Unit­ing to build a ` 1,000-crore re­tail busi­ness

Nine re­tail­ers with 14 re­tail stores have united to form a con­sor­tium com­pany, Unity IT, that aims to be among the largest IT re­tail­ers by 2017

CRN - - COVER STORY - — Amit Singh

This may be a trans­for­ma­tion of a dif­fer­ent kind—nine com­pet­ing re­tail­ers form­ing a joint ven­ture called Unity IT to have their own brand of a re­tail chain across Ma­ha­rash­tra. Ex­plains Deepak Chadha, Di­rec­tor, Unity, and CEO, Cy­borg World, “Though we were com­peti­tors we were all per­turbed by the fre­quent changes in ven­dor poli­cies, in­creas­ing com­pe­ti­tion from large for­mat re­tail­ers, over-dis­tri­bu­tion, and mar­gins de­creas­ing be­low 2-3 per­cent. We thought that the joint ven­ture would pro­vide the scale and skills which would help us to com­pete with LFRs and on­line re­tail­ers.”

While the idea to form this joint ven­ture orig­i­nated in April 2012, im­ple­ment­ing it was not a cake-walk. “Each of the founders has been run­ning his own busi­ness for long and had his own style and model of op­er­a­tions. The pri­mary chal­lenge was to ar­rive at a mu­tu­ally agreed mode of op­er­a­tions. How­ever, we over­came the hur­dles be­cause we knew each other for 7-8 years and un­der­stood each other’s strengths,” re­calls Kan­chan Sa­mat, CEO, Unity, and Di­rec­tor, Wiz World.

The sec­ond chal­lenge was to part­ner ven­dors. “As most of us were pri­mar­ily into exclusive part­ner­ships, other ven­dors were sus­pi­cious about us sud­denly seek­ing new part­ner­ships. They were also doubt­ful about our abil­ity to man­age multi-brand re­tail. How­ever, look­ing at our con­vic­tion and the scale that we could of­fer, ven­dors agreed to part­ner us,” says Chadha.

The con­sor­tium cur­rently has 14 stores branded U&IT, and is tar­get­ing rev­enue of ` 100 crore in the cur­rent fis­cal. Continues Chadha, “Though we started only four months back, rev­enue has been strong. It in­creased dras­ti­cally when we added the tele­com port­fo­lio in De­cem­ber 2013. Smart­phones and tablets will add ` 15 crore this fis­cal.”

High­light­ing the ben­e­fits to mem­bers of Unity IT, he says, “While the par­tic­i­pat­ing stores buy all the prod­ucts from Unity IT, they are re­lieved of the hur­dles of back­end pro­cesses. All they have to fo­cus on is sales. Since it’s our own ven­ture, we trans­fer all the price ben­e­fits to part­ners that we get due to high vol­umes.”

The only in­vest­ment re­quired from each part­ner is a per-store se­cu­rity de­posit of ` 25,000-`50,000, and stan­dard in-store brand­ing as de­fined by Unity IT guide­lines. Ac­cord­ing to Chadha, Unity takes 1 per­cent as op­er­at­ing mar­gin on pur­chases.

Mar­gins have also im­proved for the con­sor­tium part­ners. “The economies of scale helped Unity to

All the 14 stores have been re­branded U & IT. While the stores con­tinue to run un­der their orig­i­nal founders, they buy from the con­sor­tium Unity IT who buys from dis­trib­u­tors as a sin­gle agency

We are tar­get­ing ` 220 crore rev­enue in FY2014-15 and ` 1,000 crore by FY2017-18. Through a fran­chise model we plan to add 100 more stores within 18 months backed by on­line re­tail

pur­chase prod­ucts at the best prices from dis­trib­u­tors. Also, there was no pres­sure from ven­dors to carry stocks; this meant that we could plan our pur­chases and this im­proved our liq­uid­ity. Over­all, all the part­ners have seen their mar­gins im­prove by 2-3 per­cent, which is a lot in the re­tail busi­ness.”

The joint ven­ture has helped the re­tail­ers to of­fer a con­sis­tent and wider sales and post-sales ex­pe­ri­ence. “We now lever­age each other’s ser­vice net­work to pro­vide a wider and en­hanced post-sales ex­pe­ri­ence to cus­tomers. Fur­ther, the cre­ation of a com­mon brand en­abled us to con­sol­i­date mar­ket­ing ex­penses and chan­nel­ize them for a uni­fied high-deci­bel cam­paign to pro­mote the U&IT brand,” adds Sa­mat.

Unity IT has am­bi­tious plans for the fu­ture. The com­pany is tar­get­ing ` 220 crore rev­enue in FY2014-15 and ` 1,000 crore by FY2017-18. It has plans to in­tro­duce the fran­chise model in April 2014 and ex­pects 100 more stores to be added in the next 18 months.

“By 2016, we plan to have a pres­ence in ma­jor met­ros across the coun­try and the en­tire west re­gion,” says Chadha.

The com­pany will also get into on­line re­tail in May 2014, and will lever­age the net­work of the mem­ber part­ners to deliver prod­ucts.

DEEPAK CHADHA

Di­rec­tor, Unity IT, and CEO, Cy­borg

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