Daybreak - How Croma became the victim of Tata Digital's endless quest for relevance

Episode Date: June 30, 2025

Over the last four years, Croma has found itself in a curious spot. On paper, it’s Tata Digital’s crown jewel—contributing over half of its revenue and crossing ₹18,000 crore in sales last year. But behind the scenes, it’s also become Tata Digital’s favourite testing ground.From sudden team transfers — like its entire marketing team being moved to Tata Digital overnight — to shifting strategies, Croma has borne the brunt of Tata’s endless experimentation. The result? Cracks in its business model, ballooning losses, but also one big silver lining: a 20 million-strong customer base that could be its ticket to a turnaround.The real opportunity lies in tapping that customer base. But the catch? No one seems to know how to make that happen. Tune in. P.S The Ken’s podcast team is hiring! Here’s what we’re looking for.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.Listen to the latest episode of Two by Two here

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the same. secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they managed to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into.

to the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert, as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcast. or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode.

Over the last four years, the electronics retail chain chroma has found itself in a rather unique predicament. On one hand, it is Tata Digital's most valuable asset. In some senses, it's crown jewel. After all, it brought in more than half of its total sales just last year, and its revenue meanwhile crossed 18,000 crore rupees. But at the same time, it's also Tata Digital's favourite lab rat. Just ask the company's marketing team.

My colleague, the Ken reporter, De Banjali Biswa, spoke to at least three members of the team earlier this month, and they all agreed. If you ask them what Kroma stands for today, they just would not be able to tell you. You see, ever since it was brought under Tata Digital's fold back in 2021, the pressure was on to grow. But the approach has been to throw things at the wall and desperately hope that something sticks. The strategy keeps skipping from one thing to the next. So one day it is to compete with Amazon, the next they'll go all out to premiumize. Then the goal will be building brand presence by sponsoring events. And then suddenly someone will step in and say, hey, wait, hold on, we have to reduce budgets.

For someone working at Kroma, it's becoming very difficult to keep track. The latest experiment took place in late March. Chroma's digital marketing team was informed that it was their last day at the company. And no, they weren't being laid off. Instead, they were told that they would now be working directly out of Tata Digital. As usual, Chroma was the first port of call. The bigger plan here is to streamline digital marketing across all of Tata Digital's brands, including the likes of 1MG, Click, Big Basket and New.

But in the process, the cracks in Kroma's business are in full display. After hitting profitability in FY19, it witnessed a steep drop to a little over 980 crore rupees and losses in FY24. But the silver lining in all of this is its massive, 20 million strong customer base. The real opportunity lies in tapping that customer base. But the catch? No one seems to know how to make that happen. Welcome to Daybreak, a business podcast from the Ken.

I'm your host Rahel Philippos and I don't chase the news cycle. Instead, every day of the week, my colleague Sigda Sharma and I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 30th of June. It was in a bit of a fix. Losses have been mounting, so the pressure is on to turn profitable, or at least to break even and fast. Shifting the digital marketing team under Tata Digital is a step in that direction.

Currently, both companies have separate teams driving traffic to Chroma's online store. Combining them would help streamline advertising budgets. Now, consolidation has been a recurring theme in Tata Digital Strategy. I'm sure you remember those super app new. Back in 2022, all Tata digital brands, Chroma, Big Basket and 1MG were onboarded onto this super app. But it ended up backfiring in a way. It became difficult to come to a clear consensus on. on which brand should get the most visibility and when.

It became a touchy subject. Integrating them was also a tough sell. People in the Tata digital ecosystem worry that the latest move with the marketing team may misfire in that same way. There are also doubts about ecosystem migration. Chroma has invested crores in tie-ups with SEO, automation and advertising agencies, all of whom are now left in the lurch. how will this matured ecosystem uproot itself and migrate to Tata Digital? Many are considering exiting these partnerships altogether.

And then, to make matters worse in the middle of the transition, Tata Digital's chief executive, Navine Tahiliani, stepped down in May. Everyone was left wondering, who's going to steer this ship now? Confusion seems to be a running theme at Croma. One person from Croma's buying team said the smartphone team's targets have skyrocketed since last year. At the same time, online sales, which primarily comprise smartphones,

tanked by 25% in 2024. That, an analyst told again, was a direct consequence of moving away from Chroma's earlier Amazon-level discounting to avoid cash-burn. One buying team member jokingly said that the management expects Diwali-level sales every single day,

except no one tells them how to achieve these impossible targets. All of this is the product of a much deeper issue, a full-blown identity crisis. Look no further than the competition. On one hand, there is Vijay Sales, which offers the best prices and aggressive sales, and on the other is Reliance Digital, which banks on its massive nationwide presence. And Chroma sits somewhere in the middle, not really winning in either of those two departments. That's not a very good place to be.

It wasn't always like this. Up until 2020, 2021, things were structured and organized. But then, company strategies started flip-flopping. Ideas are picked up as fast as they are dropped. In 2022, Chroma tried launching dark stores, according to two former employees. The idea was customers would video call experts in real time to demo products. Kroma was also aspiring to host customer events in these spaces. A few locations in Bangalore had been finalized for this also.

