Key Points:
Reliance Retail has bought brand Kelvinator, an ageing home appliance brand, in a bid to consolidate its consumer durables business.
The acquisition is that of rights of brand Kelvinator, washing machine and refrigerator brand, in India and some other foreign markets.
Electrolux parent company of Kelvinator has closed the business as part of a strategic corporate reorganisation step.
Key Background :
Reliance Retail, which is owned by Reliance Industries, is India’s largest retail chain with interests in various verticals like grocery, fashion, electronics, and consumer durables. Its entry into consumer appliances over the last few years is one aspect of a wider strategy of diversification from oil and telecom to high-margin segments like retail and e-commerce.
Kelvinator, which has its origins in the early 20th century, was one of the first to bring electric refrigeration to the globe. It gained a robust presence in India during the later 20th century and has become synonymous with reliability and cold performance. Indian families, in general, associated the brand by the slogan “The Coolest One,” and it was trailed by every middle-class family for decades. Foreign brand and domestic competition, and the shift in ownership, diluted its presence.
For Electrolux, owner of the Kelvinator brand and a Swedish multinational company, the divestment is a strategic move to exit markets classified as non-core and even more intensively focus on core markets’ innovation and sustainability. The divestment is part of the overall restructuring at Electrolux where it is exiting underperforming or geographically dispersed businesses to increase profitability.
For Reliance, the acquisition of Kelvinator brings immediate brand equity, manufacturing experience, and customer confidence. The company can grow by joining the white goods market without establishing brand credibility from scratch. Further, the enormous retail chains, online presence, and access to funds of Reliance give it competitive leverage to drive scaling up the business.
Indian consumer durables market is likely to maintain a double-digit growth rate supported by increasing incomes, urbanization, and aspirational lifestyles. With Kelvinator on board now, Reliance can target these customers directly through reliable value-for-money products with after-sales support.
This transaction also represents a part of an ongoing pattern in Reliance strategy—acquiring or constructing partnership transactions with quality or under-leveraged overseas brands and re-working them up through its deeply entrenched Indian distribution and innovation base. With Kelvinator, Reliance can now revive a formerly favorite brand to the premier position it held in the bygone era while re-inventing it for a fresh generation of customers.
Author
By Abhishek Roy
