Retail

The Indian Chapter

By appointing distributors and franchisees, this building products retailer is modifying a global model to suit Indian conditions

India’s newest organised retailer of building products is celebrating its first year of success. And in a unique business model, this company is growing its presence simultaneously in retail and wholesale.   

Danube is already a well known name in the markets of Middle East, with 27 outlets, from where it is raking in sales of over Rs.1,500 crore annually. However, in India it has established two brands, Danube Building Materials for wholesale business, and Danube Buildmart for selling directly to consumers. In both the businesses it offers a wide swath of building products including sanitaryware, luxury bathroom fittings, floor & ceiling tiles, wall papers and lighting.

Commenting on the diversity of this range, Sanjay Kumar Das (sanjay.das@aldanube.com), sales head of Danube Building Materials India Pvt Ltd, says, “We deal in wide categories. Some are manufactured by Danube, some are even imported, but the crux is that every product we sell is under the specifications of Danube and we don’t compromise on quality. We also have manufacturing tie-ups with many multinationals to complete our range.”

The first Buildmart, a 6,000-sft facility, came up at Oberoi Mall in Mumbai a year ago, simultaneously with a 8,000sft display and orientation centre for B2B transactions at Pravasi. The month June saw the setting up of a 10,000sft Danube outlet at Pune, which offers both retail and wholesale services. The next city to receive a Danube will be Ahmedabad, where doors will open by mid October 2011. The Mumbai and Pune outlets have been set up with an investment of Rs. 13 crore each.  

“In a year we have experienced great success with just one retail store, and we see a lot of potential in India,” says Das. While refusing to reveal performance figures, Das does say that the company is ready to spread its wings across the country, and has started a hunt for franchisees and distributors. “We are looking for massive expansion, and plan to give out franchisees in at least 20 locations by March next year.”

Das explains that initially franchises will be offered in Maharashtra and Gujarat, and other states will follow. “We are looking for multi-brand and exclusive distributors for Danube branded products, and franchisees in all locations of Maharashtra, Gujarat, Chattisgarh, MP, and northern and eastern regions.”  

Jaggannath Trading is the first franchise that Danube has given out. The franchisee has set up a swanky 2,500sft Danube Building Materials showroom at Navi Mumbai with an investment of Rs.50 crore, and carries the retailer’s complete range.

Danube Building Materials will appoint a distributor or franchisee in every major town for each product category. This will lead to its having around 4-5 distributors to cover the entire range it offers in a particular region. “We offer flexibility to our distributors and franchisees to select the product category they want to stock, instead of compelling them to deal with our entire range. So, a distributor who only deals in sanitaryware may not deal in our hardware or ceiling tiles.” Distributors will be supported in building a network of dealers and numbers will depend on the potential of that particular town. “In Kolhapur our distributor can have 5-10 dealers for one product, but in Bangalore the distributor may appoint around 50 dealers. We are targeting around 500 dealers across the country by March.”

Danube is talking about interesting returns for its channel partners. “We can assure average profitability between 20-25% for franchisees. On the other hand, distributors can enjoy around 15-20% gross profit annually.”

Acknowledging that a retail operation is only as good as its logistic support, Das informs that the Danube network is already backed with master godowns in Mumbai, Pune and Ahmedabad. “Besides, stocks are coming in every week from Dubai. Initially we can support the dealers and distributors with these godowns, but as demand increases we will be setting up logistic centres in other locations also. As far as after-sales is concerned, we have already set up our service teams in Mumbai, Pune and Ahmedabad.” He informs that every product is backed with a warranty, and Danube is solely responsible for all services.

This retailer is positioning itself as a provider of quality products at affordable prices, which means the middle and upper middle segments of the market. Though this positioning is not unique, there does exist space for a retailer with a comprehensive product range and a cross country reach. In fact, Danube is probably the first building product retailer in the country who has kept itself away from the home improvement space. Perhaps the conviction about this product mix comes from its years of experience and success in the Middle East, where it is considered as the largest retailer in this category.

“We are a one-stop-shop for all building materials, and a provider of efficient and prompt after-sales service. We want Danube to be known as a total solutions company in India. While we already have a vast range, in the coming years we will be adding more, and will be tying up with Indian brands as well,” Das confides.