The market for wireless devices and applications for fitness, health monitoring, smart watches and tracking Pets shows rapid growth. According to a report by research company P&S Market Research, the global market for wearable trackers is on the way to ensure that, by 2023, to an income of $48.2 billion For such a tasty piece of cake today, turned serious struggle, and almost all companies, including giants such as Apple and Samsung, reported a fall in revenue on average by 12.44% in the second quarter of 2019. Only one company, Garmin Ltd reported total revenue increase by 6.75% with a net margin of 23.42%. About the market Outlook, customer needs and how to do business with Garmin, “invest-foresight” said Eugene Dobrynin, Director-commercial Director of JSC “navikom”, the official Russian distributor of Garmin.
High technology in navigation devices
— Immediately say, my first GPS in the car was just Garmin, and I still remember him with love and warmth. But now instead it is a cell phone and the price of the Garmin device for me personally what is called “bite”. On the other hand, financial reports Garmin show strong growth. The decision to leave in the premium segment was strategically correct?
— The question is flawed. In fact, Garmin manufactures products not only in the premium segment. The company has a wide range covering all segments. Big increase in hours and the sounders. Car navigators are currently in demand by campers. Today, the gadget market is divided between well-known brands, and the struggle for the client there is also tougher. According to marketing laws, brands require constant updates to users devices. When the company can’t offer quality (drastic) innovation, competition becomes even higher. Meanwhile, the market multi-function devices (smart watches and navigators) radical innovation is present. For example, in 2018, Garmin introduced the Garmin in Russia Pay, the ability to make contactless payments for hours. Garmin now Pay among the top three leaders along with Apple Pay and Samsung Pay.
Payment system from Garmin have worked for 28 Russian banks (only Apple Pay). In addition, in the last lines of watches of the brand, Fenix 5 Plus appeared fundamentally new functionality (the function of measuring the level of oxygen in the blood) means that a fundamental change in technology.
The price of imported products (including high-tech goods, wearable devices) will remain relatively high due to the poor position of the ruble as a result of new possible sanctions and geopolitical problems. The rate of inflation may accelerate, which will adversely affect consumer activity. So, benefit those players who are faster to adapt to new reality and implement a large part of the innovation and digital technology in retail stores, but also pay attention to marketing and Analytics.
The company produces both the hardware and software for its devices and third-party brands. In 2013, she began to put the built-in navigation system Map Pilot for Mercedes Benz cars, and in 2014 launched the site for placement and application download Connect IQ. The developers got the opportunity to publish apps that extend the functionality of devices, from the dials to personalized widgets to monitor heart rate. One of the most popular apps in the store Garmin Connect. With it you can capture record your workouts and share results with other users. In April 2018, the company released the third version of Connect IQ 3.0.
— How saturated the Russian market, high-tech navigation devices? Can we say that the products are Garmin it still undervalued?
Tourist navigation is a unique segment in the Russian market. Here we do not include other brands besides Garmin. Premium reserved sports watch with navigation and offline maps are also unique, partially represented in the market segment.
In connection with the technological boom in the retail market of wearable electronic devices or gadgets is developing rapidly. The main trends of the last 20 years in the Western world and, in particular, in the United States — the increased importance of the role of shopping experience, thanks to the emergence and development of social networks, the growth in the number of transactions with the use of artificial intelligence (prediction up to 85% of all transactions by 2020).
Also, a growing number of responsible buyers, making purchasing decisions with consideration of many factors, of which price is not decisive. Competition between West and East will determine the situation in the retail sector, and in many cases the East will outperform the West.
Wearable high-tech devices are advertised primarily in the online environment. Marketing performance is based on fluctuations in cost of sales, promotions, work on the conversion. The market of gadgets has grown substantially, adding a number of manufacturers of “smart” hours. But if we talk about the premium price segment, which includes clock and Garmin Fenix ruler, Chronos, MARQ, etc., then the number of players, offering multi-functional device, which is a stylish timepiece with navigation, apps for sports, socializing, music, payment, relatively small, and are presented on the market not so much as in the cheaper range.
In the future, the market of luxury devices will be supplemented by technologies such as flexible displays and smartphones that are embedded in clothing. These technologies have been demonstrated, in particular, the IFA and CES. Smartphones leading brands develop approximately in one direction and can not offer radical innovation. Meanwhile, multi-functional wearable devices such as the Garmin brand, continuously expand their capabilities and increase the number of parameters.
