Saurabh Sharma, who runs a fabrication unit in Bhopal (Madhya Pradesh, India), used to face enormous problems in sourcing steel for his small business. Though the metal accounts for a significant portion of his operating costs, he cannot afford to maintain large inventories.
But the alternative of buying steel from the market at regular intervals depending on his needs was a frustrating experience. He would never get the desired material, or if it was available, the quality would be inferior. If the quality was fine, then the problem was of timely deliveries, or opaque pricing.
But the Bhopal-based entrepreneur is a happy man these days, as Essar Steel has opened its Hypermart in the city. “It helps us obtain high-quality Essar material directly from the mill, with certification, all under one roof,” explains Mr Sharma. “Because of their stock-and-carry model our products are available at all times and deliveries are also immediate. I can easily calculate the price and call up from my mobile to place my orders or send my manager with a check.”
There are countless other businessmen like Mr Sharma, owning small-to-medium size units across India, who are today relieved thanks to the presence of Essar Hypermarts in their cities.
Essar Steel has always been a pioneer and trendsetter in providing innovative solutions to serve its customers better. It is the first company to set up the only retail chain for steel products. Today, the company has a strong network of over 400 distribution outlets, servicing the requirements of small and medium enterprises all over India. These retail outlets contribute about 25 per cent of the company’s total revenues.
A consumer can choose from a comprehensive range of flat and long steel products for a variety of applications at Essar Steel Hypermart. Other lines of products such as structural, tubular, pipes, precision tubes, coated steel and angles will also be added to the in-store portfolio to make Essar Steel Hypermart the one-stop shop for steel shopping.
Essar also offering its Channel Financing facility, which comes as a boon for many SMEs who often need to go through ‘lull periods’ in production for want of capital. Various financial arrangements and schemes have been finalized with public and private banks. With this newfound financial access, SMEs are in a position to expand their business by increasing their sales turnover and profitability.
Reaching out to the retail customer
The world over, the retail market for steel has always remained untapped. Small volumes, immediate delivery, transparent pricing and above all consistent and guaranteed quality are some of the basic requirements of retail customers. Over the years servicing these requirements has been a challenge for large steel producers.
Worse, the market is today flooded with a wide variety of dubious, secondary and non-standard steel sourced from various countries. But at Essar Steel’s Hypermart, customers are assured of materials from an ISO 9002 and 14001 certified mill, which are available with a quality test certificate.
Interestingly, Essar has tied up with a service provider to partner in this innovative promotion. Customers can now simply type ‘STEEL’ on their mobile handsets and send it to 53636; within seconds it is acknowledged with a response message saying: “Thank you for contacting Essar Steel Hypermart. Our Customer Care Representative will get in touch with you shortly.”
Within minutes a follow-up call is made from a call center in Bengaluru seeking the customer’s detailed requirements. The call center executive provides the prices and also books an order in case the customer’s expectations are met. The agents provide hands-on information about Essar Steel Hypermart and its locations.
Consumers can also locate the nearest Hypermart by dialing the toll-free number 1800-22-5105; besides obtaining all steel-related information, they can also place an order over the phone.
Essar has backed up all these arrangements by heavily investing in IT infrastructure and applications for merchandise and supply chain management. It is equipped to provide flexibility on purchase due to interconnected Hypermarts and a core inventory.
These marts are conveniently located in the major industrial cities of Gujarat, Maharashtra, Madhya Pradesh, Delhi, Haryana, Tamil Nadu, Andhra Pradesh, Goa, Punjab, Jammu & Kashmir, Himachal Pradesh, Chhattisgarh and Kerala. The network is being expanded and soon it will have a pan-India presence.
Bandhan – forging a bond with customers Customer loyalty programs, de rigueur in consumer products marketing, have been introduced in the marketing of metals by Essar Steel Hypermart. The first-of-its-kind initiative in the industry, Essar Steel 24 Carat Bandhan rewards customers for buying a certain quantity of steel.
Customers are awarded points on purchases, which on accumulation are worth exciting rewards ranging from electronic goods to holidays at destinations abroad. Says Mr Ashok Bajpai, CEO, Steel Retail Business: “The overwhelming support that we have received from our customers has been our greatest source of encouragement. This motivated us to create 24 Carat Bandhan.” The membership cards given to customers entitle them to a range of privileges and benefits. They will also be eligible for need-based credit facility on their steel purchases. “Earning points every time we buy steel has been a new and satisfying experience in the industry,” remarks Mr Dinesh Talwar of Danish Private Limited, Jaipur. “Kudos to Essar Hypermart for conceiving such a brilliant solution for its customers.” Mr Rajesh Garg, Director, Prakash Diesels, Agra, notes that he has never come across a reward-based program like Bandhan. “It’s a great offer for SMEs and it has put Essar Hypermart miles ahead of the competition,” he adds. |
The right choice
Today, anyone who needs steel can approach a Hypermart and place an order of any kind – be it just a single sheet or for a few tonnes. Essar’s promise is ‘Sahi Price, Sahi Delivery, Sahi Quality’ (right price, right delivery, right quality) – which is all any steel buyer can ask for.
Importantly, Essar Steel Hypermart is changing the paradigms of marketing and promotion in the steel business. Steel, which as a commodity had been considered as boring and unattractive to advertise and promote, has suddenly become more interactive, thanks to innovative ideas from Essar Steel Hypermart. And in order to create awareness, Essar Steel is extensively promoting its retail network on radio and the print medium in locations where it has presence.
The first Essar Steel Hypermart was opened at Gandhidham in Gujarat in 2006. The objective of starting the retail outlets was to enable transparent, high-quality steel purchase in small and manageable packs, thus eliminating the need to buy in bulk.
With the Hypermart, Essar has a platform to better understand consumer needs and align its processes to best suit its customers. Having changed the very nature of steel business in India, Essar now plans to expand the retail nature of its business to the international marketplace as well.
| Building a win-win partnership Essar Steel aims to be present in every city and town in India where steel is consumed. Its Service Centers are special units where steel is processed to customer specifications. The centers serve as ‘hubs’ for the Hypermarts, which are the ‘spokes’. They house large quantities of steel, which are processed and transported on-demand, eliminating the need for customers to maintain high levels of inventory. “We wanted to maximize the direct availability of our products in smaller towns, where indenters have been conducting business on restrictive terms like no stock, inconsistent deliveries, etc,” remarks Mr Vikram Amin, Executive Director of Sales and Marketing at Essar Steel. “We have now bridged that gap and built a win-win partnership with small manufacturers, local fabricators and engineering and construction companies who today buy all their steel from Essar Hypermart. This model is a win-win scenario for both the customer and the company.” |
