Six months after its entry in Mumbai, the company says it has about 55, 000 regular customers. The company has also stepped up advertising support to the brand with print being the preferred medium as it's still a local service.
However, company sources indicate that there are definite plans to introduce the service in other cities as well, although not in the immediate future. Plans are also afoot to provide Internet based services for placing orders.
So would this mean that after the Surf Laundry service and Ayush therapy centres, HLL's foray into the services space (apart from the Lakme salons) has finally worked out?
Analysts are not too sure. "The company has kept a time-frame of seven to ten years to see concrete results, which is a very long time, " says Kunal Motishaw, analyst, Equitymaster, adding that the growth potential of the business cannot be ignored.
"Through direct retail, the company does away with the middle men, and since Sangam stocks non-HLL brands as well, it would have some sort of revenue sharing with those companies too." points out Yasmin Shah, research analyst at Anand Rathi.
"This could be a growth driver in the long term as it taps into the retail space as well. HLL has always been a distribution-led company and the experience will be surely of help."
Why retail, is something most people have asked. "Retailing is a rapidly growing industry and online retailing is the model of the future. In addition, given its unique ability to capture data on customer buying behaviour, Sangam acts as a live product-testing lab for HLL," explains the spokesperson.
One possible drawback could be the competitors' products doing better than the company's own products, but the company isn't too concerned. The relationship between HLL and Sangam is like any other distributor, it maintains.
Another is the popularity of large format retail stores with people preferring to go and shop for themselves and avail similar discounts, but the company is banking on the convenience factor to make the difference.
