I’d say, It was because the competition came in, we are where we are today, says Nilesh Gupta, Director of Vijay Sales
Despite facing competition from large retail players including Reliance Digital and Tata group’s Croma, Mumbai-based consumer electronics retail chain Vijay Sales has been able to maintain a steady growth trajectory. In an interview with BusinessLine, Nilesh Gupta, son of Vijay Sales founder Nanu Gupta, and Director of the company, talks about the company’s two-fold strategy: Steady growth in the physical stores and exponential growth in the online segment.
This year has been tough for everyone due to the pandemic, what is your outlook for Vijay Sales for FY22?
We are expecting our best growth over 2019 in the AC segment. For two reasons: Early summers this year and Covid-19-led lockdown in summer last year. It is a foregone conclusion that we’ll see a huge growth at about 25 to 35 per cent.
In the past four months, we have seen good growth in wearables segment as people have now become health conscious. Very soon it is going to be 30 to 50 per cent of the mobile market.
Besides this, small appliances are doing quite well. We expect further growth in that segment too. We have seen an increase of 10-15 per cent of ASP average selling price increase. We expect this to get better for the coming fiscal, too.
Last year, there was a challenge in terms of adequate stocks. Is this still a concern?
At least for the AC segments, the industry is stocked up till March or April however, the way the summers have started early, they may extend into June-July as well. We are also unsure if brands have geared up for a 30-35 per cent, growth. This could pose a problem and we are not geared up for coolers too.
Other than that, the government is not allowing you to import products with gasses in them too so one has to get them filled here which takes at least 10 days.
Does this mean skewed margins or costlier products for customers?
Margins have always been a challenge. With the price wars happening between all the brands, margins are wafer-thin any way. I don’t see a scope of it going any lesser now, so there is no other option now.
Vijay Sales has been around for over 50 years yet players who came later such as Croma and Reliance Digital have scaled up rapidly to become pan-India players. What is your vision in terms of scaling up Vijay Sales
I’ll give you a simple anecdote to explain this. In 2007, despite being just Mumbai-based, we were strong at 12 stores. Ezone, Croma, and Reliance Digital entered around the same time. People thought our company would die.
I was merely a decade old in the sector, and these things gave me sleepless nights. I walked up to my father and said that so many PEs were approaching us, why don’t we leverage it.
So, my father said and I quote “I started this business with zero, I am not giving it up for anything, at no cost. I am going to continue working on this business, you are free to start something else. Even in the US, Walmart isn’t the only retailer. All the sizes co-exist. So all you need to do is, take care of your customer, and be honest to your team rest will fall in place,” he said.
That day is there and today, I have never looked back. I’d say, It was because the competition came in, we are where we are today. Otherwise, we would have been 25 per cent of the size of what we are today.
So, currently, Vijay Sales is at 103. How do you plan to escalate this number?
We won’t get swayed by short-term gains by burning money. We plan to add 10 to 15 stores every year. Our entire focus is now going to be- along with growth in the offline stores, grow offline experience, exponential focus on online growth.
So is there a target for online growth?
This year I think we should be closing at around ₹60 crore from online sales, we hope to achieve a ₹200 crore target for the coming fiscal. We are pumping in money for our design, experience etc. Gradually, we are moving to all metro cities, and our next target is tier-one and -two cities as well.
You acquired the Hyderabad TMC to get a South market. How was the acquisition been so far so how is it working out?
We let go of the brand ‘TMC’. Frankly speaking, we had plans to keep the brand, because it was 35 years old. However, after using it for 18 months we realised, it had lost its sheen, most of the customers had gone to the competition so we changed it to Vijay Sales and we are seeing green shoots. We were slightly bleeding there and now we have reached breakeven.