Narrating the journey of touching the milestone of opening 9,800 stores across the country, Kavita Nair, Senior Vice President, Retail and Digital, Vodafone India Limited, spoke to Indianretailer about the retail journey of the organisation and opening of 1,200 stores, including 200 global design and 1000 mini stores since April 2014.
Q While Vodafone is set to launch 4G service by the year end, and the large focus will shift to digital, then how physical retail will co-exist?
The brick and click will co-exist. In India, we have been building brick and mortar for some time now and we got success there. The business will co-exist at the physical retail side in both urban and rural areas.
We have opened 1,200 outlets,since April 2014. Despite digital being the larger focus for investment in future, we believe that the offline channel is very important for us. It is a strategic time that we are investing in digital channel, while we are getting closer to the consumer through expansion of offline retail stores.
The 200 global design stores which we have opened in the last three months are equally spread across 150 towns and they are a mix of Tier I, II and III towns. And the 1,000 mini stores, which we have opened in the same duration are cut across urban and rural part.
It is about us reaching closer to our customers, not all the customers will go online. With the launch of 4G, some customers will prefer to go online and for them we will have click channel. It's not about 3G or 4G, but the customer service. Both are really important. 4G is just another part of Internet, so to that extent, these two channels will play critical role in driving data.
Q Does this number 9,800 help you in competing with other telecos' retail presence?
Compared to the other telecos, we are fairly ahead. It's not about the competition, but our strategy to get closer to the customers, and in that, 9,800 seems a large number. Vodafone retail branded outlets in total has acquired 1.54 mn sq ft of area across the country. Around 80 to 85 per cent of these stores are company owned, the mini stores and the Lal Dukans are franchise owned.
Q What is the ratio of online and offline contribution in your overall retail growth?
Actually, it's not very comparable. The offline channel is very large and online channel has started in the last few years. It cannot be compared yet, but both are doing well. We are trying to keep the seamless transfer between brick and mortar.
Q What is the break up between digital and physical store transactions?
This is too premature to compare these two channels - the 120-year-old offline retail channel and digital channel. But we are strategically in the right direction for both and expanding in both.
Q What is your target of increasing the Global Design stores?
We will continue with the expansion of Global Design stores. As these stores need larger space and catchment area and typically these stores will be in urban centres. The 200 global design stores completely replicating our overseas stores.
Q How capital intensive the global design stores are compared to digital channel?
These stores are capital intensive. While offline retail is servicing 185 million customers, only a subset of customers goes online. Compared to investments, digital channel is not really competitive.
Q At store level, how long does it take for break even?
It may take 24 months.
Q How do you make money from the stores because it is part customer service and part business?
Basically, we sell lot of connections while a lot of upsales is being charged.
Q What are the recent shifts you have seen in retail?
The major shift that I have seen is the consumer adoption of data. Because of this acceptance, their questions, queries or support that they require is quite similar to when voice started as a category. Suddenly, consumers wanted to know which plan to take, how much should they consume, what will be their bill be, what is the right plan that they could have, how to use a new phone, how to transfer data from their phone etc. So these are the questions that existed three to four years ago and the same exist now also.
Q What are the basic challenges that you have come across while expanding your retail presence?
The basic challenge is of real estate in India. Figuring out the catchment and finding property are the basic challenges in setting up the stores and we are using our experience to make it easier. Identifying the right spot, ownership, clear titles, leases, licenses everything has to be done before opening the store.
Q What do consumers value?
Consumers truly value a good experience and the time we put on value.
Q Will the Vodafone mini store be converted into payment banks for which you have recently got the license?
We have still not strategised our future plans with payment banks.
Q Tell us about Vodafone angel stores.
The store serves the overall organisation's objective of diversity. We had planned to build stores which will have all women staff and it started from that thought. It is a customer facing channel and builds platform for women and we just want it to be successful. In retail, we have 15,000 staff and 30 per cent of them are women.
Q What will be your store count by FY 2016?
We can't really disclose the future figures due to competition. Y-O-Y our retail store count is growing by 10 per cent.