Multi-brand advantages Until a few years ago, the IT retail industry in India was mostly dominated by the mono-brand model. But with the entry of large format retail (LFR) stores²like Croma, Reliance Digital and E-Zone²many IT retail ers began adopting the multibrand retail model as a way of competing with the LFRs and as a way of adding more value to their business. ³Multi-brand means more footfalls because the public gets a wider choice,´ explains S Karthikeyan, Director, Bloom Electronics. ³When a customer visits a multi-brand store it sati sfies his hunger for choice on both the time an d space parameters. The customer gets to choose from a host of brands and products in a single visit to a single outlet, thus allowing him to make a real-time product comparison, save on time, and [perhaps even save on] the cost of purchase.´ Karthikeyan has a 3,000 sq ft two-storied multi-brand retail outlet in Coimbatore; retail contributes Rs 15 crore to hi s overall revenues. Karthikeyan adds, ³In the case of multi-brand stores, retailers can easily lower their losses because they can distribute their costs among multiple brands. But in exclusive stores, if a vendor suffers a fall in market share or suffers losses, th e retailer is unable to reduce his own losses a nd so he suffers along with the vendor.´ Retailers often prefer the multi-brand option because they have more freedom to make decisions. ³With exclusivity, retailers often lose out on the freedom to make decisions because they h ave to abide by the guidelines that th e vendor has set for them. For instance, vendors usuall y have a fixed set of promotions and events that a retailer can conduct through the year. If this is the case, a nd if a retailer want s to conduct a particular event beyond the decided set of events, he will have to get the vendor¶s permission to conduct the same,´ points out P K Sin ha, Director of the Patnabased IT Zone. Sinha has two stores²a 500 sq ft exclusive HP store, and a 2,500 sq ft multi-brand store called eMall. The multi-brand store contributed 60 percent to his revenues while the HP store contributed the rest.
Multi-brand disadvantages The multi-brand retail model comes with its own set of disadvantages. ³Offering multiple choices often leaves the buyer confused. In a multi-brand setup it¶s also difficult for a retailer to recommend a brand to the customer because that would amount to underselling the other brands,´ states Kukreja. Another disadvantage of multi-brand retail is that not onl y do retailers face tough competition if other retailers start their own stores in the neighborhood, but they also receive fewer benefits from vendors. ³While exclusive retailers often get territory protection from the vendors, in the multi-brand model we frequently have to face tough competition from other retailers because they might just start another multi-brand store in the same area and give better schemes and discounts than us. As a r esult, in order to retain our customers, we have to be on our toes and keep on holding events and promotions in our stores,´ notes P Mahalin gam, Director of the Coimbatore-based Indsys Infotech. The retailer currently has two stores in the city. One is a 400 sq ft exclusive Toshiba store, the other a 600 sq ft multi-brand outlet which contributes half the overall revenues. Earlier, there were times when vendors would not all ow an exclusive partner to start his own multi-brand outlet. If a retail partner wanted to venture into multi-brand retail h e would have to start the store with a different name. But with LFRs coming into the picture, vendors have become more lenient and a llow their partners to start their own chai ns of multi-brand retail outlets. However, the matter doesn¶t end there, as Kukreja points out: ³Although vendors have become more lenient with retail partners now, they ar e still vengeful. They tend to focus more on their exclusive partners and also tend to give better benefits, support and deals to them than a multi-brand retail partner.´
Mono-brand advantages The exclusive or mono-brand retail concept is a vendor-centric model. Here, a retai ler has deep commitments in terms of investments, sales targets and marketing. The benefits that a retai ler can derive from exclusive retail are territory protection, better margins, manpower subsidy, demo subsidy, backend rebates, brand marketing rights, lead generation support and marketing support from the vendor. The exclusivity status also places a retailer hi gher on the vendor¶s priority list. The vendor provides lead generation support, involves him in special marketing campaigns, and even helps chalk out business roadmaps aligned to the vendor¶s own long-term vision. According to Sinha, ³One of the biggest benefits that an exclusive franchisee retailer can get from a vendor is the payout scheme. Vendors often buy back the stocks that the retailer wasn¶t a ble to sell at the end of the day, but this is often n ot possible in multi-brand stores.´ ³The vendor tends to give you more importance than i t gives to a multi-brand partner. Exclusive retailers get more discounts and incentives, in addition to branding and marketing support. For example, if a multi-brand partner gets a 5 percent discount on the vendor¶s products, an exclusive retailer may get around 10 percent. Other than generating leads and giving MDFs, vendors may give an additional 1 percent incentive on the overall sales done by the retail er during a
month,´ says Naresh Garg, MD of the Chandigarh-based Accord Computech. Garg has two exclusive 1,000 sq ft HP World outlets in Chandigarh and Ludhiana which together contribute Rs 8.5 crore to his revenues. There¶s more. In an exclusive store, uniformity in terms of store design, store interiors, store size, products, prices, promotions and events are strictly maintained. This method prevents competition among the vendor¶s exclusive retailers, and gives all the retailers a fai r chance to earn profits. Vendors also work more closely with exclusive retailers to conduct events and promotional schemes, and provide, along with the retailers, region- or city-specific advertisements. Opines Devraj Parasva kumar Jain, Director of the Bangalore-based Devraj Infotech, ³Mono-brand outlets are the alway s the best option for partners because they provide long-term benefits, and save cost, time and energy. Being the partner of just one vendor, a retailer has to work with only one supplier. By contrast, in multi-brand retail, a retailer has to work with numerous suppliers and will therefore spend more time and energy running after the suppliers than concentrating on achieving the sales target.´ With a turnover of Rs 10 crore, Jain h as one exclusive HP World outlet in Bengaluru.
