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Business News/ Industry / Retail/  Mobile retailers rush to reinvent themselves to stay relevant
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Mobile retailers rush to reinvent themselves to stay relevant

Retailers planning to introduce value-added services in stores, retrain sales teams and strengthen supply chain management

The Mobile Store streamlined its business by bringing down the number of stores it operates to 600 from 800 in a span of two years.Premium
The Mobile Store streamlined its business by bringing down the number of stores it operates to 600 from 800 in a span of two years.

Mumbai: The brick-and-mortar retailers across consumer product segments are feeling the heat from shoppers shifting to e-commerce sites, but for the mobile phone retail chains, it’s become a struggle for survival.

Chains such as Essar Group’s The Mobile Store, Chennai-based UniverCell and even the multi-product consumer durable retailers like Vijay Sales—some of which have cut back on operations recently—are looking for ways to bring mobile buyers back to their outlets, an effort that analysts are sceptical about.

The Indian e-commerce market, which was estimated at around $16.4 billion last year, is expected to touch $22 billion by the end of 2015.

Electronics, along with books, apparel and accessories, are among the top sellers on e-commerce sites, accounting for 80% of products sold, said the report.

“The mobile phone category is most badly hit of all. From an investor’s point, there’s hardly any money anybody is putting in the physical format. Most of the money is going into funding e-ecommerce sites," said Rachna Nath, leader of retail and consumer goods, PricewaterhouseCoopers India.

Retailers of mobile phones have already been forced to scale back operations.

The Mobile Store streamlined its business by bringing down the number of stores it operates to 600 from 800 in a span of two years. It now operates in 90 cities, down from 150 earlier.

According to a 19 February report in The Economic Times, UniverCell has shut down 70 stores in the last few months and is currently operating 350 outlets across the country.

Each of them, however, says that they are looking for ways to fight the competition by chalking out new strategies, which include introducing more value-added services in stores, retraining their sales teams and strengthening the supply chain management.

“It is a huge threat if we keep on waiting for customers to come to our stores. We are looking at strategies on how to play both in online and offline space. Our aim now is to go wherever the customers move," said Himanshu Chakrawarti, chief executive of The Mobile Store.

To do this, The Mobile Store has started listing its products on price comparison sites like mysmartprice.com, where customers are given an option to collect their purchases from stores or get them home-delivered within four hours of placing the order.

The Mumbai-based firm has also tied up with Chinese smartphone maker Xiaomi, which until recently was selling exclusively through Flipkart, to sell its products.

More such partnerships are in the pipeline, said Chakrawarti, without offering details.

Founder and CEO of Chennai-based mobile phone retailer UniverCell Sathish Babu said such exclusive deals forged by the e-commerce sites are a big challenge.

He, however, denied that the company plans to exit the mobile phone business.

Shutting down stores, which are not profitable or relocating them, is an ongoing process, Babu said in response to media reports that UniverCell has shut down 70 stores in the last few months.

“Last three months, we have been a little silent in terms of our campaigns and branding. However, post June or July, we will be clear on our expansion plans and how we move ahead," said Babu.

Standalone mobile retailers are not the only ones struggling. Consumer electronic retailer Vijay Sales, which operates over 60 stores across the country, is retraining its sales team and stocking more items with an aim to increase footfall.

The mobile phone category contributes about 15% of sales for the retailer.

“Competition from the online space makes us more agile and active. One of the reasons why people buy online is the convenience and the ability to compare a range of products. Hence, we are trying to stock more items and increase our display products," said Nilesh Gupta, managing director, Vijay Sales.

In the last one year, the company has increased display items in the mobile-phone category in most of their stores by around 30%.

Despite these efforts, some analysts feel retailers in the segment are fighting a losing battle.

“The footfall in such stores may not have gone down but conversion into sales has slowed down considerably. People go there to check the phones but eventually end up buying from the online portals because of better deals," said Paresh Parekh, tax partner for retail and consumer products at EY, a consultancy firm.

Parekh points out that the strategy of stocking more products will only add to inventory costs for these companies and that the firms face a risk of items getting outdated before they are sold.

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Published: 09 Apr 2015, 12:51 AM IST
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