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Thanks to the HR dept, employees get great bargains

Surajeet Das Gupta

Does your HR department do the following:

• Arrange fairs for you where you can buy fridges, washing machines and ACs at rock bottom prices?
• Get credit card companies to offer you cards at a really special price?
• Enter into deals with PC manufacturers so that you can buy PCs at a fraction of their price?

If not, you're missing out on something big.

Low FMCG and durables sales, a sluggish market and low demand are all coming together to shower a bounty on employees of large companies.

Their HR departments are leveraging this to offer employees never-before discounts on goods earning their goodwill, while at the same time offering a bulk sale opportunity to car, PC, credit card and consumer durables manufacturers.

Take Coca Cola's "Friday Bazaar." A company is invited to the cafeteria of the huge building to sell its products on a Friday every week. The products could range from consumer electronics to personal computers, tyres and even homes. Coke's condition: the companies should either offer a special price or a tailor-made package.

Says a Coke spokesperson: "The response has been excellent. And the number of companies offering their products at a special package to our employees has been growing so much that we now have to pick and choose."

Coke is not alone. Maruti recently roped in eight consumer electronics companies including LG, Samsung and Philips. And was able to wrest discounts ranging from 15 to 30 per cent from the companies for its employees. As many as 8,000 items were sold at the last fair.

Large companies like Reliance have been able to get discounts ranging from Rs 4,000-8,000 on air conditioners, Rs 6,000-10,000 on refrigerators and up to Rs 50,000 on passenger cars by offering companies the promise of large volume sales.

Dabur organises such bazaars once very month. Says a Dabur spokesperson: "The number of queries from companies is going up every month especially as the market is down."

For the sellers, this is a perfect arrangement. With competition hotting up and the consumer market facing a slowdown, more and more companies are trying to find a way out by increasingly turning to institutional sales directed at individuals.

Companies as diverse as Samsung, DLF, Hewlett Packard and American Express' credit division are increasingly pushing sales through this channel.

Samsung, for instance, has targeted as much as 8 per cent of its total sales to come from institutional sales this year, up from 5 per cent last year. "Executives have time constraints. So we have to reach out to them. In any case, this ensures an assured volume of sales," says Alok Mathur, institutional sales manager of the Korean company.

Samsung offers attractive price discounts and special financial packages (for instance, you have to pay only 20 per cent of the product cost upfront, instead of the 33 per cent facility provided by retailers.)

Samsung operates two schemes -- one directed at the blue-collar employees and the other aimed at the shop floor workers. Mathur says that the strike rate in factories like Hero Honda and Maruti Udyog has been as high as 40 per cent among the shop floor workers and 10 per cent for the blue-collar staff.

PC companies are also finding institutional sales to individuals a key strategy to increase volumes in a sluggish market. PV Vishwanath, country sales manager of Hewlett Packard says, "Of course with retail sales low, we are always looking at new opportunities to sell and institutional sales is increasingly becoming a key component of our strategy."

As much as 20-25 per cent of HP's business is already coming from institutional business through the 'Employer Purchase Programme' scheme. HP typically offers 7-8 per cent discounts to such clients and the employer gets more value for his money through this process.

HP points out that in many companies, the offer is a way of giving employees incentives. And there is a tax benefit: in some companies, the PCs are bought by them and are kept on their books so that they can claim depreciation benefits while the employees pay a very nominal amount on the PC.

Maruti Udyog is also making an aggressive bid into the institutional market. For instance, it recently organised a meet with the HRD departments of 100 corporate houses in Bombay, primarily with the aim of understanding the needs of their employees and the companies' car requirements.

Says a senior Maruti executive: "This is a key area of our focus and we want to extend it by providing corporates a turnkey solution which will include buying cars or leasing them, maintenance, and so on."

As much as 5 per cent of the company's business already comes from institutional sales directed at the individual customers and this, Maruti says, will only grow.

Some are using institutional sales as a brand-building strategy. Data Access, the company which promotes the NOW brand ISP, struck a deal with software education giants NIIT under which it offers the net dial-up connection at a 25 per cent discount to students.

NIIT, of course, assures a certain volume of business. Similarly, all employees in a company which takes NOW's leased line connection are offered the dial-up connection at a 25 per cent discount.

Says Siddharth Ray, managing director of Data Access: "We don't make money from it but it establishes our brand presence and constitutes for about 5-10 per cent of our dial-up ISP business."

DLF Ltd recently launched its "Walk to Work" brand, aimed at wooing corporates into coming and setting up offices in Gurgaon.

"The logic is simple. After they set up office, the next question corporates asked us was: where will their employees live. So we offered them packages tailored to their choice -- they could live in condominiums, independent houses or in group housing," says Prithvi Nath, advisor at DLF Ltd.

Coke executives point out that that the real estate company offered them a scheme with a 5 per cent discount on the cost of the property, provided at least 5 employees signed up. There are also the sceptics who do not favour the rush toward institutional sales to individuals.

Says BVR Subbu, executive director at Hyundai: "We find it unfair that individual customers who directly pick up cars from the showrooms should be discriminated against. And sometimes companies ask for ridiculous discounts, so it's not worth it."

But that seems to be a voice in the wilderness. The mantra now is: shop till you drop. And then pick up the discount.

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