Univercell Mobiles to shut down Business- Looses identity to Online Retail
Please refer to our Article regarding smartphones trend 2014 , where We mentioned clearly that Indian Telecom Specialty chains will struggle to survive in 2015. Here we go, Its started with Univercell, South India’s biggest chain with a Revenue of 1000 Cr.
Sathish Babu, Alumni of Ramakrishna Mission, Ex Regional Manager of Eureka Forbes who made the company in 1998 from no-where to 1200 Cr. group, employing 3500 people. We got the hint of downfall, when top management started leaving Univercell and the team started breaking up. Univercell Retail staff started leaving owing to high pressure of New Company policies, like, mandatory selling of accessories along with Mobiles, which landed up loosing sales of Mobiles also. More over, Price cut by On-line Retailers put Brick and Mortar Retail under high pressure.
Survival became hard for Univercell owing to the key reasons stated above. Moreover high cost involvement showrooms like Univercell Sync, Univercell Live added a nail in coffin. Today Peepul Capital holds almost 70 % stake in the company, and is approaching other Retailers to sell off the stake.
Personally, I strongly appreciate Sathish Babu’s Vision, Mission and efforts, but some times its much more than that, What we term as “ Attitude “. What mesmerizes me is, Sathish Babu’s smile and confidence level.
Univercell can revive back, if all the Chains like Big C, Poorvika and Sangeetha , combine together and fight back. Tough times are not forever.
Key Question still remains same, Why Brick & Mortar is loosing out to Online Retail ? Let’s have a rough calculation of COGS ( Cost of Goods Sold ) for both :
low operating Cost : Cost of E-commerce, Online Marketing, Affilate Sales ( negligible cost ), Shipping Cost ( in few Models, its chargeable ), low Inventory cost, No capital investment or low debts on ( S/rooms, sales persons, stocks ), JITD Concept saving lot of money on Inventory,
Advantage : Wide range of Products, 24*7 shopping facility, No travel time ( includes driving time, parking issues, heavy traffic ), PAN India coverage
Brick & Mortar
High Operating Cost : High Capital investment in stores leading to heavy interest charges, High Stock value, Live Units Display, S/Room operational Cost , LTI ( Long term Inventory where principle company’s dont support price protection )
Disadvantage : less range, limited coverage, timings constraints, ease of shopping
Its not only India, But having seen the downfall in different parts of world like Axiom Dubai, Sears, JC Penny, Macy’s Inc, started closing Stores.