Saturday, January 30, 2010

Consumer goods retailer Viveks can give a lesson or two to biggies

The Economic Times


Till 1995, Viveks continued with just three outlets. The rest sprung up in the last decade and a half. Continuing to operate at a time whengreen shoots are beginning to appear once again in the retail segment, one would assume this is the right time for Viveks to take the national plunge. But the grand old man of electronics retailing thinks otherwise. “We want to entrench the south first. We can have 400 stores in the south alone. The potential is vast,” says Mr Setty, adding that he has no plans of going national in the next two years. The reason: “You can either spread yourself very thin by putting all your resources across the country or you can take one market at a time and pool all your resources there. You cannot fight too many battles simultaneously. If you take on each market one by one, you can win all of them.”
Competition was another thing altogether. In the early nineties, manufacturers would insist on routing all installation and service requests directly to the company. But over time, Viveks has managed to create a trained sales and service workforce. So much so, that the brand is now a one-stop solution for customers needing sales and after-sales services. In tune with changing trends, it remodelled its stores to suit the needs of clients used to the shopping ambience and comfort of modern retail formats. There is also the sentiment factor at work, with Mr Setty claiming to service fourth-generation customers in many cases.
“Brand equity and loyalty initiatives too have helped us retain buyers in a market cluttered with multi-brand outlets,” he says.
Tata Group’s electronic retail chain Croma’s CEO Ajit Joshi says local players have to adapt to changing market dynamics to survive. However, he concedes that regional differences have prompted national chains to learn from local players. “We study local players wherever we go. We did this in Delhi, Gujarat and also in the south, especially Hyderabad. At the end of the day, they are competitors and competition is always good,” says Mr Joshi.
While Mr Setty claims competition doesn’t bother him, things have changed dramatically. PE players have been knocking at his doors and Viveks honcho’s admits, “There isn’t one retailer in the country who hasn’t discussed a potential...” But this player has a clear strategy. “This isn’t the right time to look for private equity. Most retailers who’re entering the business are losing money and shutting shop. Certainly, one needs money since retail is a capital-intensive business. We will consider the option 100% at the right time,” says Setty.
Is there any room for more new entrants into the already choked retail chain industry India?

Till 1995, Viveks continued with just three outlets. The rest sprung up in the last decade and a half. Continuing to operate at a time whengreen shoots are beginning to appear once again in the retail segment, one would assume this is the right time for Viveks to take the national plunge. But the grand old man of electronics retailing thinks otherwise. “We want to entrench the south first. We can have 400 stores in the south alone. The potential is vast,” says Mr Setty, adding that he has no plans of going national in the next two years. The reason: “You can either spread yourself very thin by putting all your resources across the country or you can take one market at a time and pool all your resources there. You cannot fight too many battles simultaneously. If you take on each market one by one, you can win all of them.”
Competition was another thing altogether. In the early nineties, manufacturers would insist on routing all installation and service requests directly to the company. But over time, Viveks has managed to create a trained sales and service workforce. So much so, that the brand is now a one-stop solution for customers needing sales and after-sales services. In tune with changing trends, it remodelled its stores to suit the needs of clients used to the shopping ambience and comfort of modern retail formats. There is also the sentiment factor at work, with Mr Setty claiming to service fourth-generation customers in many cases.
“Brand equity and loyalty initiatives too have helped us retain buyers in a market cluttered with multi-brand outlets,” he says.
Tata Group’s electronic retail chain Croma’s CEO Ajit Joshi says local players have to adapt to changing market dynamics to survive. However, he concedes that regional differences have prompted national chains to learn from local players. “We study local players wherever we go. We did this in Delhi, Gujarat and also in the south, especially Hyderabad. At the end of the day, they are competitors and competition is always good,” says Mr Joshi.
While Mr Setty claims competition doesn’t bother him, things have changed dramatically. PE players have been knocking at his doors and Viveks honcho’s admits, “There isn’t one retailer in the country who hasn’t discussed a potential...” But this player has a clear strategy. “This isn’t the right time to look for private equity. Most retailers who’re entering the business are losing money and shutting shop. Certainly, one needs money since retail is a capital-intensive business. We will consider the option 100% at the right time,” says Setty.