Having forayed into the retail space with exclusive brand retail stores, Kensaku Konishi, President and CEO, Canon India Pvt Ltd, is steering the brand to Tier II and Tier III towns by strengthening the product range and service support.
What is your key focus area in India?
At this moment, we are seeing change in consumer behaviour pattern in India. We are seeing increased number of consumers more interested in function and quality of the product rather than the price only. Earlier, people would visit shopping malls, watch a movie, eat at restaurants and do a bit of window shopping.
But now people go to shopping malls for real shopping, not only in big cities but also in Tier II and Tier III cities. We have to follow this consumer behaviour change and therefore we are very much focused on increasing our brand exclusive stores called ‘Canon Image Square’. We set up our first store last year in November at Greater Noida and now we have more than 30 exclusive stores across India with presence in more than 20 cities. By the end of this year, we will try to expand it to 60 and open another 90-100 stores next year to take the total to 160. So that is one channel through which we are trying to increase our coverage of India on the consumer side. On the B2B side, we are mainly into the copier business. Considering the uncertainty in the market, a lot of enterprises are keen to control their print cost. In order to cater in this demand, we are offering managed print service which is a comprehensive service support for printing including fleet management of hardware and of course after sales service as well as reporting. So far, we have around 40 big accounts which include top accounts in Automobiles, Finance, Banking, Manufacturing and Pharmaceuticals.
How do you plan to expand this market? What growth rates are you looking at?
For the B2B sector, we are focusing at around 20-30 per cent increase in business. This year, we saw around 30 per cent increase in this area and we are expecting the same or a little bit more next year.
How do you plan to increase your market? What are the resources that you are investing in to achieve this growth target?
Fortunately, the market for the products that we have now, which is digital cameras, printers and photocopying machines, is itself growing, especially the digital camera market, which is seeing an annual growth of around 40-50 per cent. So we are trying to expand our market share by strengthening our product range and service support. Last year, we recorded total revenues of Rs 1,260 crore which was 49 percent up compared to 2009. This year, we will try to reach more than Rs 1,600 crore, which is around 30 per cent increase. So, we will try and keep the same momentum next year too.
How much has been the contribution of your marketing and communication in this entire growth momentum?
At this time, we are spending around 10 per cent of our revenues for ATL around 6-7 per cent for BTL.
How are you mixing up you product portfolio with high margin and low margin products? What is the major driver of your profitability?
For example, when we fix a base sales price for our digital compact At this moment, we are focusing on one of our digital compact camera functions, which is high sensitivity. Because of high ISO and very good processor technology, we can successfully get rid of a lot of noise from the image. And this feature has had a very good impact on Indian consumers.
With increasing use of digital cameras, actual printing of photographs has gone down. People tend to click pictures and save them in their computers. How do you view your printing business in such a scenario?
Yes, that is a point. However, when people share pictures with their family two or 10 years later, you can imagine that they cannot find a good picture out of a thousand or ten thousand memories. Printing is the best way to keep memories, especially for the next generation. Of course majority of the pictures taken today are stored in computers, but people still love to click. And, therefore, we are offering shoot and print concept with which it is easy to print pictures whenever they like, especially at home.
What is your major challenge today for the Indian business?
A couple of things—one is some fluctuation of the Indian Rupee. In the last two months, the Rupee has depreciated by around 10 per cent which in turn has increased our importing cost by 10 per cent. And then there is high inflation. These are our two major concerns.
What according to you is the next big opportunity for the Indian market?
India is a young country and as more and more people are getting jobs and starting businesses, consumer spending is also increasing. With this, more and more people will shift and uplift their lifestyle. We see this as a good opportunity for the Indian market.
How are you looking at competition in the space? There are many other brands that are also getting aggressive?
Some competitors are very much keen to get the market using just flash, which cannot happen. We pursue our quality function and value for money ideology because of which more and more consumers will accept our concept. And we are focusing on this area.