The Challenge
When the multi-branded chain, Croma, was launched in 2006, its competitors were focusing on deals and discounting to attract customers. The major challenge for Croma, therefore, was “how to become a preferred choice for consumers in CDIT category without compromising on pricing”.
The Strategy
Unlike other players who typically talked about pricing and product, Croma chose a different path by focusing on a better shopping experience to customers. Decoding consumer insight that a buyer looks for more and more information on products in CDIT, which falls in high involvement category, Croma positioned itself as a guide to help consumers buy products.
Sumit Sahay, Marketing Head, Infiniti Retail
While most of the existing retail players were highlighting cheaper price in the category, Croma carefully differentiated itself by making ‘advice based selling’, its USP to win over consumers. “We offer honest pricing but not price leadership. We are not here for discounting but for giving shoppers a much better shop experience at an honest pricing,” says Sumit Sahay, Marketing Head,
Infiniti Retail.
Though it knew that price differential was something that could have driven some consumers away from it, the retail chain worked on a long term strategy, promising consumers a better post-sale service experience also. The chain also leveraged on the fact that Croma was a Tata enterprise, to establish faster its credibility in the market.
The Implementation
With a consumer insight that shopping in CDIT category is very complex and the products are full of features and jargons which is difficult for a common man to understand, Croma came with a brand promise of “helping consumers buy”.
“The philosophy is that we are here to ‘help you buy’. We are on customers’ side. We are not here as someone to push our products down consumers’ throat. But to help, guide and advise them,” says Sahay.
The chain ensured that a customer across Croma stores gets adequate knowledge on a product and he is well-informed on product features before making a buying decision. It brought Rajiv Makhni, a leading tech guru, to help design advice based selling in its stores. Thus, Croma presented itself as an expert who knew everything in the product category it was dealing in.
For this, it equips all its stores with well-trained floor staff who comprehensively explain product features to customers “from consumers’ point of view and not from the product point of view”.
These staff members on the shop floor also help customers with product demonstration as many times as required by them to completely understand the product features. Store design is such that the product display allows customers to touch, feel and try a product before actually buying it.
To make sure that the sales person in the store properly engages with customers, Croma incentivises him for meeting the expectations of the consumers in terms of satisfactory consumer experience, and not just for sales or profits he is able to generate.
To keep the average ticket size high, Croma focused on diversity and better range of products in its store so that a potential customer has plenty of options to make a buying decision. It also tied up with some of the leading brands to become their exclusive partner. For example, Dell for the first time outside US, partnered with Croma to sell its personal computers (PC).
The retail chain also keeps educating customers more on product features and usage of new technology by organising photography workshops, cookery workshops and the similar activities in its stores. Aiming to increase familiarity of kids and their parents to Croma stores, it launched a programme called ‘build your PC’, where school children get an opportunity to assemble individual component to build their own PC. Though, these initiatives do not result in any immediate sales, Sahay believes that “it definitely leaves something in the minds of consumers on the brand Croma; and they come back to the stores over a period of time.”
The chain also thrives on a post-sale service promise as all the Croma stores work as touch points for customers to get their grievances redressed.
Leveraging on a trust factor that it has created among customers, the retail chain also launched its private label portfolio, which consists of more than 250 products now. All the private label products are feature packed as, according to the chain, these products are made to match the leading players in the category in terms of quality and features it has. Sahay, however, maintains that the private labels’ share would not be more than 10-15 per cent in Croma stores as the retail brand would continue with its DNA of ‘being multi-branded’ store.
Going further, Croma has also brought new store formats to access more customers in last two years. For example, it launched Croma Zip in 2009 at Mumbai airport. Encouraging response from customers led Croma to open seven more such stores at different airports. According to Sahay, these stores are generating twice the revenue per square feet than its mega stores do. It recently launched a new format in shape of a cart in a Mumbai mall. The small format carries easily portable items like mobiles, laptops and tablets along with digital cameras and accessories.
The Result
The retail chain, which was started in 2006, has carved a niche for itself to claim a clear market leadership in its category today. With 70 stores in 13 cities, the chain has been adding roughly 15 stores every year.
Sales turnover for the retail brand has consistently grown at around 50 per cent, from Rs 13 crore in 2007 to Rs 1,020 in 2010 and Rs 1,549 crore in 2011. It expects to close the current financial year with a sales turnover of Rs 2000 crore.
The retail chain served about 1.3 crore customers last year as every fifth customer entering to its stores ended up buying at least one product with an average ticket size of Rs 6,100.
The private label products that contributed Rs 80 crore to overall business is expected to grow over 100 per cent next year.
Given the current growth rate, the chain is looking to become a Rs 5000-crore company in next three years. It is also planning to launch its e-commerce portal soon, as it believes that, there is huge a consumer shift towards this new way of buying.
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