Modern retail is the buzzword among the recently blooming industries in India. Consumer-appliance and electronic-good manufacturers are gearing up to cash in on the new distribution opportunity. However, they are said to be inadequately prepared to tackle the conflict that may arise between the conventional distribution channels and modern-retail players.
Moon Bum Shin, managing director, LG Electronics India Pvt Ltd, said, ?We are relatively weak in the organised retail segment. We are working on strengthening our presence in the segment and would target 30% of the distribution through modern retail in the coming years.?
LG has appointed a leading consultant firm to analyse the present conditions and formulate plans to tackle organised retail. The company has set up a separate division to focus on the same.
Maharaja Appliances Ltd plans to introduce premium product variants specifically targeting modern-retail outlets. The company will also become original equipment manufacturer taking the private-label route, says Harish Kumar, managing director, Maharaja. The company is in talks with players including Big Bazaar on this account, he added.
Modern retail is yet small in the country and it is too early to worry, says Eric Braganza, chief operating officer, Electrolux, Videocon Industries Ltd. However, the company will not want to miss the opportunity, he adds.
The biggest cause for concern for consumer-durable manufacturers is that modern retail is considered undesirable competition by traditional distribution channels. Harish Kumar concedes that organised retail may become a threat to conventional distribution.
?The profit requirements of the different channel partners are different. LG has evolved a new supply chain system for modern retail and is devicing plans to strengthen all channels,? said V Ramachandran, director, sales and marketing, LG.