Lenovo Consumer PC Business: New Route To The Top?

The consumer PC market in India has been relatively flat over the past few quarters and Lenovo is betting big on the emerging formats like gaming, convertible, thin and light to drive sales. 

While the Indian tablet PC market recorded a 4 per cent decline (Year-on-Year) in the third quarter this year. Chinese electronics goods manufacturer Lenovo recently achieved number 2 position after HP in the market share in overall PC sales in Q2. “Consumer, SMB and the enterprise business and every other business has grown very well, the biggest growth has come from the commercial side because we have some large education deals. All together PC market was 24.1% while only consumer part catered to 19.1% share in Q2 financial year (July, Aug, Sept)”, cheerily sharing news with media Rajesh Thadani, head and ED of consumer and e-commerce at Lenovo said that.

Rajesh Thadani, Head & Executive Director of Consumer & E-commerce, Lenovo India

Also there is a sharp acceleration in PC buying because of the students according to the consumer behavior study Lenovo has conducted. As per the company, the reason behind the success numbers for the business lies in its newer products and channel ecosystem. Answering what triggered the success, Rajesh Thadani replied, “Overall growth has been triggered due to two reasons, first the big educational deals that we have cracked and the second our consumer business have grown at least 30% Y-o-Y. Our product portfolio has been completely refreshed which is also one of the reasons of our success, and we have also invested a lot on channel ecosystem”. Among other things Lenovo has also expanding retail outlets extensively.

“Over a period of time, tablet, PCs are finding improved adoption in corporate as well as government segment. Education was the key segment for B2B sales and the key driving force behind the growth in 3Q 2017,” Narinder Kumar, Lead Analyst, CMR, said in a statement in support of the results.

Thadani informed that Lenovo, apart from opening more exclusive stores investment is being done in existing stores in terms of ground staff and branding activities. Also there has been an increase in below the line activities in terms of demand generation.  In 2018, Lenovo is planning to refresh its IDS once again in some time in April or May with Intel collaboration.

We are well aware of the fact that online platforms are making it hard for offline traders. But still in terms of revenue making, offline beats online market. On this issue Thadani said, “We are a heterogeneous entity, but still offline caters to 80% of market share whereas, 20% is online. However, online has also grown in comparison to previous years.”

According to Thadani GST will also become one of the factor in the growth of the PC business especially in the mid market sector. “Right now it is difficult to tap the exact figure of the GST contribution. People are now starting to adopt the technology for their business growth and we have also announced GST centric products as well and hence due to this we are seeing a good spike in desktop business. So in future, as the system will be upgraded it will become one of the key products.”

Lenovo aims to capture over 20 per cent market share in the premium space that is estimated to be 12-13 per cent of the total PC market. When comes to route to market depends company largely upon LFRs like Reliance, croma stores, etc; Exclusive Lenovo stores and the multi brand stores. Exclusive stores gives 100% brand value while between LFRs and LMB stores shares is divided via space, shelves and walls. “We have 26% shares in LFRs. Infact, we have grown at least 2% of share Y-o-Y in premium product category, while in heterogeneous category our shares has moved up 6% of gain. And out of 6000+ multi brand stores we work closely with some of the key stores identified, where we have already increased our shares of wallets comparable to the other brands.”

While, the company is making its products at an affordable rate and for its thin and light product, the incremental cost from a traditional notebook is 15 per cent, compared to 30-40 per cent in the past. "We are bridging the gap to drive customer needs," he said.

Today Lenovo has 170 Exclusive stores and 400+ small format exclusive stores across India. To increase its retail footprint the company plans to add 100 exclusive stores this year.

"We have over 600 exclusive stores across the country. We are looking at adding 100 more stores this year and would be targeted more at tier I and tier II cities. We feel exclusive stores are necessary, as despite of online sales still consumers wants to have look and feel of the machine in his own hands." he said.

To drive further the growth of premium products, company has identified 230 stores across the country which is being called Premium Club stores. Talking about this exercise Thadani said, “These stores are differentiated on various terms such as location, services etc. We are investing heavily in them in terms of point of sales and product highlights, product demo space. We also have specific customer premium programs for these stores.”

The consumer PC market in India has been relatively flat over the past few quarters and the company is betting big on the emerging formats like gaming, convertible, thin and light to drive sales.

“We are a good and strong brand and what makes us different is how we are engaging our partners, driving the customer experience and we will continue to invest in our channel partners, trainings and stores to achieve great targets.” Thadani said.