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Sogo Computers, Bangalore
With nearly 37 percent of its Rs 107 crore turnover in 2007-08 coming from retail, Sogo Computers emerged as a classic turnaround case study.
Just two years back, Sogo’s retail business was reeling under heavy losses as its ambitious strategy to create a chain of CDIT stores around Karnataka under the Iceware brand failed miserably.
“We had invested nearly Rs 6 crore in the retail venture but it failed to take off and losses kept mounting, so in 2006 we decided to revamp our entire strategy. The first half of 2007 was spent in restructuring our retail business, and by the end of the year we not only grew the business by 100 percent but also recorded good operational profitability,” disclosed G Jayamuni Rao, Managing Director, Sogo.
Last year, the company implemented a unique retail strategy involving uni-brand and multi-brand stores. Sogo currently operates one Lenovo exclusive store, two Sony outlets, and five multi-brand outlets across Karnataka. “In cities other than Bangalore, we converted the front section of our branch offices into retail sections. This strategy helped us save on store rentals and achieve wider coverage,” said Rao.
Performance Highlights | - Turned around its loss making retail business
- Signed up with Dell as its regional distributor for Karnataka
- Deployed Oracle-based ERP to aid restructuring and reorganizing
- Plans to open retail outlet in smaller cities
| Company Snapshot | Company: Sogo Computers
CEO: G Jayamuni Rao
Year of Inception: 1993
Turnover 2007-08: Rs 107 crore
Turnover 2006-07: Rs 96 crore
Employees: 125
Certified employees: 20
Principals: D-Link, Acer, Lenovo, HP, Microsoft, Norton, Seagate, Samsung |
The company also started a retail store selling assembled computers catering to the walk-in crowd at Bangalore’s electronics market on SP Road.
Sogo has deployed an Oracle-based, customized ERP to aid its restructuring and re-organizing. “It gives us better inventory management and customer visibility. It has also helped us to save substantially on overheads, and these savings are being ploughed back to strengthen our retail business. We used this opportunity to restructure our sales organization and product management operations,” added Rao.
Leveraging on its sub-distribution business, every product manager has been assigned retail targets, and on achieving them they are given rewards. Besides, store managers have been given retail targets by store and model from within the product portfolio they manage.
Having experienced such a reversal of fortunes, Sogo plans to expand its retail business. Early this year the company signed up with Dell as its regional distributor for Karnataka, and is now evaluating the option of setting up Dell franchise stores.
“We are aware of the threat from LFRs, and hence are keener to spread our retail presence in upcountry markets where these large-format stores will take a few years to reach,” observed Rao. |