Univercell Telecommunications, one of India’s largest cellphone retailers with 380 stores, is finding it tough to keep up with the effect that online sales is having on its business.
While talks are on to keep the ship afloat, the reality of e-commerce being a force to be reckoned with is fast gaining ground. Discounts and sales that stores cannot compete with are leaving physical outlets with little choice but to cut unprofitable stores from their fold.
UniverCell had shut 70-80 stores in the past few months to tide over a working capital crisis due to poor sales. Indus Mobile Distribution, the company that runs the UniverCell chain, reported a steep fall in profit to Rs 99.8 lakh in 2013-14 from Rs 13 crore the previous year, while sales increased 11 per cent to Rs 1,172 crore. [source]
Univercell posted a drastic fall in profits in the past year due to this competition. Other retailers such as Sangeetha mobiles and Poorvika mobiles have started banding together and providing exclusive phones as incentives for consumers to buy from their stores.
Online sales for mobile phones is a steadily growing market, expected to double in the coming year as more and more people do their shopping online. Adding to this is the presence of international retailers like Amazon which has resources that are unmatched by local vendors.
Retailers like Univercell are going to have to become more savvy by realizing the change in consumer habits or face becoming irrelevant.