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Old 11th June 2019, 16:26   #1
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Default Royal Enfield to open 350 studio outlets to push rural sales

According to a media report, Royal Enfield is planning to open 350 studio outlets in rural areas of India.

Royal Enfield to open 350 studio outlets to push rural sales-royal-enfield.jpg

Royal Enfield registered a 13% decline in its overall sales in the fourth quarter of last year. Therefore, the company is now targeting the rural market to increase sales.

The new studio outlets will be 1/6th the size of a typical Royal Enfield showroom. It will have 225 sq.ft. of showroom space and a 275 sq.ft. workshop. The company expects to sell between 12-20 bikes per month through these outlets.

Royal Enfield has a network of 825 outlets in India with 42 stores spread across the world. The company is aiming to have 1,350 stores in 1,100 towns this year.

Source: LiveMint

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Old 11th June 2019, 17:19   #2
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

With the Urban penetration appearing to have reached saturation, taking the Rural route seemed to be the logical solution.

The only issue I see is that the cheapest RE would cost around 1.2-1.3 lakhs... how many "Sarpanch" does RE hope to add to its customer base and for how long?

Last edited by payeng : 11th June 2019 at 17:26.
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Old 11th June 2019, 17:43   #3
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

Has also appeared in Economic Times and other financial publications. The ET entitled it as "Eicher Motors Rural Push may Take Some Time to Gain Speed."

https://economictimes.indiatimes.com...w/69718764.cms

It gives an insight into Royal Enfield's (RE) future strategy for gaining rural footprints. The resurrection of the once fading brand RE under the older management, by Eicher Motors is a great 'change management' lesson. A classic retro design cannot fade from the enthusiast buyer's mindset, it has aptly proved. Sadly, other companies with popular classic designs like the Premier Padmini and the Ambassador could not upgrade technology wise according to the contemporary needs of the market that led to their demise.

The RE rural push comes at a time when the competition is looking for a slice in this 300-500 cc niche, with brand Jawa already launched and Harley Davidson queuing up to showcase its lighter engined bikes. Bajaj already has its presence with the KTM 390 and the Dominar in this niche.

RE has the Interceptor and the Continental GT in the higher segment (650 cc) in its portfolio. The newer rural outlets may though mainly target the 350 cc niche for its customers, as the larger engines may have not much demand in such markets.

Maruti (MSIL) has strategically spread its wings into the Indian hinterland, with lots of rural dealerships, since more than a decade ago. MSIL is the unbeaten leader in our car market today.

The RE balance sheets from the past few quarters is showing negative sales trends, due to headwinds and general market sluggishness.

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In the near term, the strategy may help add some volumes to help offset soft demand in the traditionally large markets such as Kerala, Maharashtra and Karnataka. Volumes dropped 29 per cent, 10 per cent, and 5 per cent in Maharashtra, Kerala and Karnataka, respectively, in the March quarter. Even states with lower penetration of premium bikes, such as Uttar Pradesh, Rajasthan and Bihar, saw moderate growth. With disposable incomes in rural India not rising fast enough, Royal Enfield might have to wait a bit before it sees a meaningful contribution from the new format of stores.

The Street is pricing in volume growth of 807,000-856,000 for the current fiscal year, which implies growth of minus 2 per cent to plus 3 per cent. The company has given production guidance of 950,000 units after the March quarter earnings.
The 300-500 cc bike segment is in for lots of fireworks hereinafter. Only the fittest will survive.

Last edited by anjan_c2007 : 11th June 2019 at 17:44.
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Old 11th June 2019, 18:43   #4
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

Quote:
Originally Posted by anjan_c2007 View Post
The resurrection of the once fading brand RE under the older management, by Eicher Motors is a great 'change management' lesson.

A Lesson in Management for sure but more to highlight the role of "LUCK" in business.

Of course RE was slowing trying to change things. For example: U.C.E (Unit Construction Engine), Reliable Electric Start, Disc Brakes, Gears shifted to the Left (Conventional) Side. All these changes were done on products before the Classic models were launched. But somehow it was the design of the Classic Models that Stuck an a chord with the Indian customer that too on an unprecedented level.

As revealed by Mr. Lal, the Classic 350/500 were initially designed specifically with the Export Market in Mind.. but as luck would have it, it turned out to be the blockbuster for RE in India.

