The consumer electrical and electronics sector is likely to grow multifold as the retail segment is witnessing rising demand for consumer products. This has been driven by rapid urbanisation and by the young, upwardly mobile and affluent middle class.Mithun Chittilappilly, MD, V-Guard Industries Ltd., elaborates on the company’s plans for expansion and the future of India’s retail sector.
How is the future of retail looking?
India’s retail sector now stands at the cusp of fast-paced growth and as per many industry reports this could see India emerge as one of the fastest growing retail markets in the world.
A large population base, young upwardly-mobile and affluent middle class, rapid urbanisation and growing Internet and smartphone penetration are among the reasons for that.
Added to this, increasing awareness of online shopping is also triggering growth of e-retail in the country. This has an impact for our related product categories too. We are working with e-commerce market place players like Amazon and Flipkart.
There are certain products that can be sold [exclusively] online without causing any disruption to traditional retail. Online sales are miniscule at under 1% currently, but I'd think around 6% of our revenues can easily come from e-commerce in the coming years.
How far have GST and demonetisation affected the consumer electrical and electronics business?
As GST subsumes different kinds of taxes, it will specifically have its effect on reducing raw material cost. GST will result in a smooth and hassle-free flow of goods within the country by removing multiple checkpoints and permits at state border checkpoints.
It is anticipated that by unifying the domestic market, almost 60% of logistics time and effort will be saved resulting in faster delivery of goods.
What are your plans for a pan-India presence?
We have a highly consumer-centric product development process wherein we understand consumer needs and then create products [accordingy].
Additionally, we have embarked on a series of transformational exercises and quality-first processes within the organisation as well so as to serve customers better. V-Guard is delivering on its new vision through an expansive network of more than 500 distributors, 200 service centres, 5,500 direct dealers and 20,000 retailers.
Do you expect your new brand identity to aid growth?
This exercise actually started nearly four years ago. With the changing consumer landscape and preferences we nurtured ambitions to become a more contemporary and aspirational brand. Moreover, we realised our logo was looking very dated when compared to the other brands.
We were clear that we did not just want to effect a logo change and call ourselves a whole new brand. We decided that whatever we do will be based on a vision and philosophy for the brand going into the future.
Thus started a deep exercise in understanding consumer equity and how they would like to see V-Guard in the future. This was followed up with work on the brand strategy and subsequently defining the vision of the brand.
We created products using smart technology that were based on addressing consumer pain points and making lives simpler.
For example, our new geyser, Verano, has the ability to switch on and off from anywhere in the world. It has an auto-diagnostic capability and will detect any issue with the geyser by itself, and with one touch, a complaint can be registered with our service centre.
Our new LED fan ‘Imagina’ can throw a combination of a million LED lights to suit your taste and mood. Our inverter gives you the power in your hands. You can use heavy intensity appliances like mixer grinder, iron box, etc with lower capacity models and lots more.
Your group also supplies to the real estate sector. What is the outlook for this segment?
While business cycles have been affected in 2017 due to buyers holding back purchases in anticipation of regulatory changes, and sales are still witnessing a slowdown, we are observing signs of recovery as the triple effects of demonetisation, RERA and GST have begun to shape the sector with new standards of delivery, accountability and transparency.
More joint developments will be the order of the day with financially distressed developers being taken over by larger players and presenting the industry with a fresh line up of competitors.
Completion of existing projects will be prioritised over launching new ones. Hence, 2018 looks promising for a good supply of houses across major Indian markets which will have a positive impact in categories that we operate in, like wires, switchgears and fans.
It is leading to a scenario where better organised players will be growing the industry, with increased dependency on quality products.
