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Videocon, Samsung to expand retail outlets

February 21, 2007 10:55 IST

The consumer durable companies such as Videocon, Samsung and Godrej may be aggressively expanding their own brand outlets, all though consultants are not sure if the retail expansion will have a significant impact on sales or bottom lines.

"Durables retailing does not deliver healthy margins and the purchases are not confined to a particular brand. Mostly value-driven retail chains and multi-brand outlets deliver healthy sales volumes to the companies as customers tend to compare various product features to different brands," a senior consultant said.

Videocon Industries promoter chain of consumer durable retail stores, Next, has set up more than 230 stores across the country and is expected to scale it up to 1000 outlets soon.

Other companies such as Godrej Appliances and Samsung are also taking the same approach. In three years, Godrej aims to launch over 200 Godrej Lifespace stores and also retail other complimentary products such as accessories, toys and wallpapers.

Korean major Samsung Electronics plans to scale up its retail presence by 40 per cent. Vishesh Singh, senior consultant, Technopak Advisors, adds that the exclusive company outlets help in enhancing brand display. "A large format durables retailer might not stock all the models of a particular brand. The company's showrooms help in showcasing the entire range," he said.

However, consumers might not take their final decision without taking a look at the competition. Vipul Rawal, director, Siemens, said, "Unlike apparels and accessories, the brand loyalty in durables is not very strong as the customers prefer to compare multiple brands before making purchases.

Though the sales are driven from traditional retailers and large format stores, the brand shops enable the companies to display a wide range of products."

The companies are also taking care of consumer needs to compare their brand with others. "We have installed kiosks to guide customers in buying suitable appliances according to their requirements. Shortly, we will introduce audio-visual screening facilities that will help customers to compare features of Godrej vis a vis other brands," said Shyam Motwani, vice- president and business head of Godrej and Boyce's retail division.

He adds that brand showrooms are beneficial in extending the brand visibility, entering newer markets and maintaining the market share.

Going forward, analysts predict that the companies, which are expanding their retail presence might look at co-branding opportunities with financial services partners.

"The retail expansion is to promote branding. The companies have made enough profits to sustain these expansions, as investments in the inventories and stocking are comparatively negligible.

In the future they have an option of co-branding the retail space, which will fetch them additional revenues," said an analyst.
Tejal A Deshpande in Mumbai
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