Mono-brand disadvantages Exclusive retail stores certainly have their plus-points, but, like t heir multi-brand counterparts, they have their share of negatives. ³Unlike multi-brand outlets, exclusive retailers get very little footfall and lose out on every other customer,´ says Kukreja. ³Over 80 percent of consumers today prefer to go to a store where they can see an d test all the different brands and then make a decision. If a retailer has a multi-brand outlet he can keep the customer in the store by showing him different varieties of products. But if a retailer has an exclusive outlet and the customer wants to see and test the competitor¶s products he can¶t retain the customer. Two other disadvantages are the risk of losses if the vendor¶s marketshare falls, and the lack of freedom to make your own decisions.´
Single branded stores are an exce llent medium to romance the target customers. The flip side to this that the brands are not in a position to cover the ent ire target audience. BRANDED
outlets are target to customers who want to come close and personal with a
single brand. To promote the brand idea a single branded outlet can be a better option because with this, the idea can be communicated effectively. The ambience is designed carefully to flourish the brand image and give a holistic experience to the customer. The furniture, music, lighting, beverages and colours are chosen which helps to create the brand image. Since there is a considerable control over the ambience of the single branded outlet, the target group can be attracted effectively by providing an experience which is in line with the brand idea. For example, the Reebok showroom provides an ambience for sports lovers. The objective of the single branded outlets is spotting the next trend, test-market combinations that a retailer might otherwise hide at the bottom of the rack, pick-up consumer feedback, and even making customers co-creators. These outlets are the ultimate in being customer-centric. Beyond being points of interaction, they enable the companies to pick ideas, track trends, test products and even reverse-engineer products based on feedback. Luxury products generally have single branded outlets to position it as an aspirational product. But the recent trends has shown that the non luxury product brands are also coming with their own branded outlets like Levis, Sony, Nokia, Reebok etc.
MULTI BRAND
outlets are targeted at customers who want more options to fulfil their
needs and desires. The idea of bringing world¶s top big brands under one roof can be accomplished using this strategy. Consumers walk into multi brand outlets with two-three brands already in their consideration set, and often walk out with the ones that deliver the best value-formoney. This arrangement can help different chains to actually gauge buying patterns of consumers like any other retail channel, as the evaluation happens across brands, rather than studying buying patterns within a single brand. The increasing importance of the multi brand experience, which mirrors consumers' inclination for mix 'n' match attitude. The "total look" is completely out of fashion, and this new way encourages a multi brand environment. The multi branded stores can also be cost effective. In short, it is better to have all the brands together in just one real estate investment rather than spending the money to open five separate stores in a city. The volume is more significant and works well in mid-sized cities where a mono brand store would be too invasive. Basically it makes much more sense to offer several brands together. People who truly love fashion are curious and they want to discover and to have choice. Ten years ago, even mono brand stores were destinations for these people, but that was before we had so many of the stores, looking the same, all over. But now everyone is getting tired of it. These stores allow these people to break even much more quickly so that they can go into many more cities. The multi-brand store concept will provide manufacturers, especially new entrants and those with limited market share, small in size and having capacity constraints, a more efficient routeto-market through faster nationwide retail presence, scale efficiencies and servicing support. The very variety that these stores offer, and the fact that they carry multiple brands that sometimes overlap across chains, has made some customers complain that essentially these stores are all the same. Basically it's hard to find a store today where you can go in and buy multiple brands focused on certain lifestyles. The "store within a store" concept where brands control their display space still works well for certain brands. Though there are advantages and disadvantages in both the strategies. The firm works on the strategy depending on the external environmental factors like political, social, cultural,
economical and legal. Also there are different legal issues in countries like India for single and multi branded retail outlets. All these factors in accordance with the brand positioning, target group and communication strategy determines the strategy chosen by the firm. Recently firms like Levis, LG have chosen the mix of both the strategies to increase their sales.
