Electronics: HP; Gearing up for growth

HP India is expanding its addressable market with a focus on gaming and HP World stores

The way the stores are designed — by blending HP online and HP World to offer an ideal omnichannel experience — is another critical aspect.

With the PC market in urban centres offering limited room for growth, HP India is looking for greener pastures. It is aiming for growth from the gaming sub-category as well as the relatively untapped tier III and IV markets, with an eye on millennials.

The past year saw two big initiatives from HP. For the first time, the company became the principal sponsor of IPL team Royal Challengers Bangalore and also opened a 1,000-sq-ft marquee store in Gurugram. With retail expansion and marketing, the original equipment manufacturer (OEM) hopes to brace up for the headwind caused by the widespread adoption of smartphones, and also expand the total addressable market (TAM). The company, which commands close to two-thirds of the market in the consumer segment and has nearly 31% share in the PC segment, has based its India market strategy on three pillars — retail expansion, customer and partner experiences, and engagement with its TG.

“We see that people don’t find relevance in buying PCs and sales are shifting to other formats,” says Gurpreet Brar, senior director — consumer sales, HP India. “But the Indian economy is growing by 6-7% and our growth rate is not aligned with the demographic dividend. So we are investing in initiatives to increase TAM, to make sure more people feel the need to buy PCs.”

The retail game
HP has close to 10,000 retail touchpoints in India, which includes 600 HP World stores in 300 cities. Given that the growth is coming from beyond metros and tier I cities, HP is focussing on HP World franchise stores to drive expansion and experience. “These are captive stores where we have larger control on the consumer experience. In fact, we added 300 stores after the split in 2015 with the enterprise division and are adding 100 stores per year,” says Brar. Around 70% of HP World stores are in tier II and III cities, and it plans to expand to tier IV and V markets.

The way the stores are designed — by blending HP online and HP World to offer an ideal omnichannel experience — is another critical aspect. For this, it has trained its staff in the top 200 stores in soft skills.
Gaming is a big trend in the PC space not only in the top 10-15 cities, but also in tier II and III cities. “The segment grew in triple digits sequentially from Q2 to Q3 in CY 2018 on the back of online sales,” says Nishant Bansal, research manager, IPDS & PC, IDC India. “We are seeing growth in the under-Rs 1 lakh category as a sub-segment for casual gaming.” HP has launched Pavilion 15 models in this price range and also set up gaming zones within 40 HP World stores.

The gaming space is led by Acer, Dell and Asus. According to IDC estimates, the current festive season (Q2 and Q3) saw nearly 170% growth in gaming notebooks.

Looking ahead
Online sales, increase in retail presence through exclusive stores, strong partner and end user engagement, and marketing are key factors working in HP’s favour, according to Bansal. To drive visibility, HP has been focussing on advertising in the last one year. “We are making more investments in digital and social media, and are looking at properties with high reach in 2019 as well,” Brar adds.

IDC forecasts 14-15% growth in the overall traditional PC segment in CY 2019. “We expect the momentum to continue in the consumer segment driven by online sales and new product launches tailored towards generation Z and millennials,” Bansal predicts.

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