Organised retail faces no threat for another 10 years from online retail business, according to Mr B.A. Kodandaraman, Chairman and Managing Director, Vivek Ltd, Chennai.
The Indian market is yet to mature and there are fundamental differences between the two formats, he said.
He expected sales to cross Rs 425 crore in the current year and targeted a 30 per cent growth in the next fiscal.
Speaking to
Mr Kodandaraman said online sellers also had to contend with issues such as delivery, customer complaints in case of any defects, meeting warranty commitments on products sold, etc. There was also the issue of supply chain management.
Unlike in developed countries where online retailing has been in existence for considerable number of years and where the markets are mature, in India, it is still in a nascent stage. He felt that "there was no threat for another 10 years" for organised retailers from e-commerce.
Growth plans
He said Vivek's had grown from three showrooms in Chennai to 46 outlets now. The Chennai-based retailer of consumer electronics and home appliances that had set up shop in 1965 had had only three showrooms till 1995, when it started expanding. Of its 46 outlets, 8 are in Bangalore, 14 in Chennai and 24 spread across 16 towns/cities in Tamil Nadu.
Asked about the company's plans to go pan-India and go public too, Mr Kodandaraman said he wanted to establish a good network in the existing geography first. In three or four years, the company would expand to 100 showrooms with a Rs 1,200-crore turnover target. "Then", he said, "we would think of going pan-India".
The CMD of Vivek Ltd said at present the company was expanding using internal accruals/family funding and debt. At an appropriate time, he said, "certainly we are interested" in accessing private equity. Subsequently, it would go for an IPO. Without specifying a timeframe for that, he said he wanted to achieve "size and scale" now.
FDI in retail
He said sooner or later FDI would come into retail as all MNCs were eyeing India as it was a good market. From a customer point of view, he said he "preferred FDI should come' as it would intensify competition, bring global brands, improve customer service etc.
On whether the entry of manufacturers into retailing was cannibalising the business of retailers, Mr Kodandaraman said "yes and no". Over decades, the number of consumer goods brands has mushroomed and dealers could not accommodate every product at different price points. The brand shops opened by manufacturers helped them to sell their products and said, "we accept the challenge".
He said Viveks had grown 16 per cent this year. In 2012-13, he expected to achieve 30 per cent growth as the company would also expand its network by a minimum 10-12 more branches.