When bricks take on clicks

16th May 2019
When bricks take on clicks
Retail outlet of Reliance Digital

 Multibrand stores used to be the  place where Indian customers  compared and shopped for electronics and home appliances. Now the largest of such  retail chains are having to   take on a new challenge : online & e-commerce. Are they holding their own, or succumbing?
From Anand Parthasarathy
Bangalore, May 16 2019: Earlier this week,  the retail trade in the US  was offered an ominous new   buzzword by  the investment research  firm CFRA ( Centre for Financial Research and Analysis):  "Death by Amazon". It was the name of a new index created by the firm to rate stocks that it recommended  for 'sell',  based  on  the company's vulnerability to competition from Amazon, the online e-commerce behemoth.  Every time Amazon announced that  it was entering a new vertical market, the stocks  of existing players in that sector, took a toss,  putting fear into investors that the online giant would soon scoop up all the sales.|
And how did CFRA arrive at the index? Simple.  It compared  how much of Google search word traffic by consumers,   for a term -- say  LED smart TV --  was going to the website of a retailer versus how much was going to Amazon.  In CFRA's initial shortlist of vulnerable retailers,  were two of  largest  electronics  retail chains in the US -- Best Buy and the specialist console games chain, Gamestop.
This story appeared yesterday on the portal  ACE/EFY

The  Death By Amazon index is reported this week by Business Insider -- and one can be sure, analysts in other geographies  will soon do similar surveys.|Interestingly,  the India-based  electronics and home appliance  retail  business woke up  much earlier to the challenge posed by e-commerce giants like Amazon and Flipkart (with its new Walmart  backing).
In late 2018,  leading consumer electronics retailers, mostly headquartered  in  South India like Viveks, Vasanth &Co, Girias and Sathya,  approached  major appliance manufacturers like Godrej, LG, Panasonic, Samsung, Sony, Whirlpool and others,  asking these brands not to allow deep discounting of their products by online vendors.  Apparently,  the retail store chains  received some assurance of parity, because 6 months later they continue to deal in these brands. But not all.  Some of the retailers  mentioned above,  decided to stop selling the products  of the German  brands Bosch and Siemens. There was no official explanation, but industry watchers said this could be because   products of these two companies --  best known for washing machines and dish washing machines --  were still available  at big discounts compared to the prices that retailers could offer.|
The online operators like Amazon and Flipkart  have generally pleaded inability to help , saying they control the platform, not the price set by individual sellers.
New e-commerce regulations kick in
Roughly at this point in time, Government of India decided to step in and frames rules to regulate who could sell online and how they operated.  Scattered across the  new commerce policy were provisions which sought to regulate how low the online prices could go -- and generally,    the business media in India has condemned these provisions as anti consumer and  needless interference in what should be something the market  should  define.
Be that as it may, the   retail electronics chains  in India  have shown that unlike their  American counterparts, they are not about to roll over and die. They have  one big thing  going for them-- the archetype  Indian customer, who  unknown westerners, believes in  serious  touchy-feely comparison shopping before making a purchase deemed to be paisa vasool.  
For this sort of careful buying, there is no substitute for the neighbourhood   retail store -- stand alone or increasingly in a  shopping mall -- when it comes to buying that smart TV or fridge or microwave or home theatre.

Major study of Indian electronics and appliance  retail market
A major study recently released, by the UK-based strategic market analyst EuroMonitor,   examines for the first time how Indian retailers   hold their own against two challenges: the single stores and the Internet  marketplace. The report entitled "Electronics and Appliance Specialist Retailers in India" ( 42 pages, March 2019 USD 990)  analysis  key demand trends,  forecasts  future markets,  identifies market shares of international and desi players in India  and  suggests strategies for  growth.
According to the EuroMonitor study:
- Reliance Digital from Reliance Retail remained the leading retail brand in electronics and appliance specialist retailers in 2018. Competitive pricing and offers on a par with the major online marketplaces, such as Flipkart and Amazon, helped drive its sales.
- Croma, the flagship brand of Infiniti Retail, owned by Tata Group, continued to be amongst the fastest growing retail brands in electronics and appliance specialist retailers in 2018. This is because consumers have strong faith in Tata Group and associate its brands with quality and affordable pricing.
The report concludes with its take on why multibrand retail in electronics and appliances remain the preferred choice of Indian consumers: "Consumers increasingly prefer to shop at multi-brand outlets, especially for electronics and appliances. As consumers become more price-conscious, they are attracted by the choice of brands and product offerings at different price points in multi-brand outlets."