Essar Group?s The Mobile Store (TMS), launched in 2007, is India?s first country-wide chain of mobile retail outlets, and has a 50% market share. Srikant Gokhale, its CEO, in an interview with FE?s Sohini Mitter, talks about the telecom retail industry, the impact of 3G, TMS expansion plans and future challenges for telecom retailers.
What growth do you see in the telecom retail industry in India?
With 10 million handsets sold each month, of which one million are smartphones, the segment is dynamic. There will be 600 to 800 million mobile subscribers in India in the next two years. We expect a rapid growth in handset sales, especially in smaller towns with first-time connectivity.
At present, Indian brands like Spice, Micromax, Karbonn and others occupy 20% of the market and that?ll increase. There?s tremendous potential in the mobile market and it will grow exponentially. However, there needs to be a sustainable eco-system between the manufacturer, the operator and the retailer.
What will be the impact of the 3G revolution on this sector?
The 3G revolution will be a major game-changer, transforming the entire business of selling mobile phones. The popularity of 3G will drive business in the smartphone segment. Now, the focus is no longer on the form-factor. Consumers are more concerned with high-tech software. Hence, manufacturers are keen on providing sophisticated operating systems and an array of customised applications in every handset. Earlier, the retailer segmented phones on the basis of their features, into basic, multimedia, lifestyle and business phones. Now, we have two broad segments, smartphones and non-smartphones. All competition has narrowed down to this one element.
What kind of expansion is on cards for TMS?
TMS has more than 1,200 outlets in 200 cities, of which 70% are in the top 20, while the rest are in Tier II towns. We?re looking to expand our footprint pan-India and plan to set up 100 stores in the next four months, for which an investment of Rs 6-7 crore has been made. These stores will be in various formats, but we?ll focus on experience stores, which we call the App stores. We launched our first App store in Phoenix Mills in October, and we plan to launch 300 more such stores across the country, in the next three months. These App stores help customers experience the product better.
Any tie-ups or acquisition plans in the pipeline?
We?re looking at a few routes to our expansion. The first is an acquisition of smaller local retailers, who do not have a national footprint, but are doing well in their respective zones. We?re in talks with two such firms, but are not in a position to give out names or investment details, before the next two months. The second would be through franchises and strategic tie-ups with unorganised retail outlets, a key route for expansion in Tier II and III towns.
