T. Nagar

Transcription

T. Nagar

The
M
en
Men
behind the Mile
The Men behind the Mile
Editorial Team
Publisher
:
Kumar Rajagopalan
Content Creation
:
Vidya Hariharan ([email protected])
Marketing
:
Bhavesh Pitroda ([email protected])
Sophia Godinho ([email protected])
A. Christopher ([email protected])
Art Director
:
Deris Micheal ([email protected])
Graphic Designer
:
Arshad Khan ([email protected])
Proofing & Final edits :
Reena Mehta ([email protected])
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© All rights reserved.
01
July 2013
Foreword
Thiagaraya Nagar, popularly known as T. Nagar, Chennai, is India's largest
high street by revenue bigger than Connaught Place in Delhi; Linking Road
in Mumbai and Commercial Street / Brigade road in Bangalore.
T.Nagar is unique
it has dominant regional retailers with a national and
international clientele, is intensely competitive but enjoys high growth and
profitability, has a large number of occasion-wear retailers but no seasonality
in footfall, does not tick the box in terms of infrastructure such as high-street
frontage, or parking but attracts a significant number of global clientele.
This publication profiles eight of the retailers who have roots in T. Nagar. It is
by no means comprehensive, T. Nagar is home to at least 50 large retail brands
and many more mid-size and pavement retailers.
Our aim was to profile the historical basis of growth and the reasons which led
to the creation of one of the best shopping areas in India. All the retailers
profiled here are also owner-driven companies. Their views on technology,
and the transitions involved when bringing in professionals make for
insightful reading.
We hope you find the publication useful.
Kumar Rajagopalan
CEO
Retailers Association of India
03
July 2013
Once upon a time in T. Nagar
In the last 100 years T. Nagar has morphed from being a lake (that's right, present day T. Nagar was once
Long Tank which was drained in the 1920's to create Madras's first planned Town) to a bustling,
crowded, shopping district.
Image Credit: The Hindu
Long Tank, which in the 1920’s was drained to create
modern day T. Nagar
Image Credit: The Hindu
North Usman Road flyover – in today’s T. Nagar
T. Nagar s prosperity is because it is a onestop-shop for occasion wear shopping.
04
July 2013
T. Nagar clocks more business than Connaught Place in Delhi, Linking Road in Mumbai and Brigade Road
in Bangalore. More importantly, unlike these erstwhile high-streets, T.Nagar continues to grow even
though the number of malls in Chennai is on the increase.
Consider the facts.
Once upon a time in T Nagar
Weekday
Weekend
Festival
50,000
500,000
2 million
75,000
150,000
Traffic Restrictions applied.
Residents given special permits.
Linking Road
Mumbai
Connaught
Place Delhi
T. Nagar,
Chennai
4000
cr.
6,000
cr.
>
10,000
cr.
No of Shoppers
Per day
No of Vehicles
per day
Estimated Annual
Revenue Rs
Source: Press Clippings
T. Nagar attracts more than 50,000 shoppers and 75,000 vehicles on a daily basis, which swells to 500,000
shoppers each weekend. Festivals (Diwali, Pongal, Aadi Sale) draw in as many as 2 million shoppers on a
single day. Not bad, that, for a 2 kilometer stretch
bounded by Ranganathan Street on the South,
Bazullah road on the North, running along South and North Usman Road and including the original
offshoot outside Panagal Park (See Map).
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July 2013
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Disclaimer: Map is not to scale. Placement of the stores shown is approximate based on visualization and Google Maps data.
T. Nagar also provides direct and indirect employment to more than 100,000 people, and is one of the
highest tax paying areas in Chennai.
06
July 2013
What drove the metamorphosis?
The initial impetus behind T. Nagar's
development was because it was a planned
town. With a park (Panagal Park) at the centre,
roads radially branched out to accommodate
houses and shops. Adjacent to the park was a
vegetable market, fondly called
'London
Market' - because the 50-odd shops sold
vegetables of local and foreign origin between 6
p.m. and 9 p.m. Drinking water was provided
through underground sources. There were a
number of schools including Sarada Vidyalaya,
Ramakrishna Mission, and Holy Angels, as well as
Sabha's and publishing houses. In addition, the
The huge employment potential, tax revenues, and allied service
sector all facilitated by T. Nagar
cannot be ignored. Neither should
we back away from the opportunity
to create one of the best shopping
strips of the world.
V P Harris, Managing Director,
WITCO Limited.
town was well connected by rail (Mambalam
station) and the T.Nagar bus depot was the first
The second driver was the
to come up inside Madras. T. Nagar was also
residents: Several film-stars lived here in the
covered by Post offices in the 1950s and 60s and
three decades from the 1940's to the 1970's;
was the last pick-up point prior to the airport.
including V.V. Giri, Kamarjar, Rajaji, M.G.
profile
of its
Ramachandran, Sivaji Ganesan, Karunanidhi,
Jayalalithaa, Kannadasan, 'Theerar'
Personally, I learnt a lot on
consumer behavior and customer
management, specially, how to
handle large crowds of customers things I couldn't have learned in any
other retail environment.
Kishore Biyani,
Founder & Group CEO,
Future Group
Sathyamurthi, N.T. Rama Rao, and writers
Sandilyan and Na. Parthasarathy. That added
impetus to real-estate valuations.
From a commercial perspective, T.Nagar
developed because it was a
One-Stop-
Occasion-Shopping-Street . Nalli's Kuppuswami
recalls You could find, in a radius of 200 meters,
silks, jewellery, invitation cards, flowers,
groceries sold and delivered in bulk for festivals
and wedding feasts, as well as religious artifacts
needed for all ceremonies linked to a marriage .
07
July 2013
frontage, or parking but attracts a large number
What fascinates me about
the retailers in T Nagar is that they
have upgraded themselves in all
modern methods of retailing,
whether it is technology or processes without compromising on
the entrepreneurial spirit of their
businesses which they have built
over decades.
B S Nagesh
Vice Chairman, Shoppers Stop Ltd.
& Founder TRRAIN
of global clientele.
T. Nagar has inspired Retailers from all over India.
Retailers in T. Nagar have always fascinated me
because they were among the earliest chain
stores in the country and have developed strong
relationships with their customers. Not only are
the brand personas fascinating, but their
humble beginnings and growth stories are an
inspiration for every retailer and entrepreneur in
India. Personally, I learnt a lot on consumer
behavior and customer management, specially,
how to handle large crowds of customers things I couldn't have learned in any other retail
environment says Kishore Biyani, Founder &
Group CEO, Future Group
That combination of merchandise created a
natural customer pull which was recession
proof. It also meant that the DNA of T.Nagar of
being associated with 'prosperity' - was set.
