The highlight of a market survey conducted by Francis Kanoi Marketing Research in 2004 on consumer electronics and appliances retail outlets is that retail outlets in India selling stand-alone VCD/DVD players increased from 7,000 in the year 2000 to 56,000 in early 2004, an increase of nearly 700 per cent.
Thus VCD/DVD players became the main driver of the expansion of the consumer electronics and appliances (CE&A) retail network in the country.
The market survey covered 4,156 out of the 4,368 urban entities listed in the Census of India 2001. It also covered 2,558 entities listed as villages in the Census, where there were CE&A retail outlets.
Francis Kanoi Marketing Research had conducted similar surveys in 1996 and 2000.
Another interesting finding is that there are now more outlets selling VCD/DVD players than colour television sets, the most dominant product in the CE&A field till now.
Number of retail outlets selling major consumer electronics
The survey has also found that VCD/DVD players have gone considerably beyond the traditional CE&A outlets, thus bringing in a large number of small and non-traditional outlets into the CE&A fold.
Over 23,000 of the outlets selling VCD/DVD players are those where colour televisions are not sold. Over 32,000 VCD/DVD outlets are 'C' category outlets (small towns) whereas only a little over 14,000 of the CTV outlets are 'C' category outlets.
Many of these outlets are those which existed earlier selling other products but came into the fold of CE&A retailing through VCD/DVD players.
According to the researchers, the non-traditional growth of the retailing of VCD/DVD players is related to an exponential surge in the demand for VCDs/DVDs which has no parallel in any field in India except mobile phones.
And the demand for VCDs/DVDs has been driven dominantly by local and spurious brands and the entry barriers are very steep for new players among traditional consumer electronics outlets.
Besides VCD/DVD players, the room air-conditioner (RAC) is the product that has been sold in large numbers through retail network in the last four years.
The growth of 138 per cent in the RAC retail outlets is related to the low base in 2000 as well as the robust growth in the demand for the product since then.
Among the mature products, the retailing of fans has been above average, making it the most widely retailed CE&A product in the country replacing electric irons.
But the growth in colour television which grew astoundingly in the late nineties had only an average growth of 48 per cent.
"This is because the impact of the economics of retailing of CE&A products, forcing consolidation rather than expansion, is the most compelling in its case," the researchers say.
The consumer electronics and appliances retail network in India grew to over 100,000 additions since 2000. This includes some 60,000 new outlets and over 40,000 existing outlets.
The survey also found that there were nearly 45,000 dropouts from the network, including those which closed down as well as those which stopped dealing in durables.
Distribution of consumer electronics and appliances
Thus there was a net addition of around 60,000 outlets to the CE&A retail network during this period. That means a 47 per cent growth, from about 123,000 outlets in 2000 to 181,000 outlets in 2004 or about a 10 per cent net annual growth rate.
When around 70 consumer electronics and appliances outlets are being added, around 30 outlets are being closed down everyday across the country.
It is interesting to note that the steady expansion in CE&A retail network is largely driven by very small outlets. The number of 'C' category outlets increased from 34,000 in 2000 to 81,000 in 2004, an increase of 139 per cent. This makes the growth of larger outlets almost negligible.
There were 90,000 of them in 2000 and 100,000 in 2004 for a growth of only around 10 per cent in four years.
The expansion of CE&A retail network across states, over the last four years, has varied considerably. While Andhra Pradesh and Rajasthan registered more than 100 per cent growth, Kerala grew the least, just 10 per cent, but that has been attributed to earlier expansion.
Expectedly, the expansion of the retail network is the lowest in the top 8 cities and the highest in the smaller towns.
The retail network in the top eight cities has grown only 22 per cent as against the overall average of 47 per cent. At the other extreme, the network in towns grew 66 per cent during this period.
Graphics courtesy: Francis Kanoi Marketing Planning Services
