Croma to step up pace of store opening

Tata’s electronic and consumer durables retail chain — Croma — plans to step up the pace of store openings in 2010 to take advantage of increasing consumer spends on the back of higher economic growth, according to a top company executive.

After adding about one store a month in the last nine months, Croma plans to open four new stores every month in the current quarter and open two or three stores a month after that.

“We are upbeat about the coming quarters,” says Ajit Joshi, managing director and chief executive of Tata Sons unit Infinity Retail, which runs Croma stores. Croma has 40 stores across the country. On an average, it spends Rs 3 crore on opening a store.

The company plans to achieve a revenue of Rs 1,000 crore by the end of this financial year, which is an increase of over 50 per cent over last year.

“Markets have been good on all parameters and there is a positive energy, which is getting converted in the retail sector. Our supplies have been good and there have been a lot of launches in durables and electronics,” says Joshi.

Though consumer durable chains like Videocon’s Next and Future Group’s Ezone had set up hundreds of stores in the country, Joshi, in a earlier interview with Business Standard, claimed Croma wanted to be a market leader in cities and categories it entered instead of competing with other chains in terms of numbers. The company had said it planned to break-even by the financial year 2011.

Joshi said the chain would continue to expand in such metros as Mumbai, Chennai, Hyderabad and Bangalore as part of its hub-and-spoke model. In this model, the store chain would expand its stores around its distribution centres, from where it could supply merchandise to its stores. For instance, Croma will open eight more stores in Delhi in the calendar year 2010, in addition to the eight it already operates.

India’s consumer durables market is estimated at Rs 32,000 crore and includes such players as Next, Reliance Digital, Future Group’s eZone and Electronic Bazaar, apart from thousands of stand-alone stores. The growth rate in the durables market is pegged at 10-12 per cent in 2009, compared with 10 per cent in 2008.

Analysts say Croma’s tie-up with Australian retail giant Woolworths played a big part in its success. Woolworths helps Croma in sourcing and providing technical support for setting up stores.

“Apart from their tie-up with Woolworths, great service, strong merchandising and private labels are responsible for their success. Even a strong focus on getting right real estate at right rentals helped,” says Purnendu Kumar of Technopak Advisors.

Croma, which has 50 products under its own brand Croma, plans to launch more products, like washing machines and so on. The chain recently launched LCD televisions, refrigerators, car coolers and warmers, where it is getting good response, Joshi said.

“Any category we enter, we want to have a share of 20 per cent. For instance, in microwaves, our own brand already has a share of over 20 per cent among all the microwaves we sell in our stores,” he says. He also claimed that, in digital cameras, Croma had a share of 40 per cent among large format retailers.