Adds, B S Nagesh, Vice Chairman Shoppers Stop
Group & Founder TRRAIN What fascinates me
about the retailers in T Nagar is that they have
upgraded themselves in all modern methods of
That 'sentimental' consumer connect continues
retailing, whether it is technology or processes
today and is a key driver behind some of the
without compromising on the entrepreneurial
paradoxes that make up the T.Nagar experience:
spirit of their businesses which they have built
the street features regional retailers with a
over decades.
national clientele, is intensely competitive but
enjoys high growth and profitability, has a large
number occasion-wear retailers but no
seasonality in footfall, does not tick the box in
terms of infrastructure such as high-street
However, T.Nagar's prosperity has come at a
price
the planned antecedents of the street
have been left behind. Residents complain of a
sharp increase in air and noise pollution, and
shoppers find the lack of basic infrastructure
such as parking and toilets to be frustrating.
08
July 2013
What does the future hold
T.Nagar has been the subject of an ongoing redevelopment project since 2010 with Jones
Lang LaSalle Meghraj and Hong Kong-based
master planners, Townland Consultants being
retained as technical consultants to advice on
the design of the redevelopment. The project,
the brain child of the Corporation of Chennai, the
Tamil Nadu Urban Infrastructure Services
Limited (TNUIFSL) and NGO Chennai City
Connect had the stated objective of balancing
the interest of residents with commercial
interests. This is not an easy balance to create or
maintain.
While three rounds of annual
consultations (2010, 2011 and 2012) were held
on the plan created by the consultants, progress
has been measured at best.
Summary Timeline T-Nagar redevelopment
2008
Feb
North Usman Road Flyover commissioned
2010
Feb
Consultants appointed
Apr
First round of public consultations
Dec
Interim Report on development submitted
2011
Jul
Second round Public Consultations
Nov
Residents association submit representation
May
Third round of Public Consultations
2012
Jun
Tender for Multi Level Car Park announced
Oct
Final report on development project
Source: Press Clippings – The Hindu, Times of India
T. Nager
09
July 2013
Maintaining this balance between residents and
commercial interests would be a key to the
future of T. Nagar. The main concern of residents
is the deterioration in the quality of life and air
quality due to increase in retail traffic which is
cumbersome and unpredictable. At the same
time, the value of the property in the area has
risen manifold, driven by the proximity to the
facilities and scarcity of commercial shopping
space available in T. Nagar.
To an extent the public consultations has been
positioned in popular media as being Retail vs.
Resident .
I am now selling to the NRI
grand-daughters of the customers I
served as a child of six. Then, we sold
a standard range, now we sell
designer sarees and jewellery but I
continue to sell.
Nalli Kuppuswami Chetti,
Partner, Nalli.
That's not the case say's Witco's Managing
Director V P Harris. The fact is that most of the
proposals under discussion don't have any
impact on the larger retailers who, by virtue of
opportunity to create one the best shopping
their brand will continue to grow and attract
strips of the world!
shoppers.
To an extent, some of the retail brands are
Any government's developmental
agenda has to be inclusive It's neither pro-retail
nor is it anti-resident. Over time the retail
businesses on this strip has evolved to offer very
large stores, and the consumer has responded
by making it the biggest shopping strip in the
country. The city planners and residents in the
area need to think if they need to help improve
results with better facilities to the consumer or
curb the growth. The huge direct and indirect
employment, the tax revenues, the allied service
sector all facilitated by this strip cannot be
ignored, neither should we back away from the
looking at diversification alternatives:
T. Nagar is getting saturated , says K. Sivakumar,
Managing Director of RmKV silks. Congested
roads and lack of adequate parking space tend to
put off the young and the more affluent. We
want to tap these shoppers too and hence we
decided to expand in malls. Rentals in malls are
cheaper compared to the high-street. Running
costs are also lower thanks to the shared facilities
such as parking, security and generators
It's clear, then, that the Street is at a cross roads.
10
July 2013
Some of the proposals which are likely to make it to implementation are listed in the infographic.
Accepts and Rejects – T.Nagar Redevelopment project
Proposals likely to
be accepted
 Pedestrianisation of Thyagaraya Road,
South Usman Road and areas around
Panagal Park,
 Dedicated hawker zones in pedestrian
areas,
Proposals rejected during
public consultations
 Revision of Floor Space Index (FSI)
norms
 Four-lane road connecting Doraisamy
subway and G.N. Chetty Road, running
below Panagal Park
 Redesigning of Panagal Park,
 Traffic rerouting & integration
 Multi-level car parking
 Additional Bus Terminus
 Skywalk – between Rly. Station and
Bus terminal
Source: Press Clippings
Whichever way the project goes, two things are clear:- First
unlike its counterparts like Linking Road in Mumbai or
Brigade road in Bangalore, T.Nagar continues to grow despite
the mallification of Chennai. Second, the quintessential
south-Indian mix of 'sentiment' and 'commerce' will continue
to draw customers from around the world. Perhaps it's only
fitting that Nalli's Kuppuswami have the last word I am now
selling to the NRI grand-daughters of the customers I served
Forty years ago, it
was said that 80% of
Chennai s wealth was in
Sowcarpet. That locus of
wealth creation potential
has shifted to T. Nagar.
as a child of six. Then, sarees cost less than Rs 50 rupees, now
the average cash memo is 100 times that; then, we sold a
standard range, now we sell designer sarees and jewellery
but I continue to sell .
Kodandarama Setty,
Managing Director,
Vivek Ltd.
11
July 2013
T. Nagar: Then and Now
Usman Road today.
2013
Images credit: The Hindu
Long tank in the 1920’s
which was drained to
create T Nagar
Usman Road in 2013
Usman Road in 1962
12
July 2013
T. Nagar Bus station: then and now
T. Nagar Bus station
in 2012
T. Nagar Bus station
in 1962
Ranganathan Street
2012
1962
13
July 2013
The flavor of T. Nagar Advertisements
The Vivek’s new
year sale
2002
2005
14
July 2013
Naidu Hall – then and now
1935
1975
aidu
dit; N
aidu
it; N
ed
ge cr
cre
age
Hall
Hall
Im
Ima
2012
dit;
e cre
Imag
aidu
it; N
all
uH
Naid
red
ge c
Hall
Ima
Specialty
stores
15
July 2013
We can take on the world
Dr Nalli Kuppuswami Chetty, Partner in Nalli
Chinnasami Chetty, said commenting on the
artisanship that goes into creating silk sarees.
In 2001, Dr Kuppuswami traced the family of the
original master craftsmen from a small village outside
Lyon, France who, in the 1920's had been considered
peers of the original Kanchipuram master weavers who
create Nalli sarees.
