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Essar in Telecom Retail – Inflated nos?

Posted by fairval on February 17, 2007

Essar Group said it is planning to invest around Rs 1,320 crore ($250-300 million) to set up a network of retail showrooms across the country. The investments will be over a three year period to set up around 4,000-5,000 mobile showrooms. Essar said it expects revenues of Rs 4,395 crore ($1 billion) by 2010.

Mobile telephony retail is an interested area. A few other people have plans for large national chains. But none have talked about the large nos Essar has. Essar seems to have taken a leaf out the the Reliance book. It is no secret that the Ruias have the Ambanis as some kind of role model. But so far, other than the Hutch jackpot, they have little to show.

Lets check the numbers above. Rs 1300 crore for 4000 outlets means around Rs 30 lakh per outlet. So does this mean Essar is planning to own all outlets (not the real estate, but the business itself)? That is rare. For a business like this, one would imagine franchisee route would be the way to go. In a large format like a hypermarket or even a departmental store, franchising wouldnt work, becos you need tight control on product delivery. Not so necessary in other formats. Reliance aims to own all its supermarkets, but that is not necessary. You could do a supermarket chain the franchisee route.

Also, projected revenues could be what – around 15% or more market share? That is ambitious too. Since everyone will sell mobile phones – the service provider, the hypermarket, the durable chains will sell mobiles too. Not to mention the grey market.

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One Response to “Essar in Telecom Retail – Inflated nos?”

  1. tulika said

    Essar Telecom Retail Plans 2500 outlets of ‘The MobileStore’ across 600 cities Mumbai, February 6, 2007: The Essar Group is set to revolutionise the telecom retail market with the introduction of “The MobileStore”, India’s first national chain of multi-brand and multi-service outlets in the telecom retail space. Essar Telecom Retail Limited, an Essar Group company has aggressively worked on introducing a pan-Indian network of retail telecom outlets, with a world class shopping environment, offering state of art technology in telecom solutions and a host of unique value-added services, all for an unmatched customer experience.A first of its kind, Essar’s “The MobileStore” will afford the discerning Indian consumer choice of the widest and most comprehensive range of mobile phones with special offers from all the leading brands.. Besides the widest range of mobile phones, The MobileStore will thus offer Indian consumers across India a complete telecom solutions right from mobile phone purchase to the choice of service operators (both prepaid and postpaid connections), and services like bill collections, handset exchange etc. The stores will also offer mobile accessories and Value Added Services including the latest ringtones, wallpapers and games. Not to mention the prompt handset repair services, available not only in the city of purchase but also at any of The MobileStore locations across the country.Forty stores have been launched and are serving customers across Mumbai, Delhi, Kolkata, Hyderabad, Chennai, Bangalore and AhemedabadMr Rajiv Agarwal, CEO, Essar Telecom Retail Limited, who is spearheading the telecom retail initiative, said, “We would ensure a world class consumer retail experience to customers. We are encouraged by the growth in the Indian economy, we also believe that India is the fastest growing market for the organized retail sector. We believe that the Indian consumer has an evolving understanding and desires the latest in technology. Our target audience are among the age group of 18 to 45 years. We are certain that The MobileStore will provide a one-of-its-kind experience to the consumer.” Essar Telecom Retail has planned a phased unveiling of “The MobileStore” concept pan-India. Phase I should see Essar launch a network of 150 stores in the top 11 cities. Essar Telecom Retail expects this number to increase to over 2500 stores in the next 3 years across 600 cities, thus covering virtually every major town in every state across India. The company has envisaged The MobileStore in three formats: Large – 1000-1500 square feet, Medium- 800-1000 square feet and compact 200-500 and shop in shops in located in large retail formats and malls. (contd. On Page 2)In an effort to help consumers make informed decisions, ‘The MobileStore’ is equipped with trained professionals. Essar Telecom Retail has undertaken an extensive training programme for its employees giving them in-depth knowledge of the products and brands available at the store, thereby allowing them to provide the right kind of guidance to help the customer in their buying process. Keeping in mind the consumer behaviour, The MobileStore has gone a step ahead and categorised its mobile device offerings into four key consumer segments: Business, Lifestyle, Fun and Value. Categorization of handsets have been broadly based on features such as FM, Internet, Cameras, etc across various price bands. What’s more, all this is provided in a fun environment, where consumers can download wacky ringtones games, songs etc from the Value Added Services kiosk available in each store. Among the mobile brands that are available at the stores are Nokia, Motorola, Sony Ericsson, Samsung, Relaince Mobile and Tata Indicom. Essar Telecom Retail has also tied up with all leading service operators including Airtel, Hutch, BPL, Idea, Aircel, Reliance and Tata Indicom. Besides a wide range of mobile accessories, the outlets will also offer digital cameras, i Pods, Xbox and Tata Sky.About Essar:The Essar Group is one of India’s largest corporate houses, with interests spanning the core and infrastructure sectors of industry – steel, oil & gas, power, telecom & BPO, shipping & logistics and construction. It has an asset base in excess of US $ 6 billion (Rs. 27,000 crore). It employs 15,000 people and has offices in over 50 locations world-wide.Source: Adfactors PR

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