The Hindu Business Line : JSW Steel, Essar Steel setting up retail outlets

Branding exercise
Customers will be provided JSW steel cards and can earn and redeem points in a loyalty programme.
Essar Steel has a chain of over 80 ‘Essar Steel hypermarts’ to offer a range of flat steel such as hot rolled, cold rolled and galvanized products.

S. Shanker

Mumbai, Dec 27 Private steel majors such as JSW Steel and Essar Steel are set to retail their products from exclusive branded showrooms across the country.

JSW Steel’s first dealer-owned outlet has been opened in Hubli and 25 more outlets are in the offing by March 2008. It has also drawn up a roadmap for 600 such shoppees two years thereafter. Initial emphasis will be on west and south India.

JSW now has over 100 dealers having sub-dealer arrangements in most places. “It is primarily to brand the supply channel,” said Mr Sharad Mahindra, Associate Vice-President, Marketing, JSW Steel.

The aim is to ensure price transparency and detail usage of the product. JSW showrooms will display all its products - from HR Coil to colour-coated steel and long products. And, needless to say intense competition is anticipated in the segment.

“It is a small initiative in their overall strategy. The basket of branded products is growing and today more than the end-users it is the intermediary who decides. It will also help increase awareness levels,” said Mr S.K. Jain of Motilal Oswal Securities Ltd.

JSW Steel intends to make the showrooms - interior and exterior - identical in the image building exercise. Customers will be provided JSW steel cards and can earn and redeem points in a loyalty programme. A technical team has been entrusted the job of educating users such as architects and contractors on installation techniques and product details.

The priority is to make the company’s presence felt in the semi-urban and rural areas where transportation has always hampered product availability, Mr Mahindra said.

JSW steel is in the midst of an exponential growth. Its plants in Karnataka and Tamil Nadu together produce around 4.8 million tonnes per annum. Next year this will rise to about eight million tonnes per annum. With steel plants coming up in West Bengal and Jharkhand, the JSW group aims to produce more than 30 million tonnes of steel by the year 2020.

Hypermarts

Essar Steel has established a chain of over 80 company-owned ‘Essar Steel hypermarts’ to offer a range of flat steel such as hot rolled, cold rolled and galvanized products.

The ‘hypermarts’ are in major industrial towns in States such as Gujarat, Maharashtra, Madhya Pradesh, Delhi and Haryana. Efforts on for a pan India spread.

A senior company spokesman said customers benefited as the company furnished them a pricelist detailing the product range unlike the unorganised segment, which catered to their needs so far. This apart, the outlets instilled confidence and transparency, as the purchaser was sure of the product, price and quality.

For the first quarter this fiscal, the hypermart revenues were Rs 565 crore, about 20 per cent of its total revenue.