When I showed them samples of the kind of work, we
do now, they said that while the craftsmanship is pure
and on par with what they can produce, they cannot
produce it at the same price as we do says Dr
Kuppuswami, with a smile. That's one of the reasons I
Dr Nalli Kuppuswami Chetty,
believe that the saree retailers in T.Nagar mile have a
Partner,
competitive advantage which will sustain them well
Nalli Chinnasami Chetty
beyond short term trends like the intensifying of
competition or the opening of new malls in other
micro-markets in Chennai
There is a core clientele for T. Nagar which is not just
Chennai based but resides in other parts of the country
and includes the NRI diaspora across the world.
For
them, coming to T. Nagar is like coming home
and
they will continue to come and buy. That is enough to
sustain the kind of growth we have seen in the last 20
years , he adds.
16
July 2013
Those were the days
With a Park (Panagal Park) at the
centre, roads radially branched
out with houses and shops, T.
Nagar in the 1920's was peaceful
and the land value was Rs. 500 per
ground.
Most of the buildings
were in the 'art deco' style
the
same style of the Nalli store which
retains that old world look.
T. Nagar was a quiet residential
suburb. It was a planned suburb,
with good rail and road
connectivity. Chinnasami Chetty,
founder of Nalli, was a master
weaver in Kanchipuram. To satisfy
his Chennai clientele, he set up a
house-cum-depot in T.Nagar.
Between 1928 and 1951,
Nalli’s iconic, art-deco styled store which opened in 1951.
© Nalli
Chinnasami Chetty continued to
weaver saris from Kanchipuram
and sell them from his depot in
T.Nagar. Then, silk sarees were
made to order from Kanchipuram,
- P S Kandasamy, Doraiswamy
Iyengar and VKR Govindaraja
Mudaliar were the three other
prominent weavers in this sector.
Nalli was the first Indian textile retailer to
label its sarees as pure silk , pure zari and
tested zari to increase awareness amongst
saree shoppers.
Dr Nalli Kuppuswami Chetty.
Chinnasami Chetty foresaw the
17
July 2013
potential of selling in Chennai, when he set up
Two factors helped build the Nalli brand in those
his house-cum-depot in T. Nagar. He moved to
early years: Nalli's product promise was based on
Chennai, assigned production to his son-in-law,
timely delivery, good quality and additional
P. Lakshmiah Chetty, while he focused on
yardage (the traditional south Indian saree is 9
retailing, and moved the store to its current
yards, Nalli offered 9.75 yards). The second was in
location opposite the Panagal Park, in 1951. The
1939, during World War II, when people left
USP was and is 'personalized' customer service.
Madras for fear of bombs, Nalli stayed put and
As readymade sarees were a new category,
stayed open. That created a brand association
personalized service helped to ensure customer
with reliability, which endures today.
adoption, and earned Nalli the status of a family
store.
Nalli in Retrospective
1911
A handcrafted, Nalli saree was gifted to King George V, during his India
trip, on the occasion of his ascension to the throne.
The border came to be known as Coronation Border saree and is
available as a custom woven saree, even today.
1928
Chinnasami Chetty, a master weaver from Kanchipuram moved to T.
Nagar and set up his depot.
Source: Nalli corporate website
18
July 2013
Nalli in Retrospective
1939
During World War II, during a mass exodus from T. Nagar, Nalli stayed. And
stayed open.
1951
Nalli s best brand ambassador. M S Subbalakshmi, noted vocal artist. Nalli
customized a saree in her favorite shade of blue, which, to date is known
as M S blue.
1951
Inauguration of the iconic Nalli store at Panagal Park.
1953
Dr Rajendra Prasad, India s first president visited and shopped here.
A copy of his cheque, resides in the store to this day.
Source: Nalli corporate website
19
July 2013
When King George V, halted at Madras, in 1911,
those days, colors were limited to vegetable
during his India visit, a Nalli saree was gifted to
dyes and the dyeing process was long drawn.
him. The trip was to mark his coronation and the
While others were unwilling to experiment with
saree, woven by Chinnasami Chetty was named
chemical dyes, my grandfather accepted the
Coronation Border . Today 'Coronation border'
new technology - when tests showed that
sarees are available upon special request at Nalli.
chemical dyes produced good quality and
reduced process time . The family also extended
The blue saree that M.S. wore
Another facet to the Nalli brand is the M. S. Blue.
The letters, M. S. stand for the initials of M. S.
Subbalakshmi, the famous carnatic classical
the use of innovative practices to their retail
operations. In the 1980s, Nalli became the first
textile retailer in India to use bar codes and
computers for their billing and stock tracking.
singer. Upon receiving a prestigious award, the
Nalli family presented her with a special saree,
woven by Chinnasami Chetty in a rare shade of
blue. That attracted many among her audience.
On being told, that the saree was a 'Nalli',
connoisseurs thronged Nalli and asked for the
The biggest change in
customer tastes
says Dr
Kuppuswami, is the need for
variety.
blue sari that M.S. wore . The shade of blue has
since come to be known as M.S. Blue.
Changing with the times
Throughout its history, the Nalli Group has used
innovative practices. In the 1930s, Chinnasami
Nalli branched outside Chennai in the mid 80s
experimented with chemical dyes from Ciba
with stores in Madurai and other towns in Tamil
Geigy of Switzerland. Dr Kuppuswami says, In
Nadu such as Tiruchy, Tirunelvelli and
Coimbatore. Soon, they opened stores in major
metros including Delhi, Mumbai, Hyderabad,
Respecting a customer s
honor matters more to us than his
money.
Ahmedabad and Bangalore.
Even though the Nalli Group was the first silk
saree retailer with a pan-India presence, the
company has been cautious about expansion.
Dr Nalli Kuppuswami Chetty.
The family was careful to ensure that only those
20
July 2013
conversant with Nalli's business values and
The Nalli 'brand' of retail
brand image headed their branches.
Nalli does not grant discounts on its product
Also evident over the years was the family's
even during festivals. This is historical, and is
ethical standards. Nalli then and now stands
based on a policy decision taken by Dr
for quality and honesty avers Dr Kuppuswami.
Kuppuswami when he joined the business. In
Nalli was the first Indian textile retailer to label its
those days, part of the dynamic of buying was
sarees as 'pure silk', 'pure zari' and 'tested zari' to
the process of bargaining. Nalli introduced a
increase awareness amongst saree shoppers.
fixed price policy, and has steered clear of festival
(Pure zari' sarees used gold and silver whereas
discounts.
'tested zari' sarees used copper or a lower quality
of silver). Nalli was also one of the first saree
Nalli fosters extensive relationships with
retailers to implement an exchange policy as
weavers in Kanchipuram and other regional
testimony of the quality of its sarees.
weaving centers across the country. In 2007, the
©Nalli. All rights reserved.
