Retail chain Croma getting back on track on refreshed omnichannel strategy

Tata Group-owned Infiniti Retail, which operates the electronics and white goods retail chain Croma, is getting back on track. Defying intense competition from pure-play e-commerce players, the company has cut down its losses to Rs 570.9 million in the financial year (FY) 2017 from Rs 1.95 billion in FY 2016. The brick and mortar retail chain’s improved showing comes on the back of a refreshed omnichannel strategy, a push for exclusive product partnerships, and focus on prompt after-sales service delivery. Buoyed by its strong performance, Croma is hoping to break even both at the operating and at the net profit level in FY 2018. 

The leadership at Croma has been quick to realise that for brick and mortar retail businesses to survive and grow the fight cannot be all about online versus offline. In order to survive, the competitive narrative had to change. The company’s omnichannel approach now takes into account the customers’ new buying journey which starts off with research on a brand or a marketplace. The search then moves on to physical stores for product comparison. Next, buyers swiftly move between online and offline media to compare prices and hunt for sweeter deals. The third and the last part of the new-age consumer’s buying journey ends with the final purchase made online or offline.

“We have reworked our omnichannel strategy which now focuses more on engaging customers digitally so that we get discovered as people increasingly window-shop online,” says Ritesh Ghosal, chief marketing officer, Croma. 

The shift in communication and targeting strategy has been accompanied by a complete overhaul of Croma stores. The company has refurbished interiors and rearranged display areas for high-selling products. This has been done to enhance product presentation, drive footfalls and improve conversion rates.

For example, the key driving categories at the retail chain are smartphones and sound systems (sound speakers, earphone etc). Earlier, the product category occupied 15 per cent of the display area at Croma stores. The company has now put up interactive spaces where customers can engage with products and seek personal intervention form store staff. This has helped the retailer increase product accessibility and interfacing. As a result, store footfalls have increased; so has the conversion rate — from 13 per cent to 16 per cent over the last one year or so.

Further, the average sales per store for Croma have grown 13 per cent in FY 2018, while revenue has grown 20 per cent in the same period. This is impressive, considering that consumer electronics retail sales in the country grew at only 10 per cent last year, says Chetan Bajaj, professor, marketing, Institute of Finance and International Management. Croma, according to Bajaj, has benefitted a lot from strengthened omnichannel distribution. “Around 50 per cent of the store footfalls for the retailer originate online. Ordering online and picking up at the store, is also encouraged. Online sales, which account for only five per cent of the total sales for the retailer currently, is gathering momentum,” he adds. 

While Croma is getting active in the online space, it has steered clear of following a brand-recommended pricing strategy. “As people compare our products and pricing with that of competitors, we are mindful that Croma is not the lowest priced brand. While calibrating our prices with that of rivals, we educate prospective buyers why a Croma product is relatively expensive than the competitor’s,” says Ghosal.

For example, in the case of air-conditioning systems, along with a standard warranty offered by other players, Croma extends free installation and after-sales service support for a certain period to buyers. Ghosal asserts buyers are more than willing to pay a higher price for a product when they know that they are buying from the stable of a much trusted conglomerate. 

That apart, the retailer steps in when the lifecycle of the product ends. It offers buyers attractive buyback and exchange deals on various items — this encourages long-term consumer relationship and drives frequent purchases. 

Further, the company’s strategic partnerships with smartphone and electronic appliance manufacturers have demonstrated that tie-ups work to the advantage of a retailer when there is no direct price comparison. Apart from standard exclusive product offers on specific brands, Croma provides modified products to meet varied customer needs. For instance, in the case of laptops it makes available models with reconfigured specifications that are exclusive only to the retail chain. Exclusive colour variants are also on offer for a number of household electronic appliances and gadgets. Such add-ons help the retailer increase its salability vis-à-vis online players. Further, in case of a brand like Hitachi whose ACs and refrigerators are available with a wide range of retailers both online and offline, TVs are exclusive to Croma. 

Another interesting aspect to the retailer’s comeback story is its smart product placement strategy. Customisation of products is key to driving sales at stores in upmarket areas of cities like Mumbai and New Delhi. Then there are stores in smaller cities like Nashik, Surat, Rajkot where competitive pricing and differentiated products drive sales. For example, Croma has a line of home chakkis for sale only in the Gujarat market.