Business houses get into office products
While corporates like Reliance Retail and the Future Group have entered into tie-ups with American office product providers, domestic majors in the writing instruments industry too have firmed up their expansion plans, reports Varun Soni.business Updated: May 05, 2008 21:37 IST
The next time you want to buy stationery items, check out the “office product hypermarket” at a mall near you, where you can browse through over 5,000 products.
Surprised? A new trend that is fast catching up, many leading business houses are making a concerted effort to foray into this lucrative market, posing stiff competition to the neighbourhood stationery shop.
While corporates like Reliance Retail and the Future Group have entered into tie-ups with American office product providers, domestic majors in the writing instruments industry like Luxor and Today too have firmed up their expansion plans.
The Future Group has entered into a joint venture with the US-based $20 billion office product major, Staples. The joint venture – Future Staples – has already opened four stores in the country, three in Bangalore and one in Noida. The company plans to set up 50 large format stores (measuring 8,000-12,000 sq. ft.) in eight cities in the next three years and 100 store-in-store concepts.
"With the market size for office products (that includes information technology, stationery and office furniture products) in the country being pegged at Rs 40,000 crore and hardly any organized player in the market, the scope is tremendous," said Shailesh Karwa, Chief Executive Officer, Future Staples.
Karwa puts the year-on-year growth of the office product market at 15-18 per cent. "There is enough space for atleast three big brands to set shop in the market and we expect to achieve our target of Rs 100 crores this year," he said.
The other major new entrant in the market is Reliance Retail Limited (RRL), which has entered into a tie-up with America's Office Depot, a global provider of office products and services. To accelerate the rollout of their joint venture, Reliance Retail and Office Depot have also acquired eOfficePlanet, a dealer of office products and services to corporate customers in India.
"With this partnership, Office Depot marks its entry in India – a market that is one of the top 15 office product markets in the world. Our plan is to operate in the business- to-business segment (in the office supplies, furniture, technology and stationery market) and utilise the base of eOfficePlanet. Hence, no stores are being planned at the moment," said a source in the company.
However, since the market is huge and fragmented, there seems to be an opportunity for large players, he said.
Writing instrument makers are not far behind. The Rs 260-crore Luxor Group is planning to open 200 stores in the next three years. The retail expansion plans will be carried out through a separate subsidiary called Luxor Retail.
"The Luxor Signature stores will target the youth and have travel and digital accessories apart from writing instruments. In fact, the company is projecting Luxor Signature as a gift and innovation shop targeting the mid to high-end market," said Pooja Jain, Executive Director, Luxor Group.
Pen maker Today's Writing Products Ltd has also chalked out plans to invest Rs 370 million to expand its capacity to four million pens per day as well as open 600-700 stores in the next five to six years.