Leveraging on its audio-video accessories distribution business, the Chennai-based Ferrari Video has opened a retail chain “Headphone Zone” specialising in headphones and billed as Asia’s first exclusive headphones retail brand. It is founded by 24-year-old Raghav Somani whose family runs Ferrari Video, an importer and distributor of audio-video accessories.
Upon his return from Singapore a few years ago to take over the family business, Somani discovered that retailers in India had no idea how to sell headphones. “This was my motivation to drive change in the market and give Indian consumers the choice and education they deserve,” he says. “There is a certain way that headphones should be sold and choices offered to customers. For example, we have 400 headphones of Panasonic alone but when customers walk into a retail store, they have no clue which product is meant for what.” Customers look for headphones for various purposes – for the gym, for mobile phones, for watching TV, for laptops, and even to wear one to a party.
The Headphone Zone retail stores offer over 20 categories of headphones for all kinds of listening experiences – there are products tailor-made for athletes (water-resistant and sweat-proof) and women (called the Diva collection) as well as for DJs, audiophiles, home entertainment, mobile phones (both headsets and hands-free), and computers.Each store generally entails an investment of Rs 20–25 lacs.
The range includes headphones with features like wireless, noise-cancellation, ear-buds, in-ear, light-weight, clip-type, acoustics-based, and so on. The headphone range begins from Rs 99 and goes up to a staggering Rs 1,30,000! “There are customers who have actually bought headphones worth Rs 10,000 and even Rs 25,000,” Somani says. “But the average ticket value is Rs 1,000 to Rs 1,500. On weekends, the stores get average footfalls of 150 to 200 a day.” The margins in the business are typically between 20 and 25 percent.
There are a few specific target customers who frequent the Headphone Zone stores. The teenagers look for “funky” brands with good bass for their iPods, MP3 players and mobile phones that their moms do not mind buying for their birthdays. The working adults want headphones for their morning commute or the evening trip to the gym. Then there are the educated and discerning customers who walk in with their turn-tables and music equipment. Headphones for mobile phones are very popular because almost everyone listens to music on these. The Diva platform is popular with women.
The Headphone Zone stores have a demo piece of every headphone it sells. Customers walk in and spend a half hour trying out various headphones on their iPods and MP3 players, before buying. As far as brands are concerned, he says that Panasonic has a large range of headphones which do very well because they are specially designed for Indian customers. Brands like Sennheiser and Skullcandy are picking up while Sony remains the mainstay. Almost all headphones are imported – hardly any is made in India and there are no Indian brands except names like iBall.
The Headphone Zone is an offshoot of our Ferrari Video distribution business. “We do not look at this as a stand-alone business unit. Headphone Zone supports our distribution business and it in turn is supported by the latter. We do not look at the stock as an investment as it has already been paid for by our distribution business. So it is difficult for me to put a quantitative number on ROI as we have just opened so many stores so quickly,” says Somani.