NEW ROUTE TO THE TOP?

The con­sumer PC mar­ket in In­dia has been rel­a­tively flat over the past few quar­ters and Len­ovo is bet­ting big on emerg­ing for­mats like gam­ing, con­vert­ible, thin and light to drive sales

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While the In­dian tablet PC mar­ket recorded a 4 per cent de­cline (Year-onYear) in the third quar­ter this year. Chi­nese elec­tron­ics goods man­u­fac­turer Len­ovo re­cently achieved num­ber 2 po­si­tion af­ter HP in the mar­ket share in over­all PC sales in Q2. “Con­sumer, SMB and the en­ter­prise busi­ness and ev­ery other busi­ness has grown very well, the big­gest growth has come from the com­mer­cial side be­cause we have some large ed­u­ca­tion deals. All to­gether PC mar­ket was 24.1% while only con­sumer part catered to 19.1% share in Q2 fi­nan­cial year (July, Aug, Sept)”, cheer­ily shar­ing news with me­dia Ra­jesh Thadani, Head and Ex­ec­u­tive Di­rec­tor- Con­sumer and On­line Busi­ness at Len­ovo In­dia said that.

Also there is a sharp ac­cel­er­a­tion in PC buy­ing be­cause of the stu­dents ac­cord­ing to the con­sumer be­hav­ior study Len­ovo has con­ducted. As per the com­pany, the rea­son be­hind the suc­cess num­bers for the busi­ness lies in its newer prod­ucts and chan­nel ecosys­tem. An­swer­ing what trig­gered the suc­cess, Ra­jesh Thadani replied, “Over­all growth has been trig­gered due to two rea­sons, first the big ed­u­ca­tional deals that we have cracked and the sec­ond our con­sumer busi­ness have grown at least 30% Y-o-Y. Our prod­uct port­fo­lio has been com­pletely re­freshed which is also one of the rea­sons of our suc­cess, and we have also in­vested a lot on chan­nel ecosys­tem”. Among other things Len­ovo has also ex­pand­ing re­tail out­lets ex­ten­sively.

“Over a pe­riod of time, tablet PCs are find­ing im­proved adop­tion in cor­po­rate as well as govern­ment seg­ment. Ed­u­ca­tion was the key seg­ment for B2B sales and the key driv­ing force be­hind the growth in 3Q 2017,” Narinder Ku­mar, Lead An­a­lyst, CMR, said in a state­ment in sup­port of the re­sults.

Thadani in­formed that Len­ovo, apart from open­ing more ex­clu­sive stores in­vest­ment is be­ing done in ex­ist­ing stores in terms of ground staff and brand­ing ac­tiv­i­ties. Also there has been an in­crease in be­low the line ac­tiv­i­ties in terms of de­mand gen­er­a­tion. In 2018, Len­ovo is plan­ning to re­fresh its IDS once again in some time in April or May with In­tel col­lab­o­ra­tion.

We are well aware of the fact that on­line plat­forms are mak­ing it hard for off­line traders. But still in terms of rev­enue mak­ing, off­line beats on­line mar­ket. On this is­sue Thadani said, “We are a het­ero­ge­neous en­tity, but still off­line caters to 80% of mar­ket share whereas, 20% is on­line. How­ever, on­line has also grown in com­par­i­son to pre­vi­ous years.”

Ac­cord­ing to Thadani GST will also be­come one of the fac­tor in the growth of the PC busi­ness es­pe­cially in the mid mar­ket sec­tor. “Right now it is dif­fi­cult to tap the ex­act fig­ure of the GST con­tri­bu­tion. Peo­ple are now start­ing to adopt the tech­nol­ogy for their busi­ness growth and we have also an­nounced GST cen­tric prod­ucts as well and hence due to this we are see­ing a good spike in desk­top busi­ness. So in fu­ture, as the sys­tem will be up­graded it will be­come one of the key prod­ucts.”

Len­ovo aims to cap­ture over 20 per cent mar­ket share in the pre­mium space that is es­ti­mated to be 12-13 per cent of the to­tal PC mar­ket. When comes to route to mar­ket de­pends com­pany largely upon LFRs like Re­liance, croma stores, etc; Ex­clu­sive Len­ovo stores and the multi brand stores. Ex­clu­sive stores gives 100% brand value while be­tween LFRs and LMB stores shares is di­vided via space, shelves and walls. “We have 26% shares in LFRs. In­fact, we have grown at least 2% of share Y-o-Y in pre­mium prod­uct cat­e­gory, while in het­ero­ge­neous cat­e­gory our shares has moved up 6% of gain. And out of 6000+ multi brand stores we work closely with some of the key stores iden­ti­fied, where we have al­ready in­creased our shares of wal­lets com­pa­ra­ble to the other brands.”

While, the com­pany is mak­ing its prod­ucts at an af­ford­able rate and for its thin and light prod­uct, the in­cre­men­tal cost from a tra­di­tional notebook is 15 per cent, com­pared to 30-40 per cent in the past. “We are bridg­ing the gap to drive cus­tomer needs,” he said.

To­day Len­ovo has 170 Ex­clu­sive stores and 400+ small for­mat ex­clu­sive stores across In­dia. To in­crease its re­tail foot­print the com­pany plans to add 100 ex­clu­sive stores this year.

“We have over 600 ex­clu­sive stores across the coun­try. We are look­ing at adding 100 more stores this year and would be tar­geted more at tier I and tier II cities. We feel ex­clu­sive stores are nec­es­sary, as de­spite of on­line sales still con­sumers wants to have look and feel of the ma­chine in his own hands.” he said.

To drive fur­ther the growth of pre­mium prod­ucts, com­pany has iden­ti­fied 230 stores across the coun­try which is be­ing called Pre­mium Club stores. Talk­ing about this ex­er­cise Thadani said, “These stores are dif­fer­en­ti­ated on var­i­ous terms such as lo­ca­tion, ser­vices etc. We are in­vest­ing heav­ily in them in terms of point of sales and prod­uct high­lights, prod­uct demo space. We also have spe­cific cus­tomer pre­mium pro­grams for these stores.”

The con­sumer PC mar­ket in In­dia has been rel­a­tively flat over the past few quar­ters and the com­pany is bet­ting big on the emerg­ing for­mats like gam­ing, con­vert­ible, thin and light to drive sales.

“We are a good and strong brand and what makes us dif­fer­ent is how we are en­gag­ing our part­ners, driv­ing the cus­tomer ex­pe­ri­ence and we will con­tinue to in­vest in our chan­nel part­ners, train­ings and stores to achieve great tar­gets.” Thadani said.

RA­JESH THADANI, Head and Ex­ec­u­tive Di­rec­tor- Con­sumer and On­line Busi­ness at Len­ovo In­dia

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