Kishore Biyani has yet to crack one segment of the business: electronics retailing. eZone has been a drag on his Future Group and India's largest retailer last month decided to hive off the business and look for a strategic partner. It also plans to move into the franchise model to grow business.
"Margins are low, costs are high as we are present in malls and prime locations," says Future Group CEO Biyani. eZone has to provide display and store inventory, and needs a warehouse for every store. "This calls for a relook at the model," he says.
Biyani also decided to shrink eZone outlets to almost one-tenth their current size, build centralised inventory and boost online sales to revive the business. eZone will shut 8-9 stores and downsize stores from 15,000 sq ft to around 2,000 sq ft.
The company, which posted a loss of 12 crore in its earnings before interest, tax, depreciation and amortisation for the October-December quarter, will also revive online business and call it New Zone.
"We should be able to rope in a strategic partner and launch New Zone by June-July," according to Biyani. "We may divest some stake to the partner."
eZone now plans to move into the franchise model to grow business. Its retail outlets will double up as payment and delivery points for Internet orders. And it will build a centralised inventory to stop having a warehouse for every store.
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When you say the word 'Franchise', most people immediately think of business-based franchises like those that are top listed in popular business magazines every year. But, it is important to remember that there are hundreds and thousands of franchises out there, some that are spectacularly successful, others that are total failures. Obviously, you want to avoid the latter.
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