Subhash Chandra, Managing Director of Bengaluru-based Sangeetha Mobiles speaks about the company’s many firsts, its plans and the dark side of the smartphones business
New Delhi: What if the prices of the smartphone you bought less than a week ago drop by Rs 5000 in a week? If you bought it from Bengaluru-based Sangeetha Mobiles, you will get a refund on the difference amount if you claim it within 30 days of purchase.
Price drop protection is one of many value-added offerings the leading multi-brand retail chain offers and that has helped Sangeetha earn the reputation of being South India’s leading retailer of mobile handsets and accessories.
Founded by Narayan Reddy in 1974 in Bengaluru, Sangeetha started off selling gramophone records. Over the years, Sangeetha changed with the times to become synonymous with mobile phones.
Today, the 100% family-owned chain is present in 800 stores across six states—Karnataka, Tamil Nadu, Andhra Pradesh, Telangana, Gujarat and Goa—and boasts more than 20+ million customers. It is also the first mobile retailer in the country to have a direct tie-up with half a dozen financial institutions to offer 24 months EMI (equated monthly instalments) to customers with no prior credit experience or rating.
In an exclusive interview, Subhash Chandra, Managing Director of the company speaks about the company’s many firsts, its plans, and the dark side of the smartphone business. Edited excerpts…
Tell us about your footprint.
We are a 100% family-run business and we are profitable. We clocked a revenue of Rs 2500 crore in the financial year (FY) 2022-2023 and aim to touch Rs 3,000 crore in FY2024.
We have 800 stores across six states and are predominantly present all over South India, except in Kerala, where we will open eventually.
We have a store in Goa and in Gujarat at Ahmedabad and started scouting in Orissa.
What has been the pace of expansion?
In the last five years, we have been expanding at the speed of 100 plus stores a year, including during the COVID year. Last year, we closed 40-odd stores but corrections always happen. We haven’t yet saturated the market. We can open another 150 stores in Tamil Nadu, 100 more in Andhra Pradesh, and at least 50 more in Karnataka.
Are you omnichannel?
Yes. In fact, the first mobile sold on ONDC (Open Network for Digital Commerce) was from Sangeetha Mobiles. Sangeethamobiles.com gets about 2 million visitors a month and contributes to about 10% of our business.
Also, we deliver within two hours of an order being placed anywhere in South India except Kerala. The delivery is made by a store expert who helps with the data transfer, screen guard and other steps of setting up the new phone.
Going forward, it will be an omnichannel model wherever we open. The delivery will happen from the stores, which enables the speed.
What has helped Sangeetha to stay ahead in the last 49 years?
The fundamentals of our organisation have been very strong. We have had our ears close to the ground and we have been very hands-on, unlike companies that are massive with several layers of hierarchy, where the guys at the top don’t know the nitty-gritty of the day-to-day.
At Sangeetha, even today, I have real-time control of everything—every price drop, every scheme. And this is true of all the successful business chains in South India—we run our business with extraordinary discipline and by being diligent in our spending. This is especially important in a business like ours which is extremely thin margin and dynamic with an extraordinary obsolescence ratio with phone models going out of fashion quickly.
In such an environment, we have been able to stand and grow only because we believe that one doesn’t always have to cut prices to succeed. If you are sure of what you are offering, and you can instil that in your team is what has kept us going.
Value-added services have been your strong suit. Can you tell us a little more about them?
Sangeetha was fortunate to be the first one to embark on mobile retail in the country, the first one to start expanding when there was no concept of retail chains in the country, way back in 1997. Mobiles came to India in 1995 in Delhi and in 1996 November in Bengaluru and we started selling them in the same month.
We were the first ones to start selling mobiles legally, till then they were only available in the grey market.
However, we are retailers of mobile phones and not manufacturers…unlike say a restaurant, which can offer uniqueness in the form of taste. In a business like mobile retail, predominantly dominated by just about 7-8 brands, we have little leeway to differentiate except in the form of the interiors and look and feel of the store, quality of the staff behind the counter…Again, these are doable by anyone.
Therefore, we had to do something different. From offering insurance for mobile theft, physical and liquid damage, and pick up and drop service of your mobile phone, we have had many offers for our customers.
We were the first ones to introduce EMI for mobiles way back in 1997. Unfortunately, people think Apple introduced EMI in the country, but it was us. At the time, we bore the interest, making it interest-free for customers.
We had tie-ups with Standard Chartered Bank and ICICI Bank in those days for the scheme.
We also started offering insurance ourselves for the last 10 years and have simplified it for our customers. Customers no longer need to apply to an insurance company, fill up forms, and wait for claims to get approved. We no longer call it insurance; we call it assurance. There is no possibility of even a claim getting rejected.
It’s quite adventurous to do something like this in today’s times when an iPhone 14 Pro Max costs Rs 1,90,000 and even that gets a complimentary damage protection for 30 days at absolutely zero cost.
Which other player in your category can match what Sangeetha offers?
In our category, Sangeetha is the inspiration for many South Indian chains. There are about 10 or 12 chains and most of them are in Tamil Nadu, Karnataka, Andhra Pradesh, with Kerala having only one chain.
We have a lot of camaraderie among us. All 15 mobile retail businesses have formed an association and we talk to the brands and government as one voice.
How did you manage to compete with online players with their heavy discounts?
The game between offline retail and e-commerce has been extremely unfair as far as this segment is concerned.
One Plus and Xiaomi were available only online for the first four years after they entered the country. You have done all the hard work for so many years and one fine day somebody comes up with extraordinary pricing—price and specs are what drive this segment—and changes the rules.
They started making the phones available with only one player—one Flipkart or one Amazon. This model brought these brands extraordinary success in China, and they were equally successful in India too.
It was an uneven playing field. It was difficult and we lost out on the base of customers we had built over decades at the drop of a hat.
Some customers were willing to wait, but we would not have been able to get those phones for them as they weren’t available to offline retailers. And we had no say in it.
But every strategy has a lifecycle, after which it stops working. This is what happened to Mi in China. Some other OEMs came and hit them in their strong space of e-commerce with the same strategy. Their market share nosedived, and they were in bad shape. They didn’t want that to happen here, so they started becoming available offline.
We were the first offline retailer in India Mi approached. And we had a 3-month exclusive with them. And believe me, we did nothing and yet doubled our numbers.
This shows the power of exclusivity, the power of strong pricing with great specs. That’s how Amazon and Flipkart got built, with all due respect to all the great things they do.
Later, even One Plus became available offline after Croma and Reliance Digital, Sangeetha was the third offline retailer they were available with. Today, all mobiles are available everywhere.
Did you offer discounts at any point?
We never believed in discounting. There are mobile chains like The Mobile Store, which had 1200 stores at one point, but which is history today. Then there was Spice Hotspot which had 700 stores today they have 70 or 100. So, we did not get into discounting but rather focussed on serving the customers with great services.
Considering the nature of the business, what are some of the challenges you face?
Sometimes brands are cruel. They refuse to replace damaged pieces and offer a Rs 5,000 credit note instead. Then, they slash prices by Rs5,000 without notice, calling it demand generation. A mobile retailer’s stock is not protected from these price drops and brands expect retailers to take a one-time hit of a couple of crores of rupees. This cruelty from the OEMs is a challenge. This is a tough business, and yet, we have reached where we are today.
