Videocon's consumer durable and electronics chain Next has opened nearly 330 stores in the last two and half years, making it the largest chain in the country. Turnover is expected to cross Rs 1,000 crore (Rs 10 billion) in this financial year. Business Standard caught up with Next's Director K S Raman on the company's growth plans. Excerpts:
Are you focusing more on IT products and accessories since their sales are increasing vis-a-vis those of consumer durables?
No. This is not the case. Our core strength is consumer durables and electronics. We have a strong production base. Since the consumers demand the entire portfolio of products, we stock IT products and accessories as well.
These products may draw more footfalls, but we will always stock CDE. Today, this constitutes 90 per cent of our business. As the turnover increases, we will manage the portfolio accordingly.
Are you on track to reach the targeted turnover of Rs 5,000 crore (Rs 50 billion) in a couple of years?
We will touch Rs 1,000 crore by the end of March 2008 and are planning Rs 2,000 crore (Rs 20 billion) for FY2008-09. We are growing nearly 300 per cent year-on-year. Videocon has nearly 30 years experience in this business and expertise right from the ground level.
We have 330 stores in the country and should touch 400 this year and nearly 600 in 2008-09. As far as competition goes, we are three times bigger than our nearest competitor in terms of sales as things stand today.
How are you dealing with the spiralling real estate prices in the country?
We are opening a flagship store in all major cities and towns, to take our stores to the neighbourhood areas. Any retailer needs 35 to 40 stores to achieve growth in cities such as Mumbai. We normally take nine-year leases.
If you have a good reputation and sufficient revenues, there are no problems. We have not vacated any stores taken on lease as we are confident of breaking even in 18 months.
Has the withdrawal by some consumer credit companies dented sales of consumer durables and home appliances?
The withdrawal will undoubtedly have an impact. But when GE pulled out, ICICI came in and others followed. We are basically focusing on 100 towns, which constitute 70 per cent of sales in the country.
In what way has the consumer durables market changed after the advent of big retail chains such as yours?
All said and done, modern retail still constitutes only 30 per cent of the market. Traditional retailers accounts for the rest. Competition depends on the first-mover advantage and private labels. We have succeeded on both counts. Modern retail has provided a variety of choices, feel-good experiences and better prices to the consumers.
Why are you tying up with US distribution company Bright Star when you have Videocon to fall back upon?
The tie-up is aimed at managing the logistics part of our mobile phone business, which requires online management.
Nearly 200 mobile phone models are launched every year, 10 per cent of which constitute 80 per cent of the total mobile sales. Unless you do not pick that 10 per cent, you will stock wrong merchandise. Bright Star is an expert and provides services to many retailers worldwide and hence we went with them.
