The Tata Group’s electronic retail chain, Croma, which set up its first store in October 2006, is trying hard to become profitable by the next financial year by adding new stores, launching private labels and boosting profitability. It conducted business of Rs 657 crore in 2008-2009 and expects to touch Rs 1,000 crore in the current fiscal. Raghavendra Kamath caught up with parent company Infiniti Retail’s chief executive AJIT JOSHI to know about its strategy. Excerpts:
There were reports of Croma bleeding heavily every month. What is happening?
You should understand that we are a start-up company and there will be losses initially. A lot of our stores are turning around. We will be profitable by next fiscal. In fact, we will be profitable one year earlier than we had originally estimated. We thought we will break even after five years, but we did it in four years. Every month, we are growing, while there are records of negative growth in the industry.
How are you differentiating Croma from other players?
First, we do not push any brands to our customers. For that matter, after completing the probation, a person becomes a permanent employee of Croma. So he/she does not unnecessarily chase customers for bonus and commission. Second, we have been giving our customers the chance to touch, feel and try products, which others are following now. Third, most of the brands have launched their products exclusively through Croma.
Do you think you are lagging in terms of numbers? Others have opened hundreds of stores in the country...
We do not want to compete with others in terms of numbers. We are more concerned about what numbers we deliver, what margins we achieve, and so on. For that matter, if 5,000 LCD TVs sell in any city, we want to have a 15 per cent share of that.
But you lack presence in many cities of the country...
See, we follow a hub-and-spoke strategy wherein we make optimum use of our distribution centres. We want to have a cluster of stores in a city and take leadership positions. If somebody has a pan-India presence, it is their strategy. Earlier, everybody was talking about Tier- II and III cities and their disposable incomes. Now they are most affected. We are rolling out mostly in metros, where you are dependent on salaried cash — those who get a steady income. We have done it in the golden triangle of Hyderabad, Chennai and Bangalore. We will replicate that in Pune and Mumbai by opening more stores.
What is your vision for the company in the next three to five years?
First, get the company profitable and we are working on that. We are expecting a business of Rs 1,000 crore-plus in the current fiscal.
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After our 100 stores in big metros, we want to enter Tier- II and III cities, such as Nashik, Nagpur, Sangli and so on.
We will take a leadership position in one city and then move on.