Consumer durables’ majors like LG, Samsung, and Godrej are getting a taste of how organised retail, in return for high volumes, can squeeze their margins adversely, according to a news report in the Indian Express.
While, Reliance Retail, which is going to roll out its retail outlets in 684 cities across the country, in the next 18 to 24 months, is asking for a retail margin of 30% (markup in excess of 40%), these durable brands are not willing to part with more than 13 to 14%, in line with what they have been offering to the trade all these years.
These durable majors have confirmed that no deal has so far been stuck with Reliance on this account.
Durables’ market is approximately worth Rs. 30,000 crore in India, with the share of organised retail being around 2 to 3%. However, this market share is expected to jump to about 12% within a year.
While, Croma, the Tata Infiniti owned, pure durables’ retailer has jus begun setting shop from Mumbai, other small organised retail players operating in the market include Vijay Sales in Mumbai and Vivek’s in the South.