Consumer durables companies are going solo. With the plethora of products on offer growing rapidly, the increasing need to focus on customer service and with the need to effectively market products to the discerning customer, consumer durable companies are focusing more on setting up exclusive brand outlets (EBOs) rather than working with multiple-brand outlets (MBOs).
“We are seeing an increase in EBOs today in the consumer durables segment today, with Sony and Panasonic starting this. All brands have realized the importance of showcasing specific qualities of products,” said Raghunath Narayanan, Managing Director of Europa Group which manages EBOs for Titan, Samsonite and many other brands.
Though earlier MBOs were in vogue as they offered customers choice and information about various products, companies now prefer to also have their own outlets. LG Electronics, for instance, plans to add about 300 EBOs by the end of this year. The company gets a fourth of its turnover from EBOs, and about 7% from MBOs.
“The display in brand stores is better, the array of products is better and companies also trust better retailing skills in employees,” says Narayanan. Also, companies invest a lot on advertising and their exclusive brand outlets can add to this.
But with MBOs, companies run the risk of the outlet showcasing products that give him better margins or showcasing products that sell more rather giving preference to the brand since focus for him is the sale of a product and not a product of any particular brand. For instance, the retailer may not stock expensive products unless the company gives it to him on credit, Narayanan said.
The trend is leaving MBOs like Viveks and Chroma at a threat, forcing them to innovate. With foreign direct investment (FDI) in retail being allowed, one will see more of this as companies from abroad will come in and set up their stores in India.
“MBOs today are unable to show the length and breadth of brands as most MBOs stock fast-moving products. EBOs on the other hand sell high end products to a niche market,” said B A Srinivasa, Joint Managing Director (CEO), Vivek Ltd, one of India’s largest white goods retailer. Viveks, for instance, is getting into franchising for single brand stores and now runs both MBOs and EBOs for companies.
Via : TOI