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The coolest one meets the richest one: Kelvinator + Reliance

Nostalgia seems to be the flavour of the season in the world of business. Last week we had covered a short piece on brands being revived and ways to get it right in our story about Bajaj Chetak.which turned out to be rather popular!

Well, Reliance Retail, the retail arm of India's largest conglomerate Reliance Industries is all set to bring back "the coolest one", the iconic refrigerator brand, Kelvinator. Earlier this week Reliance Retail signed a 10 year deal with Electrolux (the firm that owns the brand Kelvinator) for exclusive brand licensing, manufacturing, marketing and distribution rights. The firm will start with launching the refrigerators, and will move to producing air-conditioners, washing machines, and microwave ovens in a phased manner, with the goods being sold in both its own retail chain as well as other stores. For context on how big this could be, Kelvinator at its peak did 1000cr+ of business in India, and is now being launched with the distribution reach and financial backing of Reliance in all its might!

In this post we discuss the potential symbiotic relationship between the two brands, and how it could lead to a brilliant combination.

Let's start with what Reliance will bring to the table that makes it one of the ideal players to relaunch the brand. For a firm to be successful in the highly competitive white goods space you need to have a lot of aspects fit in just right. Reliance, with its 8200+ stores certainly covers one major part of the problem, distribution. Refrigerators still remain one of the the products for which the customer prefers a "touch and feel" experience, and hence continues to draw people to stores. For comparison, in 2018, 35% of smartphones, 30% of ovens, and 10% of washing machines were purchased online. Refrigerators however stayed stoic at a mere 5%. The example makes us appreciate the symbiotic nature of the two brands even more because while Reliance's presence helps customers access a product they want to buy offline at a nearby store, Kelvinator also provides a pull for the customer, who would potentially consider buying other white goods once in the Reliance store.

Reliance also has experience of doing something similar before when they had acquired the rights for Sharp for three years in 2017. They have since signed on Rohit Sharma as a brand ambassador and sell their TVs across the country.

What Kelvinator brings to the table is a brand people identify and trust, which is a huge plus in the white goods space. What it brings to the Reliance stable is another brand that Reliance has complete control over. It enables the firm to control pricing of the goods across online and offline channels, something that becomes important to do as users increasingly make their white good purchases online. Once the brand is better established, it will also provide the retail chain better negotiating power with the OEMs who sell similar products.

On paper this certainly looks like a match made in heaven. However there is still a long way to go. The existing players in the market will be on their heels continuously innovating in terms of energy efficiency, product quality, and design, and Kelvinator will have to match them, and then some, to make its way into the extremely picky Indian consumer's home!

One way or another, this might just become an interesting case study in b-schools a few years down the line!

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22 oct. 2019

Wonder why Reliance chose Kelvinator. I think Kelvinator is a very marginal player in India. You hardly see their refrigerators in any big retail shop.

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