Croma posts profit after 12 years, brings focus on omnichannel strategy

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Updated: February 24, 2019 6:51:31 AM

Infiniti Retail, owners of Croma Electronics, which has posted profit for the first time in 12 years, attributes the growth momentum to GST and its online marketplace launched in 2015 to tackle competition from online players.

It is exemplified by Croma, which posted its maiden profit after going online, offering cashbacks.It is exemplified by Croma, which posted its maiden profit after going online, offering cashbacks.

Infiniti Retail, owners of Croma Electronics, which has posted profit for the first time in 12 years, attributes the growth momentum to GST and its online marketplace launched in 2015 to tackle competition from online players.

While GST has helped in aggregation of stocks in fewer distribution centres (DCs) and huge savings on shop rentals due to input tax set-offs, omnichannel strategy has helped it fight its competitors — the ecommerce players.

In fact, it has shut down three distribution centres post GST. Now Delhi NCR has one DC, compared to three earlier, and Bangalore and Chennai share one DC. “Our turnover has grown more than 150% while inventory has gone up less than 25% post-GST. Rentals are around 5% of the turnover now because we get input tax set-off of 12% on that,” shares Ritesh Ghosal, CMO, Infiniti Retail.

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However, even before GST was rolled out, the green shoots of the online marketplace launched in 2015 started to show when Croma registered 12.3% increase in income FY 2017 at `3,316.84 crore over `2,954.79 crore in the previous year. In fact, FY16 was a tough year for the company when revenues registered a decline of 10.5% at `2,954.79 crore compared to `3,300 crore in FY15 due to lower demand and greater competition from online market places.

The current success of Croma can be attributed to its efforts undertaken in H2FY16 — refreshed stores with focus on CDIT products, a reimagined croma.com and a curated range of products at competitive prices.

The online presence has helped improve footfalls to their stores. “As much as 30% of the total footfalls are the result of customers having browsed the site online. Croma.com is contributes 3% of the sales,” adds Ghosal.

Infiniti Retail’s omnichannel strategy has been built on two levers — giving consumers access to inventory on Croma.com and second, providing information on product availability at Croma stores. To compete with e-tailers, it also tracks prices of products on e-commerce platforms daily and accordingly offers promotions, cashback, etc. It has also launched a loyalty programme last month with services like offers on call for its 10 million customers.

While its store footprint typically runs into over 10,000 sq ft, Croma is also experimenting with 2,000 sq ft stores called Gadgets of Desire to “come closer to customers” and “compete with eretailers”. These stores can also function as service centres. One such store is in Delhi and another will soon open in Mumbai. Croma is using such smaller stores to sell personal devices such as smartphones, laptops, cameras, etc. But small stores come with their challenges. “Not only is there limited inventory, but also rent per sq ft is high because of a required presence in high catchment areas,” says Rahul Kapur, partner, Grant Thornton India.

Croma is present in 25 cities.

But the battle with e-commerce isn’t over yet. While the FDI rules have created roadblocks for e-tailers, experts say in the long run, such players will find their way around hurdles. Will Infiniti Retail continue its profitable run as it expands further? “The differentiators for offline retailers would continue to be big ticket items, after sales service and competitive pricing,” says Kapur.

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