Stores are sensory organs of brand owners, their eyes and ears. With this understanding, market leaders are coming up with varied formats — multi-brand outlets, exclusive showrooms, experience centres, franchises — to not only strengthen their distribution network, but also to bring their service-cum-solutions driven offerings closer to the customers.
Sourcing Hardware spoke to Arancia Kuchen, Cera, Godrej and Sloan – companies that own the market in which they operate – to get insights into why their dealerships (or franchises) are better business opportunities than the rest.
By Mrinmoy Bhattacharjee & Gyanendra Kumar Kashyap
Surat-based modular kitchen manufacturer Arancia Kuchen has adopted a franchise model to bring transparency in dealings with customers at the point of sale. “A franchise outlet helps us to satisfy customers in terms of quality and service as per the company’s expectations,” says company’s director Samir Patel.
Godrej Locking Solutions is building a traditional retail chain to ensure ‘equitable’ presence across the country for its locking products. “We follow the traditional model of ‘key retail outlets’ across 2,000 centers,” says Shyam Motwani, EVP & business head at Godrej Locking Solutions & Systems. “We ensure that the supplies of our products are first done to these stores. We also introduce our new products first in these stores to build customer loyalty and exclusivity.”
Godrej follows the traditional model of ‘key retail outlets’ across 2,000 centers. We ensure that the supplies of our products are first done to these stores, and we also introduce our new products first in these stores to build customer loyalty and exclusivity.
Godrej Locking Solutions & Systems
In India, a majority of purchase decisions for locking systems are taken by influencers such as carpenters, architects and interior designers. The purchasing behaviour and decision of these key stakeholders are related to product experience, and in-depth research on product features. “Therefore, minute attention to detail is paid in explaining the product features, price and USPs in the key retail outlets format.”
US-headquartered plumbing systems provider Sloan Valve Company, which manufacturers smart and water saving restroom solutions, has recently entered India. The company is in talks with the country’s top distributors and retail dealers of high-end products. “We are displaying our products in showrooms in a nice way, so that walk-in customers may get a satisfying ‘look and feel’ right there,” says the company’s country head Anup Kumar Tripathi.
Generally we have seen that the multi-brand outlets display economical and medium-budget kitchens; they don’t display premium kitchens. So even if the customer would like to buy a premium kitchen, in the absence of a comprehensive display, he might have to compromise and go in for a medium budget kitchen.
When it comes to bathroom solutions, a dynamic retail model that’s a mix of formats allows marketers to provide differentiated experiences in each geography. Homegrown sanitaryware major Cera Sanitaryware Ltd is following such a model. It has built a strong dealer base across the country, and has additionally set up display centres to bring ‘experience’ of its products and solutions to the foreground. The company is expanding the footprint of these studios, and has recently launched its latest in Kochi. “Our Cera Style Studio provides a touch-and-feel experience of our entire gamut of products and newly-launched Italian luxury sanitaryware ISVEA to architects, designers, developers, consultants, traders, and customers,” says the company’s executive director Atul Sanghvi.
Zeroing in on Formats
Batting for the exclusive franchise model in the kitchen space, Arancia Kuchen’s Patel says that in a multi-brand retail model, the dealer will display kitchens of different brands. This will not allow the customer to compare the product on an ‘apple to apple’ basis. “Generally we have seen that the multi-brand outlets will display economical and medium-budget kitchens. They don’t display premium kitchens. So even if the customer would like to buy a premium kitchen, in the absence of a comprehensive display, he might have to compromise and go in for a medium budget kitchen.” Multi-brand outlets, Patel points, are usually assemblers who buy components from different companies. “We believe that in this process the beauty, functionality and durability of the kitchen are compromised. For this reason we have decided to build a chain of exclusive Arancia Kuchen franchises.”
Cera Style Gallery offers wholesome shopping experience to consumers, compared to conventional bathroom fitting showrooms. We supplement the effort of our dealers with the company-managed Cera Style Studio experience centres.
Motwani says that Godrej has adopted the ‘key retail outlet’ model for distribution, which follows uniformity in the way the products are displayed. Besides, the company’s owned experience centres across the country function as additional display points allowing consumers to touch, feel and gain knowledge about its vast range of solutions.
Sloan is taking the straightforward route of single retail outlets. “We are only into single retail outlets and are not approaching large format retail at this point of time. We might take this call in 2018,” says Tripathi.
Cera has several tiers of dealerships, informs Sanghvi. “Cera Style Gallery offers wholesome shopping experience to consumers, compared to conventional bathroom fitting showrooms. We supplement the effort of our dealers with the company-managed Cera Style Studio experience centres.”
For Godrej, the decision regarding retail format depends on the distribution strategy, business objective, product matrix, etc. Motwani explains, “In the last 24 months we have entered the kitchen fittings segment and also launched a premium ethnic handle series, Arsa.”
