Next Retail revamping operations to turn around, says sales head Rajeev Sharma

Next Retail India Ltd is revamping its operations and rethinking its unique selling proposition as part of efforts to turn itself around in the face of stiff competition, a top executive said.

"We want to make the brand a little more youthful," Rajeev Sharma, Head of Sales and Operations at Next Retail, told Business Today.

The consumer electronics retail arm of the Videocon Group has been struggling to keep pace with tough competition from rivals such as Infiniti Retail's Croma and Reliance Digital as well as e-commerce players like Flipkart and Amazon, which have ramped up their electronics and consumer durable businesses rapidly in the past couple of years. Next Retail's website shows it has 550 stores in 300 towns and cities, but industry insiders say it has closed many of them.

Sharma, who has been with Next Retail for four months, is undaunted by growing competition from e-commerce players. "Brick and mortar will never go out of fashion… There is no revolution in this model, only evolution," he says with confidence.

Sharma also says the company is reducing the size of some stores and relocating some others. Currently, the average store size is 6,000 to 7,000 square feet. For instance, the company recently reduced the size of a store in Vashi, near Mumbai, to 3,000 sq ft from 7,000 sq ft. "But sales have not dipped," says Sharma, who previously worked with telecom companies Vodafone, Bharti Airtel and Uninor. "We were doing Rs 24 lakh (of sales) from that store and we're still doing the same. In three months we bounced back to the same level."

It is, however, not always possible to cut the store size. In such cases Sharma plans to work on an alternative strategy and check if there are other ways to use the available space. "At our four-storey store at Jail Road (West Delhi), we're thinking of what else can we sell. We could add printers that we don't have yet, furniture at select stores, even toys as a category," he says. "If you cannot reduce the size, then you have to add on some other businesses… The add-on business should be for value-add sales."

Next Retail is also identifying fast-moving products and reducing the in-store number while strengthening its back end. "The idea is to keep the inventory low and improve on the utilisation of space," says Sharma. For instance, the company would display only a handful of variants of a product at its outlets while keeping other variants in the back store. The company is also testing the concept of running campaigns with a star, or hero, product, particularly in South India, wherein customers receive special offers on those products.

While making changes at an operational level, the company is not looking at store expansions immediately. The company will wait till consolidation is completed and sees an improvement in operations. "If we see the right growth trend in the next six months, we get closer to the break even, say 20-30 per cent," he says. "An ignition point has to be reached first, before we think of the next steps. It is difficult, but we're moving in the right direction," he says.