IT Market most likely to tango with Retail : By Mr. Kartik Ramaswamy General Manager, Channel Enablement, Transaction Team, Lenovo India

The PC market in India has matured with the growth of home consumer and small and medium business (SMB) segments and tier II and III cities in 2006. Consumers became significantly more aware of the technology, and there arises the need to meet a demand for advanced technology features in products. This also meant that vendors needed to enable their channel partners with the skills, products and techniques to service consumer’s expectations evenly. Elements such as branding, product training, service and support acquired more significance to offer exceptional services and expertise to consumers. With developments taking place in the retail market and more in the offing, the channel community tends to have apprehensions regarding the future of the vendor partnership and the opportunities to reap higher profitability. Despite challenges that the community experienced last year and anticipating the ones ahead, the outlook for the channel community looks positive, with several new opportunities coming its way. However, to make the most of it, channel players need to closely monitor the trends in the market, technologies, industry verticals and newer channel structures and business models. Let us have a look at the four trends which will have a bearing on the growth of the IT channel community. 

Retail 
The year 2007 belongs to the era of retail. Some of the biggest names in technology will vouch for the fact that a seller’s growth potential lies in the ability to successfully leverage the retail market. India’s growing retail signifies a surge in consumerism – the need to touch, feel and use a product for a complete purchase experience. Culturally, China’s is a case study that comes closest to India. After the government permitted FDI in retail in 1992, the retail industry in China naturally started looking up. By 2001, despite the sizable’presence of supermarkets, hypermarkets and convenience stores that had entered the space in a big way, traditional retail continued to grow in excess of expectations. Similarly, the retail market in India is seen as one of the biggest growth drivers of the future. The advantages of conventional retail stores vis-à-vis malls and hypermarkets are many. Traditional retail outfits like the existing “mom-and-pop” stores interact on a one-on-one basis with consumers where they understand a consumer’s requirements more closely. This personal touch, in turn, leads to a better customer relationship where the retailer becomes a consultant to the end-consumer and not a salesman merely peddling his boxes. The geographic proximity to his customer means that the traditional retailer is able to provide a number of value-added services such as software installation. However, the biggest advantage of traditional retail is that it is scalable. With closer interaction with the principal vendors and focussed resource training, a higher conversion of walk-through can be achieved. It also offers the option of expanding to high footfall areas. With the booming economy and the rising spending power of the people, it is no surprise that the retail sector is looking up like never before. Everybody wants a piece in the retail pie, and IT retail is no exception! 

Large Format Retail 
While the growth potential of organized multi-format retailing and large format retailing is immense in India, we can be assured that traditional retailers will continue to grow significantly, especially while having advantages such as presence in the tier II and III cities and closer customer interactions. Though the rate of growth may be higher for large format retailing over the next few years, we can expect to see a continued growth of the conventional retail.

Growth of Non-Metro Market 
Clearly, almost all the major technology product companies aim to bank on the immense potential available in India’s non-metro market, if not already. The last couple of years have seen a rapid growth here, with the emergence of tier II and III cities and the development of key satellite towns. Traditional retailers in the non-metro cities are seen as being closer to consumer’s needs and demands, and are reasonable in pricing. This is a definitive score over large format retailers who are setting foot in the non-metro consumer markets, carrying a perception of being “expensive”.

Emergence of SMB/System Integrators
India’s SMB segment is showing impressive growth and is another big opportunity for the channel players. The booming economy, supported by a pro-investment and business-friendly government, has encouraged entrepreneurs and start-ups. Companies in the SMB space have gradually increased their focus on improving/upgrading their technology infrastructure over the years. At Lenovo, we see great potential in this space and are offering SMB-oriented products in our product line-up. For example, we launched the Lenovo 3,000 family of products targeting the SMB (and home) segment and also extended our focus of the Think line of products – ThinkPad and ThinkCentre – to the growing SMB segment in India. 

Also, the gradual importance of system integrators in the ecosystem cannot be ignored. Up till now, channel partners prevailed successfully with models such as brand-selling and multi-brand selling, while focussing on product-centric sales. One of the most apparent trends in selling is the emergence of solution-selling for usage-based requirements – the emergence of the system integrators as we see the rapid influx of consumer PCs.