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VCD/DVD players boost CE&A expansion in India

VCD/DVD players boost CE&A expansion in India

Author | exchange4media News Service | Thursday, Jun 17,2004 8:01 AM

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VCD/DVD players boost CE&A expansion in India

Retail outlets selling stand-alone VCD/DVD players have increased by almost 700 per cent between 2000 and early 2004 and have become the main drivers in the expansion of the consumer electronics and appliances (CE&A) retail network in the country. According to the findings of the third Francis Kanoi Database of Durables Dealers in India, 2004, retail outlets for DVDs/VCDs have increased from 7,000 to 56,000 during this period. Interestingly, at present there are more outlets selling VCD/DVD players than colour televison sets, the most dominant product in the CE&A field. Also, over 23,000 of the outlets selling VCD/DVD players don’t sell CTVs.

The Database of Durables Dealers, which tracks the growth of the CE&A retail network in the country, is based on a census of Consumer Electronics and Appliances retail outlets in India, which was completed by Francis Kanoi Marketing Research in January 2004. Similar exercises had been carried out in 1996 and 2000.

Interestingly, this phenomenal growth in retailing has been boosted by companies going beyond the traditional CE&A outlets and bringing a large number of small and non-traditional outlets into the CE&A fold. Besides the fact that over 23,000 of the outlets selling VCD/DVD players don’t sell CTVs, over 32,000 VCD/DVD outlets are ‘C’ category outlets whereas only a little over 14,000 of the CTV outlets are ‘C’ category outlets. Many of these outlets were earlier selling other products but came into the fold of CE&A retailing through VCD/DVD players.

This non-traditional growth of retailing in VCD/DVD can be attributed to an exponential surge in the demand for VCDs/DVDs which has no parallel in any field in India except mobile phones. Besides, the demand for VCDs/DVDs has been driven dominantly by local and spurious brands. The entry barriers also are very steep for new players among traditional CE outlets. Besides VCD/DVD players, the other product category whose retail network has expanded considerably over the last four years are room air-conditioners (RAC). The growth of 138 per cent in the RAC retail outlets is related to the low base in 2000, as well as a robust growth in demand.

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.

The growth in CTV retailing has been average, despite a robust growth in demand. 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.

Overall, there have been over 1,00,000 additions to the Consumer Electronics and Appliances retail network in India, since 2000. This includes some 60,000 new outlets and over 40,000 existing outlets selling other products which added one or the other CE&A products to the range offered by them, during this period. There were also nearly 45,000 drop-outs from the network, including those which closed down as well as those which stopped dealing in durables. Thus there was a net addition of around 60,000 outlets to the CE&A retail network during this period. This represented a 47 per cent growth from about 1,23,000 outlets in 2000 to 1,81,000 outlets in 2004 or about a 10 per cent net annual growth rate.

The steady expansion in the CE&A retail network has been 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, making the growth of larger outlets almost negligible. There were 90,000 of them in 2000 and 1,00,000 in 2004 for a growth of only around 10 per cent in four years. The census covered 4,156 out of the 4,368 urban entities listed in the Census of India 2001.

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