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The Videocon Group is adopting different strategies for its consumer durable retail business through its two group companies – Next Retail and Digiworld.
While Next Retail will be curtailed at 600 stores with no further expansions this year, Digiworld is slated to expand rapidly from 400 to 1,000 stores in 2012.
Speaking to Business Line , Mr K.S. Raman, Director, Next Retail, said, “This year we are in consolidation mode and there would be no additional stores. We have to get our numbers first in terms of achieving better retail margins and this is going to be a crucial cooling period for us.”
The Rs 1,500-crore multi-brand retail format currently has 600 stores and is yet to break even after being in the retail business almost seven years. It gets almost 35 per cent of its turnover from the Videocon Group-owned brands such as Electrolux, Kelvinator, Sansui and Kenstar whereby it can command better retail margins. Besides, it has also made the Hyundai brand of durables as its private label brand to help garner decent margins in the retail business.
On the other hand, the two-year-old Digiworld by Value industries (a Videocon group company) is poised to grow at a faster pace from 400 to 1,000 stores this year. Positioned as a “smart neighbourhood electronics store”, it primarily stocks only the Videocon brands. Digiworld's expansion is expected to help the “Indian multinational” compete with the Korean and Japanese brands more aggressively.
According to Mr Anirudh Dhoot, Director, Videocon Industries, “Digiworld is based on the concept of a brand shop as it would comprise the Videocon brands. We are running the business through franchises and so there is minimal investment on our part.”
With a turnover of Rs 350 crore, Digiworld is currently selling all the six Videocon-owned brands including the mother brand of Videocon.
Keeping its ad budgets on a leash, Videocon Industries would not be adding any brand ambassadors (it already has Shah Rukh Khan) and is also staying away from investing in cricket including the forthcoming IPL.
“No doubt cricket is religion but TRPs (cricket ratings) after the World Cup have dropped for the game. We have been sponsors for teams like KKR and Mumbai Indians but now it has got more expensive and we have decided against investing in the property. We would rather invest our ad budgets in regional newspapers and BTL (below the line) activities since our brands have a pan-India presence from Kashmir to Guwahati,'' added Mr Dhoot.
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