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With businesses of most steel companies coming back to pre-Covid levels after a short blip in April and May, companies are looking at both product basket expansion in the retail as well as increased technology participation going ahead.
“The market has adjusted to the new normal already and demand is picking up. Property prices have risen in urban and rural both and in fact since June steel prices have moved up Rs 6,000 a tonne to date. The sector has moved on,” said VR Sharma, managing director at Jindal Steel & Power.
While Covid-19 pandemic is setting a new normal for most industries across sectors, domestic primary steel producers too are adopting different ways to enhance focus on their retail business. At Tata Steel, the company’s Agrico retail business division which caters to agricultural implements generates almost 60 new products every year.
"We are retailing through around 20,000 hardware shops across the country and these are different from the 13,000 shops which are there already for steel products," Peeyush Gupta, vice president – steel (marketing & sales) at Tata Steel told Business Standard.
Tata Agrico, the oldest brand of the company, that exists since 1925 is a profitable Rs 250-crore business division. Agrico has three divisions with the one with Agri implements being the largest with a market share of close to 35 percent. “As we were spending time with consumers, we realised there is a market for tradesman tools, which is fragmented and organised, looking to get a trustworthy company product. So along with Agrico, we added the tradesman tools. The third piece, which we later added was consumables so that a full spectrum of products if offered which can be used by any household in a rural or a semi-urban setting,” explained Gupta.
Agrico comprises close to 60 percent of agri tools and balance 40 percent coming from the other two blocks – consumables and tradesman tools. All products are steel based with most of them having steel coming from Tata Steel units.
Other players, like ArcelorMittal Nippon Steel India (erstwhile Essar Steel) and Sajjan Jindal-led JSW Steel, are currently engaged in chalking out a detailed penetration model for their retail businesses Hypermart and JSW Shoppe, respectively, which will also include a bigger role for technology in the segment
“Plans are to have an e-platform for the Hypermart division along with assured last-mile delivery along with of course new products for the customers,” said Rajan Dhar, chief marketing officer at AM/NS India without divulging much as it plans to roll out details ahead of festivals in mid-October.
The company’s hypermart chain, which caters to retail and the medium-small and medium enterprise (MSME) segment, currently is offering a large flat product range to its customers.
“Retail is an opportunity which will grow as India becomes more affluent, where requirements for strong houses or replacement of asbestos with superior products would take place. So at JSW Shoppe, we are currently working out solutions on retail which will of course include online presence as well,” said Jayant Acharya, director (commercial and marketing) at JSW Steel.
The company in August launched a new product JSW Radiance, a steel colour-coated product range in high-gloss features with multiple variants with an option to choose among properties like anti-microbial, anti-graffiti, anti-dust, antistatic, and cool roof system.
“We have set up a 16-hour helpline in order to cater to customers in a faster manner as part of our e-business in retail. With housing demand expected to go up, we are expecting demand for our TMT bars to continue to remain strong,” said Sharma of Jindal Steel & Power.
The Delhi-based long products steel producer is present in the retail category via JSPL Panther TMT bars. Though Jindal Steel has no plans to have additional Capex, it plans to up utilisation for its retail segment from 180,000 tonnes at present to 200,000 tonnes going ahead.
While most steel companies are laying thrust on the increased usage of technology and are chalking out plans for an e-platform, Tata Steel differs slightly on the view as it sees product response from retail shops being stronger in select categories.
“Out of the Rs 250 crore at Agrico, this year (FY21) I am planning to touch about Rs 1 crore (via the online route). That’s really small. Whereas, in the case of organised products like tubes, wires, and rebars which are sold through Aashiyana (platform), I have already reached about 10-12 percent through the e-commerce engines,” informed Gupta of Tata Steel.
The company’s Agrico products are available on Flipkart as well as Amazon, while the company’s Aashiyana platform is a home builder’s site that guarantees 72-hour delivery, anywhere in the country.
“In Agrico, the word of mouth is a very important element (for marketing the products). So we work with the local panchayats, we go to the local huts, we understand from them what tool requirement changes are there and work around it,” explained Gupta.
Also, the retail shopkeeper and the hardware shopkeeper become almost like an influencer to tell the tool operator about the product and spread the word, he added.