21
July 2013
company had nearly 5,000 dedicated, exclusive
Technology @ Nalli
looms. Nalli trains their vendors prior to entering
Ecommerce
a new location and offered them inputs on
patterns, designs and color palettes that would
Loyalty Program
reflect the latest fashion trends.
Social Media
Nalli has set up an e-commerce portal, for the
local market and a separate portal for the US
Supply Chain
market. Nalli Silks is active in social media and
email marketing.
Given the policy on not
discounting product, the company does not
have a loyalty scheme.
Accommodating the family
design
•
E-commerce presence, to sell
to overseas customers.
•
Do not believe in a
“discounting” philosophy –
hence low focus on the Loyalty
Program concept.
•
Social media to actively engage
and position “design”
•
Focus on collaborations in
supply chain – to ensure
consistent quality from a
network of 7000 weavers. Also
scale (pan national presence)
driven by supply chain
investments.
Business expansion has been managed by the
next generation of the family. Nalli Silks is
managed by Ramnath Nalli, Dr Kuppuswami's
son, and is responsible for expansion and
management of stores outside Tamil Nadu
including overseas stores in Singapore and
California. The company has also added new
product lines to include a wider variety of ethnic
wear, fabrics and home furnishings.
The other format, the brain-child of Lavanya
Nalli, Dr Kuppuswami's granddaughter is Nalli
Next which sells a line of contemporary silk and
Source: Based on interview and store visit
22
July 2013
designer sarees and is targeted at the working
Challenges
woman.
One of the biggest challenges that the Group
In 2009, Nalli inducted within the family
business, a professional COO for coordination.
faces is the availability of skilled weavers. One
reason is the availability of alternative
In addition, the company expanded into
occupations (e.g. the IT sector) but a second
jewellery in 2012. This venture, called Nalli
trend is the availability of social security
Jewellers is headed by Niranth Nalli, Lavanya's
structures from the government which have
brother and represents expansion into a product
reduced the number of weavers.
range which is complementary to the core
business of sarees.
A second challenge is changing consumer
tastes. Increasingly, weddings in Chennai
feature designer sarees as much as silk sarees.
With its strong designs, Nallis should be able to
cater to navigate these changing trends.
Future forward
One of the drivers of scale and momentum is the
balance between process and people focus.
For Nalli, getting this balance right could be the
key to leveraging the enviable brand equity built
up over the last eight decades, and extending it
to other categories such as home furnishings
and jewellery. As Lavanya Nalli put it "The reason
we haven't expanded as rapidly as I'd like is
because the systems and the processes that
were in place were more pertinent to a small
firm. Expansion could mean that we move to
new geographies, to new customers, get into
new lines but still target the same audience, or
©Nalli. All rights reserved.
get into new lines and target new audiences."
she says.
23
July 2013
Design is Intelligence made Visible
One of the Facebook posts of Vummidi Bangaru
Jewellers reads this tag-line which could be VBJ's retail
story.
Customization is our forte. We take customer's needs
and preferences into account to create pieces from
scratch says Armarendran Vummidi who is one of the
managing Partners of VBJ.
The firm has deep roots in the jewelry sector
Amarendran is a fourth generation jeweler from the
House of Vummidi - a set of 12 loosely affiliated
businesses in the jewellery and allied sectors managed
by different family members.
Amarendran,
Vummidi Bangaru Jewellers
VBJ has chosen to pursue scale selectively. They have
2 stores in Chennai, and with a third (at Anna Salai) just
commissioned, the firm is using design and technology
to drive scale.
24
July 2013
Bringing in the Pro's
Amarendran has an interesting take on how
that came about as a result was a smaller span of
bringing in professional managers can help the
control for both brothers; something which
business reach scale. He uses a Return on
helped renew their design focus
Proprietors' Time argument: Four years ago,
we bought in professionals in several of the key
support areas including HR, Technology (CRM /
CAD / CAM) and Administration. It's helped on
two counts. First, we've been able to standardize
process and policy and second, it means that the
family members are freed up to concentrate on
the core of the business i.e. design.
The skill-mix infused by professionals has helped
but there are some areas where they have
struggled. One such area has been Visual
Merchandising (VM). At a country level, India is
skill deficient when it comes to VM. But since
Chennai is the regional office for most large
retailers, it shrinks the pool further, since VM
personnel are usually based in the Head Office.
During the transition phase, the firm also hired
For VBJ, a secondary dimension of scale is also
external consultants to help streamline Human
standardization in store windows, and display
Resources
identity which will complement the brand
they created a formal organization
structure, with Job roles and a structured
identity being created.
incentive plan. One of the structural changes
Image Source: VBJ
25
July 2013
Zita is used to target the younger contemporary
spender. Designs focus on small, elegant pieces,
which are not bling . The inspiration for Zita
came from an episode where Amarendran was
helping a customer choose jewelry. Her teenage
daughter waited politely but was clearly
disinterested in the entire transaction. When he
asked her Why? she shrugged and replied that
Mom doesn't get what I like . That was the
inspiration behind Zita.
This brand strategy is helping them segment
their customer base
Branding Technology
The final dimension of pursuing scale has been in
the use of technology - VBJ has a robust ecommerce platform which they launched a year
back. Additional investments in the supply chain
they are now able to
appeal not just to the traditional shopper but
also her children via Zita & Za Amor.
The brand presence is also complemented by an
active Social Media presence on Facebook.
Currently, VBJ uses Facebook to engage with the
have resulted in a reduction in the cost of
inventory by 30% visibility from factory to
store has improved and
shrinkage has fallen.
They plan to brand their
e-commerce leg of the
business as
Amor.com
Za
which
would complement
Zita
their existing
youth brand.
VBJ’s differentiated branding
strategy helps it address multiple
customer segments.
26
July 2013
customer and expose new trends in jewellery as
Technology @ VBJ
well as new designs. They've also used the page
Ecommerce
to educate readers about the history of jewellery
- using a witty, informative tone which is
Loyalty Program
appealing. However, creating a loyalty program
has met with mixed success, in terms of
Social Media
enrolment as some of the traditionally minded
customer base has been reluctant to be a part of
Supply Chain
a structured loyalty program.
•
E-commerce platform is being
branded as Za Amor – focus on
designer jewellery to attract
younger shoppers.
•
Some resistance from traditional
customers to enrolling in the
loyalty program – VBJ Club.
•
Strong Social media engagement to
support E-commerce platform.
•
Supply chain investments to focus
on availability and quality of stones
and gold.
Are we selling gold or
jewellery?
One of the key changes the firm has witnessed in
the last ten years has been the proliferation of
players in the jewellery space.
