Univercell, a Chennai based mobile retail chain, has announced that it has received Rs. 100 Crores (around $21.5 Million) in four tranches of investment since 2007, from Peepul Capital (formerly iLabs). The Hindu reports that Univercell will use the money to increase the number of retail outlets from 167 to over 300 by March 2009. The company is targeting an expansion into the states of Orissa and West Bengal.
Over the past couple of years, we’ve seen a number of such retail chains set up – Subhiksha Mobile, HotSpot (BK Modi Group), The Mobile Store (Essar-Virgin Joint Venture), MobileNXT (Network18 owns 35 pc, $2 million from Advendus Advisors and angel investors). Pantaloon also has a Joint Venture with Axiom Telecom, but we haven’t heard of it since the announcement.
Univercell reported revenues of Rs. 350 crores in 2007-08. What’s interesting about Univercells plans is the tie-up with Spencers for shop-in-shop outlets at Music World, though the company appears to be more keen on opening standalone outlets.
Do branded retail outlets have anything to offer to the average customer that a regular retail outlet doesn’t? They can never match the distribution reach of the unorganized sector, so if you’re looking for convenience, there’s probably a shop across the road or a few kilometers away from your home or office. Handset retailers like Nokia have their own after-sales-service infrastructure set up, so that’s one hassle taken care of. I’m told the margins in handset retail aren’t very high (a couple of hundred bucks), so can these chains afford to have a presence in the main markets in cities? Even when it comes to value added services, a shop in Heera Panna or Ghafar Market will give pirated content on a memory card, which these retailers can’t stock. Univercell, on its part, is offering insurance against theft and damage, in a tie-up with Oriental Insurance.
So why not a shop-in-shop model?
Disclosure: I own a few shares of Network18, which owns 35 percent in MobileNXT