What worked for RE need not be the template for other brands / manufacturers. In fact it might be Impossible for RE itself to repeat success of the Classic models. Just like the Splendor for Hero, Activa for Honda and Pulsars for Bajaj.

"LUCK" plays a big part in the success of any business.

Last edited by payeng : 11th June 2019 at 19:05.
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Old 11th June 2019, 19:05   #5
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

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Originally Posted by Geo_Ipe View Post
As in 350 outlets to sell RE motorcycles, or outlets to sell RE's 350cc motorcycles which are the entry level ones?
Answering my own (stupid) question:

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Eicher will open 350 studio outlets that will have 225 sq. ft of retail space and 275 sq. ft of area dedicated to the workshop, according to Lalit Malik, chief financial officer, Eicher Motors. “These will be one-sixth the size of a typical Royal Enfield showroom in a metro. We don’t expect these small stores to sell more than 12-20 bikes per month. This is our first rural foray in India. Under our big distribution thrust, we aim to touch 1,100 towns via 1,350 stores this year," said Malik, who also said that 80 conventional large-format stores will be added in 2019. The company now has a network of 825 outlets in India and 42 stores globally.
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Old 12th June 2019, 01:13   #6
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

Quote:
Originally Posted by payeng View Post
The only issue I see is that the cheapest RE would cost around 1.2-1.3 lakhs... how many "Sarpanch" does RE hope to add to its customer base and for how long?
Generally, even the rural market is on a downward trend - people are moving away from convenient scooters to more economical motorcycles, as well as postponing purchases - as evident from the sales numbers.

But for RE - rural sales might hold a lot of potential! The 'Bullet image' might motivate some people to spend more money on a motorcycle, in a market where the spending pattern has generally become a lot more conservative.

Quote:
Originally Posted by payeng View Post
But somehow it was the design of the Classic Models that Stuck an a chord with the Indian customer that too on an unprecedented level.
The design then, not just luck!

A quick visit to the first page of this old Team-Bhp thread will tell the story of how 'Classic' design changed the RE image (even here on the forums) almost overnight.

https://www.team-bhp.com/forum/motor...-now-sale.html (Royal Enfield Classic 350 / 500 - Now on Sale)
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Old 12th June 2019, 09:45   #7
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

Quote:
Originally Posted by CrAzY dRiVeR View Post
The design then, not just luck!

A quick visit to the first page of this old Team-Bhp thread will tell the story of how 'Classic' design changed the RE image (even here on the forums) almost overnight.
A Design that was Conceived with Export Markets in Focus... but as LUCK turned out, it was the Domestic Market where it clicked.

I have been a witness to the LUCKY Classic Turnaround Story of RE from the time when it was first unveiled in its (now defunct) Minisite "www.BulletClassic.com" in 2008.
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Old 12th June 2019, 14:07   #8
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

My hometown is one of the most backward areas of Bihar. On my last visit, i was surprised to see the number of royal enfield bikes that people were owning up. Not just the pradhans or the sarpanchs but normal public was also very much interested and anyone who could afford an apache/pulsar has extended his budget and got himself Royal Enfield. Coupled with its retro look and charm, RE is drawing attention of mature as well as youngsters equally. As per me, the urban market has reached its saturation point. Market now exists in smaller cities and towns where these automobile OEM's have nil/very less presence. The nearest bajaj showroom from my village is around 40 kilometers and same goes for maruti showroom as well. Ford and VW are still an alien brand. People have never heard these names.

Coming back to RE opening new studios, it is a very good move which is aimed at capturing the markets which were being ignored till date.
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Old 12th June 2019, 20:58   #9
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Default Re: Royal Enfield to open 350 studio outlets to push rural sales

Are sidecars legal in India?

They were popular in Europe as a cheaper alternative family transport option to owning a car here for decades & are still very popular with Enfield owners today here - no other new bike suits one more than a Bullet..

I'm a bit surprised I did not see one in rural India. In rural Thailand, they often have locally made sidecars attached to old Honda 110s - a friend and I had a very fun ride down a main road and along a jungle track in one with all of our luggage a few years ago! They are surprisingly practical but only very local use with a little 110 attached. A 350 has plenty of torque to drag one along though

Last edited by Rob UK : 12th June 2019 at 21:02.
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