Next Retail, a retail division of consumer durable manufacturer Videocon Industries, is closing down another 106 outlets.

That follows a cull of 100 last calendar year which left it with just 250 nationwide.

“The company has been closing down some of its loss-making stores over the past few months. In Chennai we had eight stores last year, now there are just two,” a company official said. 

Local industry observers blamed the disastrous cull on a “flawed retail model” which led the four year old retailer to chalk up massive losses.

“They have not got the model right. The problem has been with the category mix and product mix. Further, the location of the stores and the size of the stores also have to be right for the store to do well. The company had been aggressively opening stores, but it should have been a little more careful from the beginning,” said chairman Arvind Singhal of Technopak.

CEO Sunil Mehta announced in July 2011 that Next Retail had a total of 609 stores and planned to increase the number to 1000 by the end of 2011-12 fiscal year.

However the real number was considerably fewer and included 341 franchised stores.

Director KS Raman said the company’s experience was that it generated larger revenues with a healthy bottom line from non-metro stores.

“Our presence in the metros are to showcase our brand, whereas the depth of our business is from the stores across India that are not located in the metros,” Raman said.

India’s consumer durable market welcomed entrants from organised retail sector including Tata Croma – a joint venture with Australia’s Woolworths – and Reliance E-zone in the past few years. However, Next Retail said those did not affect its sales. Rather the direct impact was from ‘unorganised players’ who attract customers by negotiating prices.

GB