, this is indeed the right time to experiment and come up with a
workable formula, either singly or collectively, to tap the excellent market
opportunity that will unravel in the near future.
The cellphone boom is on. Can the retail IT boom be far behind? It´s time to
sit up and take notice! Retailers can invest safe in the notion that ultimately
vendors will back those that are close to the end-customer.
PG Kamath is GM, Lexmark
International (India) Pvt Ltd