For kitchen fittings, the company utilises the existing distribution and supply model using traditional retail chains. “The rationale was that we wanted to leverage the existing footprint in the market and build on it,” he says. “In contrast, Arsa is only available in select stores as the product is a premium range of ethnic handles that largely focuses on HNI market. Therefore, we adopted ‘selective retailing’ and partnered with only 80 stores across India, depending upon the size of the commercial space, location and the customer profile the store caters to.”
“When Sloan decided to enter the Indian market,” Tripathi says, “we conducted a scientific market research with the help of CIBC to understand the potential in the commercial bathroom segment. We also wanted to check how relevant the product portfolio of Sloan is in India. The result of that research is the basis of our decision regarding any retail decision.”
Boosting Brand Loyalty
The kitchen business depends on ‘word of mouth’ communication; it’s always about satisfying the current customer first because every sale is a project in itself. Patel explains, “Once the existing customer is satisfied, he will send more customers to us. In case of referrals, it’s easy to convince them about the quality and design as compared to in the case of a new inquiry. The main reason is that the referred customer has already seen the installed kitchen at his friend or relative’s home, and in all probability has heard about a good experience.”
He also avers, “Our franchisees find our business proposition quite rewarding, and they have come forward to start second franchises with us. Our Mumbai franchisee has unveiled a new showroom at Santa Cruz West, in addition to his existing showroom at Tardeo. Our Rajkot franchisee has opened another showroom in Ahmedabad. Our Calicut franchisee has opened another showroom in Kochi. The Dehradun franchisee has opened another showroom in the city. All these franchisees joined us three years back, and they are so much satisfied with the return on their investment that they are setting up second outlet of Arancia Kuchen. This is brand loyalty in the true sense.”
For its retailing partners, Godrej is a sign of trust, affirms Motwani. Nonetheless, he says, to nurture the relationship the company has several programmes that are run throughout the year to help them sharpen their skills, understand new products and share the success. “A key aspect of such programmes is partner centricity. Much like the customer-centric approach, for all product launches, we first take feedback of our retail partners. If need be, we make necessary alterations in the product. This makes them feel a part of the organisational goal and development.” He adds, “We focus a lot on relationship building with the retailers and distributors.”
We conducted a scientific market research with the help of CIBC to understand the potential in the commercial bathroom segment. We also wanted to check how relevant the product portfolio of Sloan is in India. The result of that research is the basis of our decision regarding any retail decision.
Anup Kumar Tripathi
The 110-year-old Sloan has always sustained its channel partners for long periods, says Tripathi. “In various states of the US, quite a few distributors and dealers have been working with us for 50-60 years. So certainly, there will be incentive-based market promotion planning and initiatives which will sustain channel partners in the long term. The company will take a similar approach for the Indian market as well.”
Better Business Opportunity
“We have unique products like Concors seamless polymer shutters, ceramic shutters and lacquered glass shutters. This exclusivity gives status to our partners,” stresses Patel. “Besides, we give area exclusivity to the franchisees and also impart training to their team. We dispatch the material within 15-20 days. The designs of our kitchen are also very exclusive. All these factors help our franchisees in selling high-value kitchens, as well as more numbers of kitchens.” An Arancia Kuchen franchise requires 1,000-sft carpet area for displaying five kitchens and two wardrobes, which would require an investment of Rs 15-17 lakh.
Godrej understands the market the best, Motwani avers. “We provide quality products with aesthetic feel and looks; our products carry the essence of Indianness.” Besides, the company invests in the development of its channel partners as well. “We do capability development of their salespersons. This includes providing training to sales staff at the store about products and ways of pitching to the customer. We also invest in the branding of the store to make it look premium, and also provide well designed display units.”
Channel partners will smell business with Sloan, as the company is a global leader known for innovation. This, Tripathi feels, will be the company’s advantage while attracting partners. “Sloan has a long-term vision for the Indian market and it’s always a better opportunity for channel partners across the industry.”
When it comes to kitchens, customer would always like to touch and feel them before making a buying decision, believes Patel. Placing a caveat, he says, “In case of economical kitchens, the customer might buy online.” But he expects that things may change in the coming years as new technology, such as virtual reality, will provide a more immersive experience to buyers looking for premium and customised products.
Motwani admits that while e-commerce has been an important resource for manufacturers, it’s not the case with architectural hardware and locking solutions. “Our transactions happen through the traditional route even today. However, we assume that the electronic locks market may drift more towards e-commerce retailing in the near future.”
Sloan is not in e-commerce platform directly, but many of its channel partners undertake online sales on their own, informs Tripathi. He adds that since e-commerce business is growing rapidly, the company may take the call to sell online in the future.