The mobile retailing space is hotting up in India. Essar Telecom Retail, an Essar group company has entered mobile retailing in India with the launch of its "The MobileStore" outlets across the country. The basic aim is to be a complete telecom solutions provider.

It has tied up with global media firm Virgin to provide the backend solutions like customer care. This marks Virgin's entry into India's burgeoning mobile sector. Virgin founder Richard Branson believes that this is an opportunity for the two parties to fundamentally change the face of mobile retailing in India.

Indiantelevision.com caught up with Essar Telecom Retail CEO Rajiv Agarwal for a quick chat on the plans.

Excerpts:

Could you give me an overview of Essar's mobile retailing initiative?
This is a chain of retail stores that will serve as one stop shop for the needs of the mobile consumer. We are looking to fill a void that is present in the retail market. Today we have international players on the operators side, on the manufacturers side. But on the retail side we do not have an organised player. The customer is the most important element as all these people are working for him/her.

As the number of mobile subscribers, users becomes more and more the market is becoming more complicated, which has created a void. Our aim is to come up with total telecom solutions for the customer.

What are the different products and services being offered?
One can buy cell phones, get repair services, do bill collection. We also have value added services like ringtones. We have media services like games, DTH connections, ipods, cameras. All are fast moving.

What is the synergy that the group has in setting up telecom retail?
Essar has decided to be in retailing in all their core businesses. We have been in telecom over the last 12 years. Our aim is to get closer to the customer. We have knowledge and awareness about telecom.

As per research, what does the mobile user expect from a mobile retail chain and how is Essar going about fulfilling his/her needs?
The mobile customer is looking for a range of products that he can touch and feel. He/she wants a store that is next to his house. He wants value for money, after sales service.

Why did you decide against going the franchise route for your stores?
There would have been the risk of our brand value being diluted. Also you have to manage many entrepreneurs if you walk down that road. This is a business where you cannot allow your service proposition to get diluted.

The franchise route would have meant that there would have been no difference between us and any other mobile store.

Given that Indians are an extremely price sensitive won't it be difficult for mobile retail to make a margin and have sustained revenue?
That is the case for any product. We have developed our business model keeping this in mind.

What is the investment being made and how many stores are being set up?
In the next three years we are setting up 2,500 stores at an investment of Rs 1,250 crores (Rs 12.5 billion) across 600 cities.

Over 70 stores have already been launched in places like Mumbai, Delhi, Kolkata, Hyderabad. In the next six to eight weeks we will have opened up another 100 stores. In the next six months we would be operating 700 stores.

The stores are in three formats - large (1,000-1,500 sq ft), medium (800-1,000 sq ft) and compact (200-500 sq ft). The ratio being identified is 20:60:20 across large, medium and compact stores respectively.

We are looking at a breakeven of three years for the business. The stores will cost between Rs 500,000 - Rs 5 million each to set up.

What are the factors looked at to select each location?
You look at places where customer footfalls are high. This could be in a mall or on a busy street. We will have the shop in shop concept to a certain extent going forward. Around 15-20 per cent of the stores will be in Metros.

In terms of revenue how much comes in from where and who are the companies you have tie-ups with?
Handsets contribute to 75 per cent of our revenues. We have tie-ups with all the major manufacturers like Nokia, Motorola, Sony. Mobile repairs are our core area. We have trained people in our stores who can look after the problem. We have straight tie-ups with the manufacturers and operators.

We have a tie-up with Mauj Telecom for mobile games. For DTH there is Tata Sky, Dish TV. There are also opportunities for in-store advertising and merchandising.

Could you talk about the back end solutions that have been put in place?
We have a tie-up with Virgin. They bring retail knowledge in terms of softer skills in terms of customer relationship management. The deal is for brand licensing, technical and consultancy services.
Virgin will provide their expertise in the areas of branding, marketing, customer care, store operations and staff training.

We chose Virgin as that brand stands for good quality, brilliant customer service, innovation, fun and good value.

Finally what marketing activities are being done to create awareness?
We are airing ads during the broadcast of the cricket World Cup. A large portion of mobile users will be watching the event. We will also be doing a lot of print and outdoor activities.