Retail in Asia

In Trends

Indian appliance retailers resist Samsung on margins

A tug-of-war between retailers and manufacturers over margins has resurfaced in India. Samsung, the consumer durables maker, is looking to rationalise payouts to channel partners by as much as 6-7 percentage points, in a bid to reduce the price differential between retailers of home appliances.

The Korean giant has been looking at ways to get all its trade partners – small retailers, large-format stores, regional and national chains – under one pricing structure. That is, the margins it is willing to pass on would be uniform for all. The categories where it is targeting a uniform pricing structure include air conditioners, washing machines, refrigerators and microwaves. Audio-visual products, information technology and mobile phones are not part of this move.

Samsung is keen to bring margins to 17-18 percent across formats. This has not gone down well with regional and national chains, since these enjoy margins of about 24 percent. A small retailer’s margins are 12-14 percent; a large-format store, basically a large neighbourhood electronics showroom, enjoys margins of 16-17 percent.