But then they realized, that the sites were in inaccessible areas, one of which was a near abandoned mall with poor football. Despite the investment, the plan was sheled. And that's not a one-off. There have been several such projects deserted midway. For instance, at one point, the goal was to expand warehouses aggressively. But eventually they realized they don't need so many and then ended up shutting them down.

Then a transport management system was implemented, but that didn't work out either and was eventually scrapped. Such experiments also apply to employees. Internal roles and reporting hierarchies are very frequently reaching. Debarjali spoke to multiple employees who ended up feeling stagnant in the company. They stopped seeing growth. This even reaches the top rungs of the management. Leaders with experience in analytics and merchandising were heading operations, while others overseeing tech came from business management backgrounds. More on that in the next segment. This is Rahir, the co-host of Daybreak. I'm quickly pausing this episode to share something very exciting with you.

We are hiring. We are looking for someone in the early stages of their journalism career, maybe you're fresh out of journalism school, or you've done a couple internships and projects and are eager to take on your first full-time role in audio. I'm looking for a co-host to help launch a brand new podcast from the Ken. This is a full-time role, and you get to work closely with me as well as the rest of the audio team

right from story pitches to interviews to shaping how the final show sounds. If you're curious, ambitious and absolutely love audio storytelling, we would love to hear from you. All the details will be in the show notes of this episode. Before Tata Digital entered the picture, Kroma had only one goal to get offline retail right. Sure, it was still loss-making at the time. Even its occasional profits were too minor to make noise about.

But the leadership was still able to. run Chroma like its own business and in many ways it paid off. A former top management employee we spoke to shared how business heads didn't have to wait for approval from the board. They were able to revamp pricing, optimise for footfall, even pioneered one of the first low-cost EMI options with the non-bank Bajarge finance. Their price-mats scheme enabled Chroma to be competitive with e-commerce giants like Amazon and Flipkart.

In the three years between FI-16 and FI-19, the company had turned a one-one, 196 crore loss into a 197 crore profit. Newly launched stores were turning profitable within a year. Moral was at an all-time high. But this just wasn't good enough. A big reason for that was the leadership. They were all accomplished in their own right, sure. But most came from IT or financial services backgrounds.

And that was believed to be the effect of TCS's influence over Tata Sons ever since Natarajan Chandrashakran became the group chairman in 20. Since then, the focus shifted to e-commerce. Made sense considering revenue from Chrome's e-commerce channels have jumped by five to six times post-COVID. So they doubled down on selling iPhones and Sony TVs for cheaper prices to maximize returns. But the thing is, beneath it all, Chroma is a good old-fashioned brick-and-mortar offline retailer to the core. Only 10 to 12% of its revenue came from online sales in 2024. electronic retail is also a low margin game, so the profits don't really spike very quickly.

Offline retail also requires a sense of when to hold versus when to sell. Suppose Chroma buys a phone at rupees 95 to sell at rupees 100, it'll get 5% margins. If it doesn't sell, it loses 95 rupees. If it sells, it earns only 5 rupees. To top it off, products have short life cycles, courtesy of ever new releases. Now, Tata Digital didn't immediately. grasp all of this. And as a result, many old systems were undone. Kroma's private label is a very popular choice for its entry-level prices. Its TVs, kitchen appliances and ACs have been

fan favorites among bachelors and rental companies. But over the last three, four years, it was sidelined. Even its loyalty program was skilled in 2021 to make way for new. But things are now changing yet again. Ironically enough, private labels are back on the drawing board, tight buzzer. budgets have also pushed Chroma back to control pricing, basically it's back to square one. The digital first investment also hasn't panned out yet. One HR executive recalled how, despite the investment in the Chromea website, they haven't yet seen any outcomes. On the contrary, the leadership team is constantly getting complaints about poor service

and user experience. Driving this flip-flop is Chroma's chief executive and managing director Shibashish Roy, who acts as the channel for Tata Digital's experiments. More on that in the next segment. Ever since Roy took over as Kroma's CEO, his goal was to make Kroma a new age brand. People in the Know told us how he invested disproportionately in that direction. Under him, Kroma sponsored the Global Dance Music Festival Sunburn in 2023.

It changed its social media style from sales oriented to influencer and trend-based content. It even made its website black. Chroma was trying to reposition itself as a premium brand. But like everything else, there was. was some contradictions here too. Store locations, for instance, was one that came up during a town hall. Some employees wanted to know why multi-story chroma outlets were placed in the by-lains of small towns where they argued no one was really interested in purchasing such products.

Targeting the right demographic has actually been a recurring issue. The consistent lack of clarity and direction have left employees feeling jaded as a result, which is why attrition has been at an all-time high. Roy has a big role to play here. He's often the first person to jump into new initiatives, and that's despite the fact that employees doing the work end up being martyred. Work has become a game of passing the parcel. Roy is doing what Tata Digital wants him to do,

and Tata Digital is doing what Tata's sons wants it to do. In the process, they have bled Kroma's business. First competition from e-commerce players, high inventory holding costs. They've all trapped Kroma in the red. Amid all that confusion, there's one thing all current and former employees seem to agree on. If the digital marketing team's integration in Totata digital proves successful, it could be a step in the right direction. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippos and edited by Rajiv Sien.