Ability to pay
among the customer base has increased, but at
the same time, segments of the customer base
are becoming more discerning. That's why we
keep asking ourselves the question
are we
selling gold or are we jewelers? That keeps us
focused on what we are good at
design , says Amarendran.
which is
It also helps us
design for the repeat customer in such a way,
that we help them in becoming more
discriminating about design, and move them up
the value chain. So, we've tried to leverage off
the customer's natural propensity to spend
more with a trusted brand
Source: VBJ
Investments in the supply
chain have resulted in a reduction
in the cost of inventory by 30% visibility from factory to store has
improved and shrinkage has
fallen.
27
July 2013
The focus on design has lead to a selective
pursuit of scale. We are not in the 'cheap and
cheerful' segment. When you focus on selling
gold, design takes a beating.
Amarendran
clarifies.
This is the way we do the jewellery business.
We keep at it, irrespective of scale,
irrespective of where gold prices are in the
cycle and irrespective of how customer tastes
change - design will always have a place .
This probably explains why customers also
identify VBJ as Very Beautiful Jewellery.
Image Source: VBJ Website
Are we selling gold or are we
jewelers? That s a question we ask
ourselves daily.
Amarendran Vummidi,
Partner, VBJ
Image Source: VBJ Website
28
01
July 2013
Images Source: VBJ Website
29
July 2013
Bringing Inner-Wear to South India
Starting from 'then'....
The man behind the - 12 store- chain of Naidu Hall in Chennai
began his journey with just a sewing machine, executing
tailoring orders from women in the vicinity. As Venugopal
Naidu, Managing Director, Naidu Hall says, "Our founder, Late
M.G. Naidu was a tailor who started with a single sewing
machine in the corridor of his rental residence. He used to visit
the resident areas to collect clothing materials, stitch them
and then deliver. As his customer base expanded he opened
his tailoring shop and named it Naidu Hall after his name and
based on the fact that he started his tailoring business in the
corridor of the house (which used to be called Hall ) thus the
name Naidu Hall was born."
Venugopal Naidu
Managing Director,
Naidu Hall Family Store
...to now
Naidu Hall represents the non-occasion wear shopping face
of T. Nagar. It's a brand responsible for bringing lingerie to the
South Indian woman. M G Naidu designed brassieres and
employed a field-force of women to market the concept
door-to-door, during afternoons. This helped with embracing
the brand, since customers could try the product in the
comfort and privacy of their own home . Gender sensitivity
remains a critical component for the company which is found
in their DNA and reflected on their culture. The founder of the
company would not enter the store, but stayed behind the
counter handling billing so as to maintain an all-woman staff.
This ensured the customer were willing to come in and adopt
the category by trying our products , says Naidu.
30
July 2013
Customer mantras: Range vs. what sells
Venugopal
who has adapted to the Retail business
says
that one of the enduring advantages that large format,
owner driven stores have is their understanding of customer
habits.
Since we've helped the customer adopt a new
category of clothing i.e. inner wear; we've understood that
the importance of presenting the customer with a large
number of choices. However, what sells are typically one or
two 'patterns'. Even today, after 75 years, the mainstay of the
business remains PB (Pointed Brassière) and RPB (Rounded
Point Brassiere) , he says.
Exposure and acceptance
Source: Naidu Hall
Customer tastes have changed in the last few years. There
Founder of Naidu Hall
is a distinct difference in the purchasing habits of the
Late M.G. Naidu
consumer in the age group of under 35, as they are willing to
try new brands and new concepts like for example 'trainer'
brassiere for younger girls. This segment is more conscious
and regularly critiques their appearance. They are willing to
try new looks. Customers above the age of 35 are more
transactional and tend to stick to their favorite pattern.
Our Founder, late. M G Naidu designed brassières and employed a fieldforce of women to market the concept door-to-door, during afternoons. This
helped with adoption, since customers could try the product in the comfort
and privacy of their own home. It has created lasting brand loyalty.
Venugopal Naidu, Managing Director, Naidu Hall
31
July 2013
From inner wear to outerwear
Over the years, Naidu hall has diversified into
outerwear as well
including casual / day wear,
saris, salwar kameezes and more recently
nightwear.
The core value proposition stays
value for money with a sensitive service
experience says Venugopal.
The People Factor
Our methods of handling the
customer are specific to our brand
values
there is a level of old
fashioned courtesy and gender
sensitivity that pervades our store
design and customer interactions.
Growth is driven by the ability to infuse their
culture into staff and home-grow managers.
For me, the key person in any store is the store
manager as he sets the tone for customer
Venugopal Naidu, Managing
Director, Naidu Hall
experience. It takes about 7 years of on-the-floor
experience with us; before we believe that a
person is groomed enough to independently
norms and they find it tough to fit in our mold .
handle a store .
That said, Venugopal agrees that there is a
What about 'importing' store managers? Firstly,
professionals from larger modern format
chronic shortage of trained staff in Retail. Retail
is not an easy career choice
you have to stand
retailers are not keen to work as a store manager
for hours, wear a uniform, deal with various kinds
they want to move into management which
of customers, while staying cheerful throughout.
automatically creates a clash as most of our
Essentially, you have to like the transactional side
senior management team is 'in-grown'.
of shopping. Most of the young people of today
Secondly, our methods of handling the
have multiple job-options as compared to 20
customer are specific to our brand values there
years back and so are not willing to work in retail.
is a level of old fashioned courtesy and gender
Also, one of the main sources of staff
sensitivity that pervades our store design and
migrants from smaller towns and cities has
customer interactions.
Many of the
reduced. Some of the social security measures
professionals from organized retail are not
available to them have slowed down the influx of
i.e.
comfortable dealing with some of these unsaid
32
July 2013
people into big cities puts pressure on
Technology @ Naidu Hall
resources.
Ecommerce
We've found that if you can intensively mentor
new entrants through their first month on the
Loyalty Program
floor, that is a 'tipping' point in terms of creating
a strong enough emotional connect to retain
Social Media
them. The other thing that has worked for us has
been referrals. We don't advertise for staff but
Supply Chain
use existing staff to bring in new staff for
replacement and expansion plans. This ensures
that newcomers have a support group and
again, helps create that emotional connect he
•
Strong e-commerce presence,
customers prefer this channel
for repeat orders. Because
lingerie is a high involvement
category, people will not
change brand, and size, once
they are comfortable with the
same.
•
Product margins do not favor a
Loyalty program.
•
Target customer is not the right
fit for social media.
•
Focus on supply chain – high
proportion of private label
volume.
says.
At the same time, since the new market reality is
a shortage of good quality human resources in
the retail space, Naidu Hall is moving to innovate
to handle this change using a combination of
Technology and changes in Store Design.
We
are moving to a self-service layout now says
Venugopal. Most of our new stores have fewer
counters, more focal points and free standing
fixtures with merchandise displayed
to help
shape the buying process without involving
floor-staff.
