Rel winning on ‘after sale service’

Mumbai: The Reliance Group's retail plans include providing after-sales service for consumer electronics brands that it will stock.

That is worrying consumer durable companies, some of whom sell as much for their after-sales service, as they do for their price proposition.

However, Reliance is convinced that this could be a key differentiator for them, in a rapidly growing retail market. It may actually prove to be a smart move because that's often exactly what the people want.

Amarjeet is looking for a microwave. After much research, he's zeroed in on his choice and he says he's made his pick, keeping in the after-sales service of brands.

Consumer, Amarjeet Kumar told CNBC-TV18, "I will go for LG, as it gives better service compared to other companies available in the market."

Retailer, Manish Anand says, "The consumer is very demanding today, and retailers don't have the infrastructure to support the service, it's best for the company to look after that."

However, the rules of the game are set to change with players like Reliance wanting to complement its mega-retail plans with a huge after-sales network.

The Group is already in talks with consumer durables companies to offer this service across brands and categories.

This would cut costs for smaller companies. But the bigger players are worried because they say they have invested heavily in after-sales service infrastructure.

"It's a part of the brand promise and after-sales is important and we have invested a lot in after-sales service. I'm not saying that no one else can take care of it, but we should, as it’s an important part of our brand promise," Vice President, Sales & Marketing, LG, Girish V Rao says.

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The after-sales service is the only point of interaction with the customer and it's where players like Samsung and LG have scored. If Reliance takes over this function, then the slim advantage these players have in a hugely competitive and price sensitive market could be wiped out.

Most experts believe that the move, if it goes through, will help Reliance's retail plans.

COO, Technopak, Harminder P Sahni explains, "This will help retailer gain brand equity and consumers will be happy, as it will provide them with a single window."

Until now, retail chains have been providing after-sales service only for their private label products, which makes up 20 per cent of their stock.

Reliance, which plans to stock up to 50 per cent of private label consumer electronics products, will need a huge after-sales network for them.

It believes it makes business sense to get branded products under its service umbrella too. But for now, they will still have their work cut out negotiating with the big brands.