In a candid interaction with DQ Channels, Mr. Himanshu Chakrawarti, CEO – The MobileStore Limited talked about the largest retail chain and its next Gen offerings to the customers.
How the idea of the MobileStore flourished? How is company’s growth since inception?
Himanshu Chakrawarti: The journey of the MobileStore started in 2006 when telecom and mobile industry was booming in India. When we entered into the industry, lakhs of mob shop were doing box selling. As there was great market potential in this segment, we felt that we need to do something beyond box pushing. We decided to create a national chain of MobileStore that would serve the needs of customers who wanted to buy phone and associated products along with it. Since inception, we are experiencing very organic growth. Like any other corporate entity, we have also gone through our own downwards. However, we moved from there and created a network which was not only largest in the country but also profitable. At present, we are the largest retail chain of mobile stores with presence in more than 90 cities across the country.
Predatory pricing by E Commerce companies is a major concern of offline retailers. How MobileStore look s into the pricing policy of online giants?
Himanshu Chakrawarti: There are two ways of looking at pricing issue. Minor difference in the prices on online and offline platforms is alright. However, online companies selling goods below the landed cost is something which we feel is not the ethical business practice. When the price is below the landed cost it effectively harms the brand and the Channel. We as well as brands are in dialogue with these market places. The second and very important part is that we do not sell on any of these platforms. We do not think that we have to build our own channel. Rather we want people to prefer us and come to our stores. We are not present on any of the market places but the tact we have done is actually combines best of online and offline retail.
Along with OLS portals, LFRs are also major competitors of offline retailers. Do you think that these market places will eliminate traditional channel?
Himanshu Chakrawarti: Every format has something specific that it offers. LFRs offer customers convenience and modern experience testing of products. However, customer’s bargaining ability is limited in such stores. On the other hand small retailers are ready to negotiate because they don’t want the customer to go. That is the difference between the two formats. It is customer’s preference to choose between. Irrespective of debate on pricing the march of technology is such that people will buy on these platforms. Our endeavor is customers should buy from our stores. OLS endeavor is customers should buy from our stores. It is an ultimate choice of the customer who selects the platform. Some prefer LFRs, some prefer small mob shops and some go for online shopping. Each format has its own reasons for existence. Therefore, I don’t think that one market place will eliminate another.
What are the online and offline offerings you have combined for the benefits of consumers?
Himanshu Chakrawarti: Though customers are buying on online platforms there are certain things that OLS portals cannot offer to customers. OLS portals lack behind in giving facilities like data transfer including notes and passwords, accidental warranty, extended warranty, theft warranty etc. We have come up with these offerings to customers. Our stores are established in the systems where we say that buy from Snapdeal or any other online portal but while doing that buy our extended warranty. There is nobody in the country who offers such services.
Since there are other established brands present in the market, how the MobileStore differentiate itself from other LFRs?
How do you analyze smart phones market growth in India in next 3 to 5 years?
Himanshu Chakrawarti: Indian smart phone market growth in future can be analyzed from four perspectives. From customers’ perspective, there is humongous number of feature phone users who are now in the mode of upgrading. When we couple it with various government initiatives whether it is Aadhar or direct benefit transfer, we see people want to upgrade from feature phones to smart phones. People who have bought base level smart phones will feel to have more in their phones in terms of features and user experience as they want multimedia experience. This will be the trend in the mobile and telecom industry.
Then from pricing perspective, we have an interesting part which is mid-end smart phones typically range between 15000-25000 and top end smart phones which are priced Rs 40000 onwards. There will be one or two brands which will be in a forefront position at the top end purely because of the innovations they do, the ecosystem they are operate in and the crazy following they have. However, establish brands will feel hit of reduction in price. Indian brands will find it more difficult to operate at the higher end. At mid end level will become crowded. As a result there will be huge competition between the brands offering mid end level smart phone ranging 15000-25000. This particular segment will see tremendous growth. There will be upgrades in the brands and downgrades in prices.
Third from ecosystem and brands perspective, there will be huge pressures on margins. There will be a catfight in the mid end. Indian brands will face tough competitions from international brands in sub Rs 10000 category. We will see proliferation of the whole bunch of international brands in sub Rs 10000 category. We will also see different initiatives by brands in operating systems whether it is Windows or Android. India will be the focused market for all brands. And we will see equivalent of Mahabharata going on in smart phone market on pricing.
Lastly, from the Channel perspective, large amount of the decision making will be influence by the digital, whether the transaction happens there or not is the secondary issue. Transaction can be online or it can be in the store and that depends on what the store system does.
After taking responsibility of the MobileStore, what are the critical decision you have taken that impacted your business margins?
Himanshu Chakrawarti: I have worked upon 3-4 crucial points. First we worked on profitability which is very critical for any organization. However, profitability cannot come buy just closing shops as it is not sustainable. Apart from selling we worked on attachments. On an average almost 30 percent of our margin comes from attachments. We have introduced specific plans for customers who want to upgrade from same series. Our own focus on marketing methods has changed from purely being physical media presence and now we have prominent present on digital and social media. We have got very large fan base for Facebook, fan following on Twitter and Youtube channel. More importantly, we have worked towards internally creating an organization sharper, energetic and best in the industry focused on quality people.
What are your expansion plans?
Himanshu Chakrawarti: We don’t have any great expansion plans but we have focused on upgrading. We have upgrated 25 to 30 stores this year. We are hoping by June 2015 we will finish upgradation of another 75-80 stores. We have focused on big cities and prime locations. We are reaching in tier two tier 3 cities through our franchises. Till date we have got around 80-90 franchises.