Infiniti Retail to break even this fiscal year
Infiniti Retail, which operates retail chain Croma, is hopeful of meeting its topline growth projections even as demonetization has slowed its sales slightly
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Mumbai: Infiniti Retail Ltd, a 100% subsidiary of Tata Sons which operates consumer durables retail chain Croma, hopes to break even at the operating level this financial year, a top company executive said.
The retailer is also hopeful of meeting its top line growth projections even as demonetization has slowed its sales a little bit, said Avijit Mitra, chief executive officer, Infiniti Retail, while explaining that sales had fallen by 50-60% in the first three days after the government withdrew Rs500 and Rs1,000 currency notes. He said sales have mostly recovered and are now just about 10% lower than what it used to be earlier. However, the drop in footfalls has been much more at 20%, said Mitra, who felt that the impact on the topline will not be much.
However, sales growth will be at a slower pace of 6-7% this fiscal year, said Mitra. He said the company is focusing on profitable growth and this had led to it de-prioritizing its sales to cash and carry channels. These channels accounted for 5-7% of its overall sales.
“We will break even at the operating level this year,” said Mitra, adding revenues for fiscal 2017 will be about Rs3,100-3,200 crore, compared to revenues of Rs2,900 crore in fiscal 2016.
Currently, there are 97 Croma stores including seven Croma Zip stores at airports. The company plans to add 10-15 stores of an average 10,000 sq. ft. every year.
Infiniti Retail is piloting a new smaller store format of 1,000-1,500 sq. ft that would stock gadgets and accessories like fitness bands and smart phones at its Ghatkopar store in Mumbai, and this will eventually be expanded as a standalone format as well.
“Croma needs to expand much more rapidly, especially the small-sized stores, of which there is potential to open at least a thousand,” said Rajat Wahi, partner and head, consumer, retail and agri sector, KPMG India, while noting that the company also needs to take a lead online and leverage the trust it has with consumers by having a larger online sales revenue model.
Currently, online sales contribute only 3% of Croma’s overall revenues, said Mitra; however, digitally influenced sales where people discover products online and transact either at the store or online is much larger, accounting for 50% of its sales.
Reliance Digital, the electronics and consumer durables arm of conglomerate Reliance Industries Ltd, has rapidly expanded its footprint with the help of small-sized stores called Digital Xpress Minis. There are over 200 Reliance Digital stores and over 1500 Xpress Minis, according to the Reliance Digital website. The unit contributed 37% to Reliance’s retail business of Rs 8,079 crore in the September quarter, according to an investor presentation.
Meanwhile, it is business as usual for Infiniti Retail, whose parent Tata Sons has seen turmoil following the ouster of its chairman Cyrus Mistry on 24 October. “There is no impact at all on our operations,” said Mitra.