Retail chain HotSpot banks on gizmo craze to beat meltdown

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Pupul Dutta | 10 Dec, 2008
HotSpot, a multi-brand retail chain offering a wide range of mobile handsets and accessories, is banking on the craze for gizmos to beat the financial meltdown, and is planning to open between 100 to 150 outlets by the month-end.

"We plan to expand from the current 475 outlets to 600-650 outlets by the end of this month and almost 1,500 by next year-end," HotSpot chief executive Sanjeev Mahajan told IANS.

HotSpot is part of Spice Televentures, a B.K. Modi group company, and is a leading retailer of mobile phones, accessories and services. Its product portfolio comprises mobile handsets, accessories, airtime connections, recharge vouchers, gaming devices and direct-to-home television services.

The mobile market in India is valued at Rs.800 billion (Rs.80,000 crore), out of which value-added services (VAS) constitute 10 percent of the total market. And it is this area that HotSpot is looking at.

"There is a sentiment loss in the market (as a result of the financial slowdown)," Mahajan said, adding: "But it will pick up things will get back to normal in a few months."

The company now plans to spend almost Rs.225 million for the expansion and plans to raise its proposed investment capital through internal accruals and promoter equity. "Setting up one outlet costs us around Rs.10-15 lakh (Rs.1-1.5 million)," Mahajan said while explaining the investment plans.

Recently, HotSpot also launched its own range of accessories and service centres across the country in an effort to address customer issues effectively and efficiently.

Additionally, it has launched a 1GB movie card, to be available at a starting price of Rs.350, which will come pre-loaded with Bollywood movies that can be watched on mobile phones.

Mahajan said content is currently at a point of inflection, and is ready to take off at any point. Hence, according to him, content developed by HotSpot becomes important given the backdrop of third generation (3G) mobile services, which will be rolled out soon.

Service providers are aiming at providing VAS such as movie downloads and ringtones in a mobile handset priced above Rs.4,000, making such services more freely available, Mahajan said.

With the launch of 3G mobile services, the company will focus on VAS content development focusing primarily on gaming, music and imaging (wallpapers and photos).

HotSpot also plans to expand its outlets in rural areas. "Tier-III cities and towns will be our next drivers of growth," Mahajan said.