Helps secure uniform store image:
With exclusive retailing, companies get the benefit of uniform store image throughout the market. The policy gives them the required command over the outlets for ensuring this. Titan Watches is a good example. The details are presented in the case study on the retailing strategy of Titan Watches. Bata too is very particular about uniform store image and display. It stipulates that the shops should adhere to the guidelines on store image. It employs display specialists who visit the shops and helps them adhere to the guidelines. Raymond too advises its exclusive outlets on décor and ensures that they follow the guidelines.
Creates special enthusiasm for the company’s brand at the retail level:
Many companies find it difficult to get enough penetration for their brands through multi-brand retailers. Exclusive retailing comes to their rescue. For instance, over the years, Singer India was selling its sewing machines through two channels: own/exclusive shops and dealers. With experience, they realized that the dealers were not interested in promoting any particular brand. They concluded that the only way to boost the sales of their sewing machines was to expand the network of exclusive shops. They took a conscious decision to increase own/exclusive shops and made the Singer Centers the mainstay of their retailing.
Enables the firms avoid margin wars at retail level:
Through exclusive retailing, a firm can have a measure of freedom in retail margin strategy. It can ensure that its retailers enjoy the approved retail margin in full measure and escape the problem of competitive undercutting. And the firm itself can escape margin wars from its competitors. In fact, shoe companies cite freedom in the matter of retail margin as one main reason for going in for exclusive shops. Shoe manufacturers in the cottage/village sector usually offer high margins to the retailers. As the big shoe companies could not toe this line, they opted for exclusive outlets as the alternative and got out of the margin war with the cottage/village sector.
Showrooms are one type of exclusive outlets. There are actually two kinds of showrooms: (1) Own (2) Franchised.
Titan Watches is a good example of a company putting the concept to fine use. Raymond is another good example. It has also taken to the idea in a big way. Raymond proudly announces that it has India’s finest and largest exclusive chain of showrooms for men’s clothing. By 2001, it had more than 260 such showrooms spread over 120 cities, of which 30 were company-owned, and the rest franchised. It has been adding 10 to 12 such showrooms every year.
Franchising is one form of exclusive retailing. It, however, involves certain special features. Franchising, in fact, is not just a method of retailing; it is a method of marketing. Here, the franchisee, who is an independent businessperson, abides by the marketing plan of the franchiser and pays him a fee for the use of his brand and know-how. In many cases, franchising covers manufacturing as well as, wherein the franchisee uses the process/formula of the franchiser in addition to the brand and marketing know-how.
Advantages of Own and Franchised Showrooms:
* Help the firm to be more close to the customers and in direct touch with them.
* Help the firm get market feedback directly from customers; with franchisee showrooms, this advantage may not be available to the same extent.
* Own showrooms can be controlled better and used more for enhancing company image as compared to franchisee showrooms.
* Franchised showrooms often do the job more economically; they incur lower overheads compared to company showrooms.
* Often suitable space is not readily available at the desired locations for setting up own showrooms; franchisees bring in such space.
* Help save set-up time.
* Budget constraints also drive firms towards franchisee showrooms.
* Setting up own showrooms is usually an expensive business. Singer, for example, has estimated that it costs Rs 4 lakh to set up one showroom of its own. Companies can at best have only a limited number of own show rooms as coverage of the entire market will be prohibitively costly given the size of the country.