Leveraging the retail route

Once seen as a mere utility product, PCs are increasingly being viewed as a lifestyle statement. Here’s R Manikandan on how IT retailing can be dolled up to meet the needs of today’s customer, who is looking beyond warranty and after- sales service

Market trends have always been a reflection of changing consumer needs, and IT retailing is no exception. If we look at the trend in the home segment, we realise why IT retailing is suddenly catching the imagination of people.

Gone are the days when a PC was a simple utility device placed idly in some remote corner of the house. Now a PC and its peripherals like scanners and printers are more of a lifestyle statement than utility boxes. A simple survey of the market or even plain window-shopping reflects the changing trend dual-coloured monitors and multi-coloured cabinets have become the norm of the day. Manufacturers of PCs and peripherals are giving as much emphasis to aesthetics as to the technology behind it.

Today, a whole lot of PC accessories and peripherals are available, and newer technologies are emerging everyday. Products like modems, joysticks, gaming solutions and software, floppy disks, CDs, webcams, digicams, headphones and consumables are finding their way into the retail segment in a big way.

With the market inundated with all types of accessories and peripherals, there is increasing need for end-consumers to understand these products in sync with their requirements, and to have a touch-feel of them. It is here that IT retail can play a very important role. Interestingly, the slowdown in the IT market has also given a fillip to IT retail in India. The slowdown has brought channel margins under pressure, forcing them to move up the value chain. This has indirectly led the end-consumer to go in for more value-additions.

Meanwhile, the definition of value-addition has undergone a change. A simple warranty with good after-sales service is no longer looked upon as a big value-addition. End-consumers with myriad options in this competitive market are always asking for more.

Venue options

Before going deeper into the IT retail scenario, let us take a look at the types of retail venue options available, and the ideas associated with them.

Broadly, there are four categories of retail venues:

• Brand shop: This can be defined as a retail shop associated with one single brand, and which displays all products of that particular brand. The concept is gradually picking up in India. However, this kind of retail can do well only when the brand being sold has unquestionable credentials and the customer has full faith in the brand. The advantage of this approach is that brand-loyal customers get to see all products under one roof, while the retailer gets focused attention from the principal or vendor.
• Multi-product retail store: This category is associated with multiple brands, and is more prevalent in India at present. These stores give the customer more options, and are generally a good place for customers not loyal to a single brand.
• Shop in shop: This can be defined as a hybrid of the above two categories. Here, exclusive space is earmarked for a particular company’s products and brands. This is quite advantageous from the retail owner perspective since every brand owner will include the retailer in its promotions. It also enhances walk-ins.
• Web retail store: A virtual store on the Internet, this is very easy to set up at a low cost. However, there are many limitations to it. On its own, this kind of set-up has a problem getting customers. Lack of Internet penetration and proper e-commerce infrastructure are some constraints to this model.

Key ingredients

It may be useful to look at some of the factors involved in IT retail. These factors are generally common to all types of retail outlets.

• Retail space: The very foundation of a retail set-up. There is a lot of thought regarding the location of the retail outlet. Should it be centrally located? How much should one invest initially? A rented space is better than a self-owned one since it drastically reduces the capital investment needed. Also, a prime location is not always important.
• In-shop decor: This factor is of great importance in IT retail since the attractiveness of the shop is dependent on it. A good decor creates a pull factor, and can even attract window shoppers. In this the retailer can seek support from the principal since the investment is generally made only once.
• Product display: A critical part of IT retail. The retail outlet should display the whole range of products wide and deep. There should also be a display of accessories and trendy hardware. The idea behind the product display is that customers should get a good feel of the range of products.
• In-shop demonstrators: Everything else will mean nothing if the shop does not have good salespeople. Since the needs of every customer is different, the sales staff must understand and recommend products best suited to these needs. The principals could be of help to the retail owner by training the sales staff, with special focus on their brands.
• Security systems: Since IT retail shops have high-value products, security is necessary. Closed circuit TV is recommended. The retailer should also display dummy samples of tiny products. At a later stage, magnetic decoder alarms are also recommended.
• Marketing strategy: This is one area where retail owners have to do meticulous planning, since sales depend on the right marketing strategy. A good marketing strategy brings high visibility at low cost, so retailers can suggest promos co-funded by principals and vendors. Low-cost promotions like newspaper inserts, outsourced telemarketing and cable TV stripes can come in handy. Game events, movies, and free Internet browsing can also attract the end-user.

Value-addition

What will differentiate winners from losers in this highly competitive market? Keep in mind that any customer who is planning to invest a substantial amount on PCs and accessories will also have substantial expectations, so the retailer should aim to meet and exceed these expectations. In a changing world where warranty and after-sales service are not the only yardsticks of customer satisfaction, retailers have to find alternative means to generate better sales. One thing they could do is provide customers with need-based or budget-centric solutions, rather than just thrusting a product on customers. Exclusivity in select software, games and hardware can also help in securing business, along with the practice of assembling the whole PC right in front of the customer's eyes. The essence is to make the whole sales affair as interactive as possible.