Steel players increase focus on retail sales pan India

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As steel consumption grew 5.2 % during the first quarter, showing signs of improvement in demand for the commodity, steel players like JSW Steel and Essar Steel are increasing their focus on opening up more retail outlets pan India with growth in domestic demand. Steel major like JSW Steel currently has 50 such steel retail outlets called JSW Shoppe and is targeting to increase it to 200 by March 2010.

"We are targeting at least 10-15% of our total production to be sold by our retail outlets," Seshagiri Rao, joint MD and Group CFO of JSW Steel told FE in a recent interview.

Similarly, Essar Steel also has such retail outlets called Essar hypermarts, expressmarts and express points with customers across automotive, white goods, construction, engineering and shipbuilding. With a total 150 such outlets currently, this segment contributes to about 20-25% to the company's total revenue.

Meanwhile, Essar Steel on Wednesday announced that the company has set up its fifth service centre in Bhuj, Gujarat, with an investment of about Rs 50 crore which will also service the Essar Hypermarts along with OEM customers. Other service centres are operational at Hazira, Bahadurgarh, Chennai and Pune. The service centre in Bhuj will have an annual capacity of 2,00,000 tonne and is slated for commissioning by March 2010, the company said.

Declining to give specifics on its retail expansion, an Essar Steel spokes person told a news agency, "It will be difficult to give any targets. But we are in the process of identifying locations for further roll out," he said. Likewise, Tata Steel, the world's sixth largest steel producer had forayed in to organised steel retailing with its first pilot store 'steel junction' started in Kolkata.

It was reported that the company plans to increase the number of steel junction outlets in the eastern region through franchises to sell all kinds of steel items like furniture, jewellery, cutlery and home building items and branded products of the company.

According to industry watchers, the move by steel players to increase their retail outlets is with the objective to get in touch with customers directly.

Also with exports being impacted domestic steel majors are expanding their retail presence in the domestic market. [From Internet]