Infiniti Retail, the Tata Group company that houses Croma, has been feeling the heat as online marketplaces emerge as a popular channel for the purchase of electronics. While launching more offline stores is high on its agenda, Ritesh Ghosal tells Devika Singh that the company is also working on an omnichannel approach. Edited excerpts:
What share of your business currently comes from online sales? Are you actively tapping digital?
We get 3% of sales from our website; and are very happy with this number. Over 50% of the customers who come to our stores start their journey online by visiting our website. So, while having a digital presence allows us to compete with the online marketplaces, most of that business is enjoyed in the store. Our approach is omnichannel; and we focus on active shoppers. We always stress that a customer is better off making a choice at the store and, therefore, promote the ‘connect to the nearest store’ button, rather than the ‘buy’ button. We also offer express delivery or three-hour delivery.
We have plans to invest significantly in creating an omnichannel journey for customers. We are working on showcasing our entire inventory online and everything that will be available to a customer at the nearest store will become available online, too. We are investing in building capabilities such as tracking orders, electronic ticketing, etc — electronic tags will help us change product prices in real time and compete more effectively with marketplaces. We are also revamping Croma.com.
Online marketplaces are bullish on electronics. They already have 40% share of the smartphone market. How poised is Croma to compete with them?
A lot of the sales on marketplaces are orders being booked by local retailers. There is a large B2B element in the smartphone market reports, so that figure is misleading. Online marketplaces are our key competitors, but their pie is not getting larger. It is one thing to sell by dropping prices and another to sell on the basis of customer experience, and do so profitably. Running a business is very easy if you are not trying to make a profit.
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We realised how significant the smartphone category was four years ago. We changed the display in our stores to a bench structure to make it more inviting for customers, and also expanded our range. We have partnered with smartphone manufacturers, and are ensuring that for anything a customer searches online, Croma is the answer offline.
What’s your strategy to counter competition from offline players such as Reliance Digital, which is far ahead of Croma in terms of sales?
We need to choose who to battle with, and we are very clear that we are competing with online marketplaces. A customer buying from Croma and from Amazon has the same mindset; he is a modern shopper who is confident of making up his own mind about the product. Reliance Digital has an extensive number of stores, but it doesn’t serve the same customer need. Our answer to Reliance is simple: we need to expand faster. That’s a priority for us right now.
We have around 147 stores today, but we plan to have 180 stores by the end of this financial year. We are looking at franchises too, and have four such stores right now. However, it will be a franchisee-owned but company-operated model. While we will open more stores where we see good business already, such as the metros, we are also looking at tier II and III cities around them that can be serviced from the same distribution centre. The third opportunity is in the geographies where we are not present, such as east and central India, and Kerala. Although operating in markets like Kolkata and Indore is expensive, it is an investment worth making since our absence there is giving the competition a free run.
In such new places, we are only looking at larger format stores of 7,000-7,500 sq ft area. Over time, we have realised that small stores don’t really work because Croma’s differentiation is the range it offers; if we limit the range, we look like any other local retailer.
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Source: Financial Express