For a company that is barely four years old, Croma is on a roll. There are more than 60 Croma outlets all over India, including a new store at Delhi airport’s sparkling Terminal 3; it’s the preferred launch partner for most new electronic products in India; and it has been voted the Most Admired Electronics Retailer for the third time in a row. The Croma team, though, has set its sights on more targets — another five stores to open before the close of this financial year, more exciting products to change the face of electronics shopping in India and an online retail store to take the growth story onto another plane altogether.
Since the opening of its first store in Mumbai in 2006, Croma has rapidly rolled out its large format electronics retail store concept. Today its presence spans Mumbai, Pune, Aurangabad, Ahmedabad, Rajkot, Surat and Baroda in the west; Delhi NCR in the north and Bengaluru, Chennai and Hyderabad in the south, with the last two cities on the list being the immediate focus for the chain owing to the huge potential for growth there.
New vistas of growth
After tasting success in the bigger markets, the company is now working on a plan to set up stores in newer as well as smaller markets such as Madurai, Trichy, Ludhiana and Chandigarh. Next year, Croma will foray into the east, starting with Kolkata.
“At the time of our entry, the market was populated with price-focused local players and there was limited endeavour to understand the needs of the consumer. Shopping for technology products is an involved process given the wide variety of brands, products, features and jargon,” adds Sumit Sahay, Croma’s head of marketing. “Therefore, Croma came in with a strong intent to help consumers in the buying process. This is aptly expressed in the tagline ‘We help you buy’.”
That the tagline doesn’t just remain something that merely sounds nice is a constant endeavour at Croma, where staff is trained to understand a customer’s requirements and recommend products to fit the need. As Croma stores have only employees (or interns) and no commission agents, customers get to explore the products on display without pushy salespersons breathing down their necks. And that makes it a perfect electronics shopping destination for the whole family.
The Croma Zip stores, by contrast, attract the young and the restless generation of gadget-lovers. These smaller format stores focus on more digital offerings such as laptops, cameras, mobile phones, MP3 players, software, gaming and accessories. And given the target audience, these stores sport a younger look with differently designed fixtures and more energetic communication.
In tune with the customers
Besides reinforcing Croma’s image as the destination for the latest in the world of electronics, this creation of a platform for launches makes business sense too: in most cases, Croma enjoys a two-three week exclusivity, which ensures not only higher sales but also a higher number of footfalls in the stores. Given that the retail chain’s footfalls to buyers conversion rate is as high as 22 per cent (vis-à-vis the industry average of 16-18 per cent), there is clearly great benefit in this strategy.
A four-member team at Croma’s head office has the task of surfing the worldwide web to spot latest trends in electronics and technology, study the local demand for new products and source these products. The result: innovative products such as vacuum cleaners with built-in mops, car vacuum cleaners with torch, jewellery cleaners, and so on. With the Indian consumers no longer shy of spending on themselves, Croma also has good sales in the personal care category, including foot spas and back massagers. Most of these products are marketed under the Croma brand, which was launched a couple of years ago and has been another success story for the retail chain.
“We have made a very promising start in the own labels segment with a fast-expanding portfolio of products that now has more than 250 SKUs. Penetration within the categories and overall sales volumes have also grown very sharply; so much so that Croma brand products are already ranked seventh in our overall list of brands by sale salience,” says Mr Sahay.
The Croma line of electronics offers customers a 10-15 per cent price benefit, without compromising on quality or aesthetics. Top selling Croma label products include vacuum cleaners, LCDs, refrigerators, hard disks, etc. There is a conscious effort to ensure that the own brand products do not come across as cheap alternatives; every piece of communication draws attention to the fact that these products are top-notch quality as well as feature-matched to leading brands in the category.
“In case consumers face any issues with the products, we have a one-year, no-questions-asked replacement policy for the products. These measures help us build consumer confidence on the range,” says Mr Sahay. Of course, the implicit faith in the Tata brand also helps.
While the Croma line has seen healthy growth in sales, the company is conscious that it is built on a multibrand proposition and that there are brand partners’ interests to be taken care of. “It is a challenge. But we have a clear strategy: our private label will not be more than 25 per cent of our sales. We will continue to offer a neutral platform for all brands,” explains Mr Joshi.
On ground, Croma aims to have a total of 100 stores up and running by 2012. Given its track record so far, that shouldn’t be a tough task, all things being equal. The company is looking at revenues to the tune of `16 billion this financial year and expects to break even next year. The big picture? “To be a $1-billion company by 2014 or earlier,” says Mr Joshi.