— How would you describe the portrait of the typical buyer Garmin, who are now positioned the brand?
Company Garmin has been manufacturing equipment for motorists, sailors, tourists and aviation, as well as software to work with them. We have a wide audience: it and athletes, and followers of a healthy lifestyle, tourists, businessmen, fishermen, motorists, travelers… each group of goods has its own loyal target audience. The model range is constantly extended with new models belonging to the rulers Fenix, Forerunner, Marq, and others. The result Garmin is not only engaged in development and sale of gadgets, it generates a new lifestyle, whether in water, in the air or on land.
— What to the buyer the advantage of the shop before you buy on the Internet?
— Feature shops Garmin are that they are made on the basis of showrooms. Any gadgets you can see in open access and even to use them with the help of experts of the brand. When buying a sports watch with many of the settings can be tested only in an offline store, for example: hold the device in your hands to assess its weight, to see how the watch on the wrist, assess the real size and ease of strap. Buyers expect contact with the brand. The advantages of stores require a range of all devices, especially new products, the option to test any device that can receive consultations of managers and maximize support. Also for tourist navigators important points are setting and the skills to use the cards, therefore, most likely, will need to consult the seller.
The opening of the flagship store
— What are the requirements and recommendations, based on your experience, would you give me for the selection of the trading place?
— It is necessary to estimate the cover of the shop accessibility of the store for the target audience, the solvency of the audience attending the location of the store. For us is a preferred choice of a large shopping center to accommodate the trade point Garmin. Important synergies with other sports brands in the Mall. That offers the brand store Garmin, sports and tourism electronics — is a great addition, for example, when buying sportswear. This ensures a stable consumer traffic. In addition, the shopping centers provide Parking availability and accessibility. To open an affiliate store Garmin franchise in Russia and CIS countries required trade area from 50 to 80 square meters in a heavily visited shopping center, individually calculated the first installment, investment in repair and furnish of premises on corporate brand standards, sales of equipment and basic investments in production. Usually the process of opening a turnkey takes about two months, and the investment will return in about a year or two, it all depends on the location of the store.
— Well, I weighed all “for” and “against”, to estimate the market for similar goods in the city (found it almost empty), agreed about putting in 50-80 square meters in the largest shopping center. How much will my deductible?
Investments in the opening of the store of 50 sq m up from 2.5 million rubles and include repair of the premises, trade equipment, security open display, sign, advertising and display samples (on which the firm gives a discount of 20%). In the case of the opening of the island in the gallery shopping center investments will be about 1 million.
— Excellent, price are acceptable to me, what does it include? The timing of the launch is very critical, may I not seek and order the trading equipment in place, and to take all at once do you? Can I receive credit for it?
— You can get installments on merchandise 30 days. For ordering commercial equipment we provide contacts of several processes. Shipping possible to any city of Russia.
— Like any businessman, I think through and escape routes. If “something goes wrong”, will you accept back equipment and the product?
— Yes, we have the opportunity in case of unsuccessful development of events to take the goods back. May also consider a buyout of partner’s store, which the business closes.
Training of staff in corporate store
Most General stores have huge trouble starting just because of lack of qualifications of management. How to avoid a period of “trial and error”? Will rent Manager a couple of months?
— You can rent the Manager of the store. The company “Navicom” was developed a business franchise package, which includes a technology start-up point and conduct business. Partners in case of approval of cooperation assisted in the design of the store, selection and training of personnel, marketing events and even on choosing the right location.
A number of major global companies offer average option, a hybrid between direct selling and franchise. This includes Garmin, the brand supports the idea of managing a rental store. We are talking about the provision of an experienced specialist, in a short time to establish all the important processes according to the standards of the brand. Such a scheme makes it impossible to keep the range under control, to make important decisions and to influence the profit directly. However, as an option for investments reverse franchising is very popular.
— When selling high-tech products in the first place is the quality of training of sellers. It’s a nightmare when the potential buyer knows about the product line more than the one who sells it! A bad seller is a lost customer. Is it possible to shift the training on your shoulders?
— We provide training and support for partners at each step. Implement motivation + KPI which is monitored remotely through video surveillance. In cooperation with Garmin entrepreneurs already familiar with the business, get new experience and support. This continuous interaction beneficial to both franchisees and the company itself. Partners can always arrive at a point of sale and to learn all the intricacies on the practice, as well as to the office for review with the marketing process.
Interviewed By Kristina Firsova
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