The other aspect is technology.
Our e-
commerce site is a convenient way for
customers to place repeat orders. For lingerie
especially, customers who have found a brand
and size that suits them, will not change easily.
It's also more convenient for them to shop online
Source: Naidu Hall
33
July 2013
Source: Naidu Hall
now than before. Some of that thought process
brand behind them. For us, most of our online
runs counter to standard thinking
where
sales are repeat sales, not first time purchasers.
lingerie is considered a high involvement
So, we have found good adoption of the online
product with high requirements for exact 'sizing'
platform , says Venugopal.
the Achilles heel of online retailing. That may
be true for online retailers who don't have a
Naidu Hall has also invested in the supply chain.
For us, control and visibility over the supply
chain of our own brands is very important
The new market reality is a
shortage of good quality human
resources in the Retail space. Naidu
Hall is handling this change using a
combination of Technology and
changes in Store Design.
as a
large part of our turnover is driven by our
'private' labels. We have to stock all brands,
otherwise, we lose the customer due to lack of
choice, but we've seen that our fast moving
items are usually our own brands , says
Venugopal. In addition, expansion plans are not
feasible without the visibility to stock and other
metrics that technology provides.
34
July 2013
Becoming the neighborhood
store
For Naidu Hall, the future is growth in the Tier 2
/ Tier 3 South Indian cities on the Bricks and
Mortar network. They are experimenting with
smaller store formats (1000 to 2500 sq feet)
stores, stocked with mostly in-house brands. A
'woman-and-infant' range of stores is also on
the anvil.
We ve seen strong adoption on
our e-commerce platform. Most of
our online sales are repeat sales
not first time purchasers.
The plan is to develop in-house
brands in the women-and-infants category,
and trading brands in the Mens category. To
Venugopal Naidu,
Managing Director, Naidu Hall
that end, they have expanded their dealer base
as well as their warehousing facilities.
Source: Naidu Hall
35
July 2013
Source: Naidu Hall
We are moving to a self-service layout now says Venugopal. Most of
our new stores have fewer counters, more focal points and free standing
fixtures with merchandise displayed to help shape the buying process
without involving floor-staff.
36
July 2013
About 30% of topline is from outside the
shawl or dupatta over a Nidhra and walk down
Chennai market. In those towns, the target
a corner store to buy provisions, without a
customers are such that there is a degree of
second thought , says Venugopal.
discomfort in going to a mall, even today. So
our positioning is to be a neighborhood store
For Naidu Hall, the focus on small format, own
that's why the focus on smaller formats and
label and brand building are likely to drive
own brands. , says Venugopal.
future profitability.
Another market where they are testing waters
is with NRI's.
NRI's tend to congregate in
specific cities in the US and UK. Most NRI's, who
visit Chennai once a year, also tend to be bulk
buyers. Increasingly, airline baggage
restrictions mean that there is merit in the
company aggregating orders and shipping
from store. The model is a combination of
online/ offline platforms and the range is
currently restricted to own-brands where the
supply chain is controllable.
An experiment with high-end nightwear has
We are moving to a selfservice layout now says Venugopal.
Most of our new stores have fewer
counters, more focal points and free
standing fixtures with merchandise
displayed to help shape the buying
process without involving floorstaff.
created Nidhra. The product is good quality,
well designed nighties, which, are also used as
casual wear by customers.
Most customers
want to wear something comfortable at home.
Working women, especially, like to change
after they get back from the job, and wear
something suitable which can also double up
as nightwear. Nidhra specializes in providing
good, (non transparent) fabric with
embroidery/ designs which makes it suitable
for day-wear. Many of the customers will toss a
37
July 2013
Marching to the tune of a
Different Drummer
I like to sell jewellery that I like to wear says Vummidi S
Balaji.
That statement encapsulates the company's
philosophy
with its focus on Design and personalized
service above all .
The company - VBC Jewellery
has deep roots in the
jewellery space. It is part of the Vummidi Group a set of 12
loosely affiliated businesses in the jewellery and allied
sectors managed by different family members. The firm
was established in 1900.
The founder, Vummidi Bangaru Chetty launched the
jewellery business as a minor jeweler making the gold
Vummidi S Balaji
VBC Jewellery
accessories that adorned the
thaali
the sacred
mangalsutra used in South Indian weddings. He later
moved to North Chennai and converted a portion of his
home into a retail outlet. Since then, the family opened a
bigger outlet in NSC Bose Road in 1954, popularly known
as the Corner Store . Expansion was swift, from NSC Bose
Road in George Town, to Panagal Park which became the
hub of T.Nagar - to the modern showroom on G. N Chetty
road, near Vani Mahal.
VBC has two stores; with 160 employees. The focus on
design means that they take on made-to-order requirements from longstanding customers; about 60% of their
38
July 2013
100,000 customer base are repeat purchasers .
Customers will often bring in a piece
example an Italian gold finish
say for
which we will
work with them to convert it into something
suitable for an Indian wear says Balaji.
Customer tastes have changed quite a bit over
the last three decades. They are more discerning
they don't need jewellery to look 'ostentatious'
any more. Increasingly, the focus is on adjectives
such as
unique , with
understated , and
elegant being other requirements. At the same
time the economic boom in the last two decades
means that more customers want diamond /
gold jewellery for everyday wear including
office-wear compared to few years back.
V B Chetty, Founder, VBC
Source: VBC Jewellery
39
July 2013
Another interesting trend is
jewellery being purchased to mark
success
or
milestones'.
Previ-
ously, customers bought at festivals
or other religious occasions. Now
we find them willing to buy
jewellery to mark personal milestones
like completing a doctor-
ate, or landing a big contract . This
has also translated into a higher sale
of solitaire diamonds.
His view on competition underscores the same focus on being 'one
of a kind'. I don't have a problem
New year sale advertisement
with the kind of corporatization that
has created vast jewellery chains ,
Riding the wave of the 90's
he says. It's a large market after all
large enough for everybody. I
believe, though, that corporatizing
can make you lose touch with the
customer. I need my finger on the
customer's pulse on a daily basis .
VBC has invested in technology
but sparingly. They have an ecommerce portal:
We use that
I need my finger on the customer s
pulse on a daily basis.
more as an extension of our shop
window than anything else. Also,
Social Media is good for fashion
Vummidi S Balaji,
VBC Jewellery.
jewellery but design focused
jewellery is a very high involvement
category . Its clear Balaji is happy
40
July 2013
with the trade-off: The need to connect
Technology @ VBC Jewellery
personally with the customer might limit scale
but it gives him a depth of relationship that
Ecommerce
others may not be able to replicate.
