For a retailer, it’s all about what’s good at the moment, to kickstart the retail game with. So, what is good at the moment? Mobile phones, it seems. Vishnu Rageev R rings up a few debutants and visionaries in the steaming Indian mobile market.
Story begins
Chennai-based discount retail chain Subhiksha, currently the largest retailer in the country with 780 stores across nine states, recently pledged to be the largest national retail chain for mobile phones. Last week, pouring more fuel into this mobile retailathon, Pantaloon Retail (I) Ltd signed a joint venture agreement with Axiom Telecom of the United Arab Emirates (UAE) to distribute mobile handsets. According to industry sources, many corporate retailers will soon emerge to grab a pie from the Indian mobile market, which is worth over Rs 20,000 crore.
“The mobile market, which is currently worth over Rs 20,000 crore, has been witnessing a 20 per cent year-on-year growth since 2004. It is expected to take a major plunge now with the major corporate houses going after the device to bring it on to an organised retail platform,” an industry expert told Indiaretailing.
Mobile mania
Chennai-based Subhiksha made the first-of-its kind retail attempt in New Delhi in July 2006. Today, mobile mania rules this grocery retailer. The chain has scaled up to 145 exclusive Subhiksha Mobile stores in the capital and other states such as Punjab and Gujarat, and cities like Mumbai and Chennai. The company has opened 15 such EBOs in Chennai and plans to raise the number of stores to 30 by this December, and around 400 across the country by March 2008.
When enquired about the viability of mobile phone retailing, a Subhiksha spokesperson informed: “This is a new format that our managing director R Subramaniam has evolved under Subhiksha, and it is growing at an unprecedented rate. As per our data, our chain sold 65,000 mobile phones in the month of June. This underlines the viability of this device and we will close our eyes to bet on mobile retailing.” According to him, the June transaction is the highest sale through a mobile chain in the country. In six months, Subhiksha expects to push through a sale of at least two lakh mobiles a month.
Subhiksha stores retail all the major brands of cell phones, spanning a broad price band and selling for at least 5 per cent cheaper than other stores. “Earlier, there had been no organised retail chain in the business. It’s a low-margin business, but we noticed synergy with the rest of our business, which is mostly in branded goods,” informed Subramaniam.
Visionary’s vision
Quite often, retail experts are heard saying that nobody foresaw retail as Kishore Biyani did. After signing the JV with Axiom Telecom, Kishore Biyani said: “ The current explosion of the telecom retail market that we are seeing, is breaking new barriers everyday. There is no doubt that mobiles will soon be the single-largest electronic products retailed in the country. Future Group, with the knowledge and expertise of Axiom Telecom’s systems and process in this area, will be best positioned to retail and service the Indian telecom market.”
The 50:50 JV, with an equity base of up to $40 million, will distribute mobile handsets and accessories, and set up service centres in India. The venture is targeting revenues to the tune of $200 million in the first year of operations, as it taps the world’s fastest-growing mobile services market.
“The joint venture activities will be carried out by a separate company. The new company will focus on developing backend sourcing infrastructure for Pantaloon Retail’s existing telecom retailing business, to enable it to expand and scale up exponentially. Additionally, it will also create a nationwide network of state-of-the-art after-sales service centres for mobile handsets in the country,” a company spokesperson informed.
However, Biyani does not intend to experiment by launching company-owned private labels in mobile category due to the price fall. “We cannot do private labels, but there is an opportunity at the top end for some lifestyle phone offerings,” Biyani said. The Pantaloon-Axiom JV stable may even offer accessorised or custom-made cell phones—ones studded with Swarovski diamonds, for instance.
Pantaloon already has a Rs 500-crore mobile retail business through ConvergeM, a wholly owned subsidiary of Pantaloon Retail India Ltd. The company has a three-pronged strategy – M Bazaar (shop-in-shop at Big Bazaar stores), M Port (independent brand stores), and Gen M (kiosks in malls and multiplexes catering to impulse buying).
“With this joint venture, Pantaloon is leveraging its already established presence in the retail space. This is a strategic business decision for Future Group and reinforces its commitment to be a serious player in the telecom wholesale, retail and after-sales service market in the country,” avers an industry expert. Pantaloon entered the mobile-phone retailing business in 2006.
Future Group with its wide presence and Axiom Telecom with its knowledge and expertise will be best positioned to retail and service the Indian telecom market. However, the company will have to deal with the short-interest span in new cell phone models and the competition from established chains like Virgin-Essar’s Mobile Store and Subhiksha Mobile.
Last year, Essar Telecom Retail entered into an agreement with the UK-based Virgin Group for brand licensing, technical and consultancy services for its mobile-phone retail chain. It is learnt that the group has earmarked around Rs 1,500 crore for its new multi-branded telecom retail chain initiative over the next five years. The company plans to set up a chain of 2,500 outlets across 600 cities in the next three years. It recently tied up with Planet M to open The Mobile Store, a one-stop mobile solution retail chain, at Planet M outlets.
Winners
Nokia has teamed up with Srishti School of Art, Design and Technology in Bangalore to open its first studio in India . According to sources, the partnership is the first in a series planned to tap into the potential of countries, which are seen as design hotspots and best markets for the brand.
According to a Nokia official, “About 66.7 million mobile phones were sold in the country in 2006, the third largest in the world after the United States and China in terms of handsets sold. Out of the total, five per cent goes in organised trade. We are happy to see many organised retailers entering the market investing millions of dollars.” It is learnt that this is another reason for the company to set up its design studio, which is mainly focused at studying what Indian consumers require.
Whatever the stakes for the early entrants and the newcomers, the fight for the big pie will once again prove that the customer is king.
