New Delhi: To increase the number of people using smartphones in India from the current 8% (8 out of every 100 people), Samsung India Electronics Pvt. Ltd is expanding its network of stand-alone stores, according to executives at the company.

The Indian operations of the South Korean conglomerate clocked annual revenue of 38,000 crore in 2013.

The company recently opened a store in Pataudi, a town in Haryana, and is looking to launch several more in similar-sized towns. “We are doing a lot of investments in retail to get the maximum benefit from these markets," said Vineet Taneja, country head for mobile business at Samsung, adding that the company would aim to open hundreds of such stores in smaller towns.

In the past two years, Samsung has focused on retail stores in big cities where it has more than 1,800 stores under Smartphone Cafe and Samsung Plaza (the company’s electronics retail chain) formats; most are owned by local franchisees.

“In the next couple of years, the company will look at small towns to grow market share," said Taneja. In Haryana, for instance, apart from Pataudi, Samsung has opened stores in Bahadurgarh and Hisar.

It isn’t alone in eyeing smaller markets that remain largely under-serviced by organized retailers.

“This is the next phase of growth for all consumer companies," said Gaurav Gupta, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd, an audit and consulting firm. “Retail channels in metros are getting cluttered. Percolating down to these markets for brands such as Samsung makes sense to gain market share."

Stand-alone stores ensure visibility and strong consumer mind space, said Vikhash Agarwalla, principal at consulting firm Booz and Co. It is best to diversify portfolio and offer allied services, he added. Stand-alone stores in smaller markets are likely to operate on lower margins and limited footfalls. “So profitability may be a concern," he said.

Samsung’s Smartphone Cafes compete with mobile store chains such as the MobileStore, apart from multi-brand retail chains such as Croma, owned by Infiniti Retail Ltd, and Reliance Digital. However, most of these are present mostly in metros. Taneja said it would take the company a couple of years to establish the entire network of stores. The idea is to tap first-time smartphone users.

According to research firm IDC, Samsung is the market leader in India in the smarphone category with a share of 38% in the fourth quarter of 2013.

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