Loyalty Program
From a future perspective, the design focus
continues. Daughter Lakshmi Shruthi has joined
Social Media
the business recently, and is concentrating on
specialized, exclusive diamond jewellery. The
Supply Chain
strategic rationale is to target customers with
future spending power, the younger age
segment (from 25 to 35 yrs), she believes that
•
Business focus is on creating
unique one of a kind jewellery. Ecomm platform seen as an
extension of the “store window”.
•
Some resistance to traditional
customers enrolling in the loyalty
program. 60% of orders are
repeat purchases.
•
Social media more suitable for
fashion jewellery than design
jewellery
this represents a large untapped market. Her
line of diamond jewellery also re-positions
traditional designs with a contemporary 'twist'
so as to attract the older, above-35 age segment.
Another experiment involves showcasing 3 to 5
gm gold jewellery in new mediums such as
thread. She has also initiated a collection of
mixed metal jewellery
bringing her own
brand of youthfulness to the category.
For VBC, expansion is about depth of design
rather than new store launches. I would rather
create 'show-stoppers'
single pieces which
complete an outfit and are complete in itself
says Balaji.
I would rather create showstoppers than be a mass market
brand.
Vummidi S. Balaji, VBC Jewellery
41
July 2013
Good service is a matter of right
for the customer
Says B A Kodandarama Setty, Chairman & Managing
Director of Viveks.
Viveks has differentiated itself on service, and is today one
of the most respected consumer electronics and home
appliances retail chains in south India.
Tamil Nadu has always been blessed with entrepreneurial
spirit in abundance.
There is a saying that if you hail from the Vaishnavite
community, the ability to handle a business is an inborn
trait. Such, at least, was the case with the Late
B A Kodandarama Setty,
Chairman & Managing Director,
Vivek Ltd.
B.A.Lakshminarayana Setty, who came to the city in 1965.
He came with one idea - to start his own business. He
named the business
Vivek & Co.
after Swami
Vivekananda, of whom he was an ardent devotee. says Mr.
Kodandarama Setty.
The date was May 3, 1965. The location was a 450 sq ft shop
adjacent to Sanskrit College in Mylapore. The products on
offer were electrical fittings and folding chairs. The idea
was to sell products for daily use at affordable rates.
Over the first three decades of its existence, Viveks
operated through just three showrooms, each one run by
one of the brothers (the other two brothers are BA
42
July 2013
Chandrashekar Setty and BA Srinivasa Setty). The stores, apart from the first one in Mylapore, were in
Purasawalkam (started on February 19, 1969) and T Nagar (started on August 21, 1980). The steady
growth was also a reflection of the closed nature of the Indian economy in the post independence era,
where consumer durables were a 'once-in-a-lifetime' purchase that few could afford. Sales were limited,
but the company created a brand promise around service and trust.
BA Chandrashekara Setty, says, We were determined to make everyone feel like they were an important
part of the family. The advantage of that stance was that we learnt to observe people, not only as
customers but as community. One of the major lessons we learnt as a result of observing people was the
Image Source: Vivek Ltd.
“A slice of History”
Top left – the invitation to
the opening ceremony of
Viveks. Top right – the
frontage of the first Viveks
store;
(Left) the key that was
used to inaugurate the
first store. (Right) –
inauguration of
Viveks
@T-Nagar.
43
July 2013
introduction of the idea of paying in installments. Initially, we started the scheme on a daily
basis (that is, installments were paid every day).
This was feasible enough for businessmen, but
the middle-class family, or even an individual
customer, could not afford. So, we created a
monthly scheme for them.
As brilliant and innovative as the idea was, the
cornerstone of their commercial success,
undoubtedly, was the idea of a New Year Sale.
Kodandarama Setty explains,
In 1977, we
decided to try and boost both our sales and the
spread of services to our customers, by selling,
The Brothers
for that one day where all our goods are sold at
cost price. Our concept through this initiative
was to thank our customers for their yearlong
patronage at Viveks. That New Year Day was a
sell-out success and that tradition became the
hallmark of Viveks promise in the customers
mind.
Over the last few years, T. Nagar has adapted the
idea of the Aadi sale. Traditionally, in Tamil
Nadu, the Aadi month is considered inauspicious
and people do not embark on any new ventures
during this time. The retail business used to
reflect this as a seasonal low. However, with the
introduction of the Aadi sale which is seen as a
way to shop without impacting sentiment, T
Over time, we evolved from a
family-run business to a corporate
organisation. We created the
necessary procedures and processes. The team environment we
have today is one of the reasons
behind our success.
B A Srinivasa Setty,
Chief Executive Officer, Viveks.
Nagar has been able to create an additional
season of selling.
44
July 2013
New year sale advertisement
Riding the wave of the 90's
With the advent of liberalization, Viveks was able
When people s aspirations are
growing, you cannot continue to
operate like a small store with a
petty cash box and a cheque book.
You have to think big and bring in
professionals to help you grow.
to 'surf the wave' of increasing consumerism,
rising incomes, and growing competition. It
expanded its reach and its service offerings, and
also grew inorganically by acquiring Jainsons, a
14 store chain in 1999. 14 showrooms were
added, as also Spencer Super store (RPG's
electronics store) and a two store operation
(Premier Electronics of Salem). By 2011 Viveks
- B A Kodandarama Setty,
Managing Director, Viveks
had a spread across 16 cities in Tamil Nadu and
Bangalore with 54 stores.
Along the way, the company also adopted a
45
July 2013
corporate structure. Says Srinivasa, Over time,
we evolved from a family-run business to a
corporate organization. We created the
necessary procedures and processes. The team
environment we have today is one of the reasons
behind our success. Vivek Limited was registered as a closely held public limited company in
1994. Kodandarama Setty points to Wal-Mart,
Tesco, Best Buy and other retailers as precedents
to the corporatization of retail. When people's
aspirations are growing, you cannot continue to
operate like a small store with a petty cash box
and a cheque book. You have to think big and
bring in professionals to help you grow , he says.
Professionals were hired for HR, accounts, sales,
If you look at a Viveks customer, we are part of his life, and are
part of every room in his house.
From the air-conditioner and
refrigerator that run while he is
asleep, to the TV he watched before
falling asleep, to the coffee maker,
geyser, toaster, microwave, washing machine and gas-stove he will
use when he wakes up we are
present every step of the way.
and finance and the first stores outside Chennai
were opened, in Bangalore in 1995 and Salem in
- B A Kodandarama Setty, Viveks
1996.
46
July 2013
Technology @ Viveks
Ecommerce
Under development
Vendor relationships
Our strength was the vendor relationships we
built during the 70's and 80's. Colour TVs came
Loyalty Program
Not planned
into India in the early eighties but were in severe
short supply. Dealers had to pay cash in advance
Social Media
Supply Chain
and wait for supplies from manufacturers like
Dyanora, Weston, and Crown. Viveks got support
from these manufacturers through its ethical
standards of dealing.
