Ashish Kapoor, owner, Ashish Electronics, Gurugram, in an exclusive conversation with EFY Group shed light on the consumer electronics retail business in India. He shared strategies and that has helped his showroom compete against the large format stores and online sales channels.
“We are managing challenges by choosing models in our inventory. Our focus is on models that large-format stores do not pick up for retailing. This helps us in avoiding clashes with large format retailers. Good product knowledge and demos are always of great help,” noted AK.
Here are some more interesting excerpts from the interaction
ACE- When did you start this business? What prompted you to start this business?
AK – My father started this business in 1989. Earlier, brands used to choose one retailer for an area, for example, if a consumer electronics brand has assigned me as its retailer, it would not reach or entertain retailer inquiries from other showrooms. When my father was planning fo foray into this business, only Weston was ready to make us its retailer.
We started with Weston initially and it did very well for us. As time changed, we also took dealership of Videocon, Akai, Samsung, and Electrolux brands. The scenario is completely different now, consumer electronics retail business is now driven via direct dealership models. It simply means that the higher your purchasing power, the better you will be treated by brands!
My love for the latest gadgets is the reason I joined this business. Additionally, I am an engineer and consumer electronics have always been close to my heart.
ACE- What’s your vision for your business?
AK- We currently retail audio-video and home appliances through this showroom. I strongly feel that the market has a very good scope for smart gadgets and accessories. My vision for this business is to turn it into a one-stop-shop for any kind of consumer electronics.
Soon, we will start retailing smart gadgets as well. We are already in the process of shortlisting brands that we would retail.
ACE – How do you see India’s ACE industry growing from here?
AK- India’s ACE Industry growing at a fast pace. I think advancements in technology is one of the main reasons responsible for this exponential growth of the consumer electronics industry in India. If we talk about the TVs vertical, then we will find that CRT TVs were in trend around 2000, then came FPD (Flat Panel Display) plasma TVs, LCD TVs and LED TVs. Mow OLED and QLED TVs packed with smart features are in trend.
Similarly, in the case of home appliances like refrigerators, the trend, both in terms of technology and that of looks has changed. Earlier, people used to invest in single door refrigerators, now double door and even triple door refrigerators have become the first choice. The growth of India’s ACE industry has been a product of consumer’s readiness to change and companies’ capabilities to advance technologies used.
ACE – What are your expansion plans in the near future?
AK- When we started this business, we had one consumer electronics showroom. Now we have three but the competition has also increased. The number of retailers in the offline channel has increased. Then comes competition from the online channel.
The strategy that we have come up with is to start dealing with smart gadgets and smart accessories. These categories, as per me, will register growth owing to the increase in the number of smartphone users.
ACE – How’s your business doing in this FY?
AK- It has been a mixed year so far for us. While the air conditioners business is doing good, we are facing severe competition from the online channel in the TV vertical. I have heard that the government is also planning to decrease GST on TVs. If this is true, then we will get stuck with an inventory of TVs that we bought on higher GST rates.
New brands are selling TVs in prices that are 50 to 60 per cent less than the bigger brands. This has resulted in people turning towards the online channel for buying TVs. Now the problem is that a lot of these brands do not have a great presence in the offline channel, so collaborating with them might be risky when it comes to the service part. The sale of bigger size TVs has become a trend these days!
ACE – Any product segments or brands that are affecting your business positively or negatively? Any strategy?
AK- Large format retail stores have become a big challenge for us. Their purchasing power is much higher than us. Additionally, they also have more stores resulting in more sales. Brands offer them higher margins than small retailers like us.
We are managing these challenges by choosing models in our inventory. Our focus is on models that large-format stores do not pick up for retailing. This helps us in avoiding clashes with large format retailers. Good product knowledge and demos are always of great help.
ACE- Any new strategy implemented by your team in this FY that’s resulting in growth?
AK – We have completely revamped the display area of our showroom. The strategy around which products to display and which to not has also been completely changed.
Now, instead of displaying small screen TVs like 32 and 40 inches, we display TVs that are either 43-inch or bigger. All the smart TVs on display are always connected to an active internet connection. Similarly, we focus on displaying fully-automatic washing machines instead of semi-automatic ones.
Additionally, we also tried branding as per the seasons this year. These strategies have worked out so far for us.
ACE – What’s your strategy for developing your team to guide and sell the right product to your customers?
AK- We have grown to three consumer electronics stores from a small size showroom just because of our sales team. They are always treated as a part of the family.
Most of the employees have been with us for the last eight years. They understand the challenges from the local competition, and competition from the online sales channel as well. The best part about everyone here is their ability to convert walk-ins into sales.
We have not defined any strategy for any of our team members. It’s the experience that has made them better sales reps than others. We all learn from each other here.
ACE – How are you handling the challenges created by Online portals like Amazon and Flipkart?
AK – The challenges from the online portals are limited to seasons. The offline sales channel, on the other hand, is here to stay.
Consumers who go online to buy TVs on Diwali might not do the same when they are buying TVs for gifting purposes during the wedding. The touch and feel factor gives the offline channel an upper hand.
ACE – What’s your strategy for products that get discontinued or obsolete? How do you avoid losses on them?
AK – With advancements in technology, the trend of launching new products is no more a trend. I mean new products get launched every other day. While consumers may like this, it leaves retailers like me in trouble.
The strategy that we planned and implemented around this is discounts and sales. These two things are far better appealing to consumers than new launches. Most of the time, we are able to liquidate the stock via these two only. However, we also plan carefully before ordering the number of pieces.
ACE- Are you accepting digital payments from customers through Debit Cards, Credit Cards, PayTM, etc? Are you seeing an increase in the same? Do you have a finance facility? Do you have finance facilities for consumers?
AK – We are accepting almost all types of digital payments. In fact, digital payments are increasing at our shop. We have around 80:20 ratio between digital and cash payments. We offer finance options including digital and direct finances to consumers.
ACE- What’s your take on the erosion of margins because of commissions on cards, payment gateways, etc on digital payments? How do you manage this challenge?
AK- Yes, it costs us around 1.5 to 2.0 per cent. We also recommend UPI, Paytm and Google pay, as that makes our job easier because maximum consumers are using digital wallets these days. Payments through digital wallets do not lead to erosion of margins.