The brand that once went by the name Linksys is now better known in the market as ‘Linksys by Cisco’, but more pertinently it has emerged as the lynchpin in its parent company’s home networking product strategy. That has naturally brought about a change in its channel strategy, particularly in the Middle East, where under the leadership of Amanulla Khan, Cisco’s Consumer Products Group is seeking to plough a furrow in the retail market.
CME: Your channel model has gone through some considerable re-engineering during the past year. Tell us about that.
AK: If you go back to the old Linksys days we had an SMB channel structure because we had an SMB portfolio, which was a reasonable portion of our overall business. But although that was the case, we had traditional IT distributors carrying consumer products as well, and through them we were trying to do business in the retail space. With the change in strategy — where we are becoming a consumer-centric organisation — we had to realign our entire channel.
CME: So what has that meant for your existing distribution channel?
AK: We continue to do business with the traditional IT distributors like Logicom, Track and those kind of companies, and through them we sell into the traditional IT reseller channel, which is a significant business. But if you look at consumer buying behaviour and what is happening in the retail space, more and more consumers are moving to the malls and the power retail channel for their purchases. Obviously that transition in the market place and the transition that has happened in our product portfolio with becoming consumer-centric meant we had to go and recruit partners that can grow our business in the retail space. So we have started to bring in specialist retail distributors. We started that in the UAE by bringing in Eros Electricals as our retail-focused distributor at the end of last year.
CME: So what does a ‘retail-focused’ distributor such as Eros Electricals bring to the table?
AK: Number one, they understand the retail business because they only do business in the retail space. Retail requires a different DNA and that is what they have. They have contracts with 99% of the retailers in the UAE, so they have the relationship, existing business and presence in all of those retailers, which is a good headstart. When we brought Eros onboard we were present with about 16 or 17 retailers in the UAE. By the end of our fiscal year in July we will be present in close to 100 stores in the UAE.
CME: Is one retail-focused distributor sufficient for a market like the UAE?
AK: For the UAE we will look to rely on Eros and that is our strategy as of today, but our market is a dynamic place so it might change as we move forward. We are looking at having a similar set-up in a few other major markets, such as Kuwait and Qatar. In the major markets we definitely believe that we need to have specialist retail distributors.
CME: Are there any markets where distributors could play a dual role?
AK: In Saudi Arabia we have used Al Jammaz as a distributor for both the resellers and the retailers. The reason for that is we believe Al Jammaz has got a significant presence in the retail space and a strong relationship with the majority of retailers, and it offers complementary products. That is an existing set-up we want to use.
CME: What investments are you making in the retail channel?
AK: When we got Eros Electricals onboard we looked at the cost model and decided we wanted to invest in merchandisers. In all our major stores — and you need to understand that each retailer might have multiple major stores — we have a fully trained merchandiser dedicated to the home networking business. We have close to 24 merchandisers in the UAE today and we expect to grow that number.
CME: What kind of role do these merchandisers play? Is it purely as an in-store sales resource?
AK: These merchandisers are fully trained and fully equipped to give the right information to the consumer to be able to make the right purchasing decision. We are not trying to push a product — the objective of the merchandisers is to educate the customer so they are able to make the right decision. At the same time, we are also making sure that we invest in the point of sale; ensuring the product is well-presented in the retail stores and visibly positioned. We have also invested in a dedicated channel manager resource whose only job is to manage the retail accounts. This is an additional resource that we brought in place this year which we did not have before.
CME: How significant is the role of the retail channel manager?
AK: This person’s job is to help the retailer with in-store activities, making sure that they understand the complete category management and that they understand we can manage the inventory for them to ensure they are not overstuffed.