There are multiple micro and macroeconomic indicators which are supporting growth potential for India in the coming years. These metrics are strong demographics, young working population, rising income levels, rapid urbanization, growing brand orientation and many more.
India’s retail industry has emerged as one of the fastest growing industry and is projected to grow almost to US$1 trillion by 2020 from the market size of US$ 600 billion in 2015, driven by income growth, urbanization and attitudinal shifts. In addition to the above, now the government has opened up FDI investment in retail up to 100%. Till recently the issue of opening up Retail industry has been a strong contentious issue. However, it must be said that Indian retail is still dominated by unorganized sector. Organized retail penetration is just 8%. The biggest challenge facing the Indian retail sector is the lack of efficient supply chain. Within retail, India’s IT hardware market includes many product segments such as desktops, laptops, phablets, tablets, printers, and other peripherals.
According to market reports, there are over 30,000 channel partners for IT hardware in India. Apart from that, there are eight national distributors and 159 regional distributors who supply products to this vast network of channel partners. Although India’s e-commerce market is still in nascent phase, the IT hardware sales through e-commerce websites or through the company’s own website are still in the single digit-range as percentage of total sales is concerned. This is mainly because most of the laptops, desktops, and tablets sales are still coming from bricks and mortar shops.
In order to expand in India, large technology companies have been increasing their focus on smaller towns and tier 2 & 3 cities. For example, by end of 2015, Dell had doubled the number of its stores (named Dell Exclusive) in India to 825, continuing the trend from 2014, when Dell had already doubled its number of stores to 400 from 2013.
Organized retail started more than a decade ago and significant growth has been achieved ever since. However, most of the retailers have struggled to achieve a desired level of profitability. Leading retailers are now putting profitability at the top of their agenda. Croma was the first multi-brand store to sell consumer electronics among other retail products. Major IT hardware retail players in India include Reliance Retail (Reliance Digital – 151 stores), Pantaloon Retail Ltd (eZone – 92 stores and Electronic Bazaars), Videocon (Next Retail Ltd – 144 stores), Tata Sons (Croma – 101 stores), Sumaria Appliances and Vijay Sales (54 stores).
In India, hardware products are sold mostly through mortar and brick stores. Also the IT hardware retail segment is mostly covered by unorganized sector as there are very few companies in organized retail sector in India. The traditional hierarchy for distribution is from national distributor to regional distributors to channel partners. Now-a-days, hardware companies are opening their exclusive stores in order to provide superior customer service and increase market share. E-commerce revolution is affecting this trend, but since it is just beginning, it will take a few more years to gain significant market share to e-retailing.