- This consumer electronics/appliances brand exclusive retail showroom chain feels that large-format stores present in a mall help increase footfall where brand shops also benefit
- Discounts and offers announced by online channel, as per the showroom, also help drive sales in the offline channel
SM (Shishir Malhotra), Owner, Malhotra Enterprises in an exclusive conversation with EFY Group’s Rajeev Kumar spoke about consumer electronics retail business in Gurugram, Haryana.
“I am not totally against the online sales channel. You have to use your advantages to compete in the market. For example, online sales started from 29 September and offline sales also started around the same time. What such offers do is bring potential consumers out of their homes,” shared Shishir Malhotra.
He added, “We are taking full advantage of digital payments and digital services like WhatsApp. The consumer uses digital methods for communications and for payments, and this helps us too!”
Here are some more excerpts from this interaction around the consumer electronics industry and retail in India.
ACE – When and why did you step into the consumer electronics business?
SM- We got into the consumer electronics business in September 2004. Currently, we are associated with the following brand shops at the Plaza Mall, MG Road, Gurgaon.
1) Samsung Smart Plaza
2) Hitachi Home
3) Siemens Brandshop
4) Daikin Airconditioning Solution Plaza
5) HP World
6) Panasonic Brandshop
Consumer electronics products and technology always fascinated me, we are dealing with brands that are MNCs. These come with international experience across different product categories. There is a lot of exposure and learning from them.
ACE- What’s your vision for your business?
SM- There is a lot of competition and its increasing day to day. My vision is to develop this business in a manner that there is less clash between our stores and big format stores like Vijay Sales, Sargam Electronics and the online channel.
If any challenge arises out from the online channel, then we want to make sure that the impact is minimized. We are heading in that direction only.
ACE– How do you see India’s ACE (Appliances and Consumer Electronics) industry growing from here?
SM- India’s ACE industry is growing at a fast pace. Talking about the growth in the AC segment, we see the potential for large growth. A lot of companies have pointed out that AC penetration in India is only 11 per cent. This simply means that as the buying and spending power of consumers increase, this penetration rate will go up, resulting in even better sales.
The second reason behind the growth is improvements and advancements in technology. Most of our consumers want to have technologically advanced products. If an upgraded version of an old technology comes in, they do not hesitate in investing in the upgraded ones. Our store is in Plaza Mall, Gurugram. This location is known for consumer electronics and a lot of consumers here prefer products based on the latest technology. Like customer wants to upgrade to more energy-efficient air conditioners.
ACE– How’s your business doing in this FY? There’s a lot of news of growth from the ACE sector—are you witnessing it too, in your business?
SM- We are witnessing good growth in the air conditioners business. I think in products like air conditioners and other large appliance categories, consumers prefer to buy from offline stores. It is all about the hand over process. There is a lot of involvement of a retailer when it comes to AC purchases. We have to be present from the buying point to the installations.
Air conditioners, like a lot of other big appliances categories, are service driven products. We also help people in the service part in a lot of cases.
ACE – How are you handling the challenges created by online portals like Amazon and Flipkart?
SM – I am not totally against the online sales channel. You have to use your advantages to compete in the market. For example, online sales started from 29 September and offline sales also started around the same time. What such offers do is bring potential consumers out of their homes.
In case of big appliances, consumers prefer to check prices and discounts on both channels. If we are able to match or even come close to the prices offered by the online channel, then a lot of these potential consumers prefer buying from the offline channel. As I said earlier, consumers want to check how large appliances feel and function before making purchases.
Further, the challenges from online sales channels is reduced after the government introduced a new policy last year. Even brands have started focusing on different models for online and offline sales channels.
ACE – Any product segments or brands that are affecting your business positively or negatively?
SM – We consciously want to run only exclusive brand showrooms so that we look like a specialist in front of completion like large format stores and online players.
ACE – Any new strategy implemented by your team in this FY that’s resulting in growth?
SM – We would like to increase our focus on two product categories which are air conditioners and built-in appliances. We are doing good in both as these categories are service driven. In fact, these are two categories where the consumer needs a lot of help and guidance from the retailers.
ACE- What are the top-selling product categories at Malhotra Enterprises?
SM- Air conditioners are the biggest contributor to Malhotra Enterprises’ business. One consumer can buy more than one AC because the sales usually depend upon the number of family members.
Our main brands in air conditioners are Hitachi, Daikin, and Samsung. Other product categories like built-in appliances, televisions, refrigerators, washing machines, dryers, dishwashers, air purifiers, laptops, desktops also contribute significantly.
ACE – What’s your strategy for developing your team to guide and sell the right product to your customers?
SM – Our business is based on brand shop models. Most of the brands we have tied up with have premium clientele. Not only these brands organize regular training for us but we also try to learn from every walk-in at our showrooms.
Additionally, all the team members sit together and discuss challenges that are new and old. Our main focus is always on making demos as interactive as possible. Next comes the installation part followed by ways we can help consumers in terms of service for their products.
ACE- How do you manage the challenges from Large Format retailers like Vijay Sales and Sargam electronics?
SM – The likes of Vijay Sales and Sargam are definitely big competitors. However, their presence has increased footfall in this mall. You have to understand that a lot of consumers walk-in into this mall because of these large-format stores. Now it completely depends on what you do to bring these potential consumers into your store.
Of course, sometimes we lose sales because of their pricings may be more aggressive. But they are helping in increasing footfalls and that is definitely helping us as well! In fact the advertisements these carry out in newspapers, on radio and TVs, helps us cut down our marketing costs.
ACE – What’s your strategy for products that get discontinued or obsolete? How do you avoid losses on them?
SM – New products always come at a higher price than the older products and that is enough support to liquidate old stock just like a smartphone. Brands also support in case we get stuck and ask for it but this is one problem that we do not face too many challenges in.
It is simple, retailers like us concentrate on developing a business model in which interaction with consumers is of utmost importance. This conversation may take place via WhatsApp, SMS or social media, the message has to be clear. We learn from consumers the kind of products that they would be interested in and hence place orders accordingly. Product demos, whether for a new range or old range, are also of importance.
ACE – Are you accepting digital payments from customers through Debit Cards, Credit Cards, PayTM, etc? Are you seeing an increase in the same?
SM- Yes, We are accepting almost all types of digital payments, If we talk about Gurgaon, top 500 fortune companies offices are here. The majority of consumers prefer digital payments here. This is another reason that demonetization had less effect on sales of consumer electronics versus other traditional cities. Digital payments have helped us bounce back faster versus others.
In fact, we are taking full advantage of digital payments and services like WhatsApp. The consumer uses digital methods for communications and for payments, and this helps us too!
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?
SM- I don’t look it as a challenge for sure. If you are in this business and sitting in Plaza Mall, You are paying rent for stores and warehouses, interests and salaries. After all,, if any retailer is making an issue out of the transaction fees for a mere 1.5 per cent or 2.0 per cent, it is not justified. You have to bear this in order to survive and in order to flourish as a business.