In turn, we never made
them wait for payments
• E-commerce platform under
development
•
•
•
Loyalty program not planned.
Philosophy of “best price for
all”.
Focused social media presence
– used to communicate offers.
Supply chain investment to
create availability and pricing
efficiency.
we don't have
inventory management issues, and we've been
flexible with them. In return, whenever we have
needed them to stretch
for example to
accommodate our annual New Year sale
we
have had a great response from them. says
Kodandarama Setty. The strength of relationship
with both customer and supplier was an
important component of the speedy growth
that Viveks saw in the new millennium.
Service Focus
Viveks has also systematically expanded its
service offering. It set up its Viveks Service
Center in Chennai in 2004 with 150 technicians
and a call center to handle customer calls. Our
brand promise is one of service and trust, says
Kodandarama Setty. If you look at a Viveks
Source: Vivek Ltd.
customer, we are part of his life, and are part of
every room in his house. From the air-
47
July 2013
Customer Ownership
conditioner and refrigerator that run while the
user is asleep, to the TV they have watched
before falling asleep, to the coffee maker, geyser,
Strategically, by aggregating services across
toaster, microwave, washing machine and gas-
manufacturers, Viveks is able to realize econo-
stove user will use after waking up
we are
mies of scale and more importantly is able to
present every step of the way. But when any of
'own' the customer. Because the customer sees
these appliances malfunctions, the customer
Viveks brand and service delivery at the point of
has to run from pillar to post to get them
maximum need, (after sale delivery, product
repaired . Viveks has built its brand by targeting
demo, warranty servicing, Annual Maintenance
that 'weak link' in the chain. Manufacturers want
contracts - AMCs)
to focus on manufacturing, after-sales service is
than the manufacturer's brand. That phenome-
not core to their value proposition.
non has led to Viveks being quoted in several
they trust the brand more
publications, particularly CII-McKinsey's 2002
Accolades
2006 REID AND TAYLOR
RETAILER OF THE
YEAR – Organization
2002 CII AND MCKINSEY:
VIVEKS – MORE TRUSTED
THAN THE BRANDS IT SELLS
2009
Retail Asia
2004
2002
2001
2006
CONSUMER DURABLES
RETAILER OF THE
YEAR by Images
AMONG THE TOP 500
RETAILERS IN THE ASIA
PACIFIC REGION
BUSINESS TODAY:
2000
MCKINSEY:
RANKED THIRD
AMONG INDIA’S
TOP 10 RETAILERS
MOST TRUSTED
RETAIL STORE IN
THE MARKET WITH
OVER 3 LAKH
CUSTOMER FAMILIES
48
July 2013
report on Indian Retail in which this globally
reputed consulting firm termed Viveks as a
Brand more trusted than the Brands it sells .
While customer loyalty is high, Viveks has not
introduced a formal loyalty scheme. We cut
about 600,000 cash memos every year and we
believe about half of these are repeat customers
says Kodandarama Setty. But, this is a business
with thin margins. Customers may not be as
price sensitive as before, but we would rather
provide the best prices to all, than invest in a
loyalty program he says. The company sells gift
cards, and is active on social media. Viveks will
soon enter the e-Commerce space, a growing
segment in multi channel retail.
We have always been conscious of the need to provide
excellent ambience and visual
merchandising at our stores. This
makes us design new showrooms on
international lines and also progressively upgrade our existing showrooms. We have found this essential
in order to maintain a strong brand
image.
Kodandarama Setty, Viveks.
49
July 2013
Process over technology
Specialty Range
Viveks has used the Theory of Constraints
In addition to the 'service' focus, Viveks has also
framework (TOC) to streamline inventory
created specialty stores focusing on segmented
management. The framework leverages
categories of consumer goods. 'Viveks Digital 1' -
technology and set norms for a pull based
a new retail initiative targeted at the young
system for stock replenishment. The company
gadget users, and sells IT and Telecom gadgets
has a 40,000 sq ft distribution center at Chennai
(mobile phones, tablets and laptops). The first
which is the single point 'aggregator' of all
Digital store was opened in Bangalore at the
merchandise that arrives from the manufacturer.
Forum mall, because, "We wanted to test market
With growth has come the ability to create a
it in the IT hub of India," says Srinivasa. The
transparent interface with manufacturers so that
format also represents the entry of the next gen
they have visibility to stock in hand.
into Viveks Digital 1 is handled by Vishal Bysani,
The
company is also looking to move towards
Srinivasa's 28 year old son.
managing its inventory using predictive
analytics, but this, Kodandarama Setty admits, is
Similarly, Viveks has opened an AC Bazaar near
Pondy Bazaar in Chennai
which sells only air
conditioners. Each brand is given one 'room'
with glass partitions, so that customers can
'experience' the product says Kodandarama
Setty.
50
July 2013
Changing customer spends
One of the changes that Kodandarama Setty
notes, is that previously customers were
strapped for money. Now they are strapped for
time. They are willing to pay for service and see
value for money in the AMC, extended warranty
concepts .
Customers are also pre-poning consumption.
want to have more than one TV / Fridge in a
house says Kodandarama Setty . When the
customer changes, the retailer has to change
with the times. (Bargaining) power has now
shifted from manufacturer to retailer to
consumer . This structural shift, he believes is
permanent, and is recession proof.
Retailers respond
Where previously the father bought his house
when he retired, the next generation is buying
their first property before they are 35. This trend
of preponement of consumption has also
resulted in and increase in the frequency of
purchase when it comes to consumer durables.
People don't think twice about changing their
TV's and refrigerators every few years. They also
The T. Nagar 'strip' has seen a variety of
responses to this shift in purchasing (and
bargaining) power to the consumer.
From
brands like Nallis who don't believe in discounting, to Kumarans who's product promise is
regular pricing equal to others discount prices to
still others who want to refocus the conversation
away from pricing to product innovation in the
last 10 years, retailing in T. Nagar is changing
says Kodandarama Setty . But the street has
If there are no customers there
is no business. Next is the interest
of the employees and the
community we live in and have
benefited from. After that are the
shareholders, if we, as owners, can
impact all these, then the Retail
sector will prosper.
witnessed communal prosperity of a scale not
seen before.
Forty years ago, it was said that
80% of Chennai's wealth was in Sowcarpet. That
locus of wealth creation potential has shifted to
T.Nagar. Today, we think, if you add up the sales
of high value categories such as Jewellery and
silk Sarees and then look at the business done by
the mid-market brands and the smaller
pavement retailers, T. Nagar probably accounts
for a good Rs 15,000 crores says Kodandarama
Setty . Published figures value T. Nagar at Rs
- B A Kodandarama Setty, Viveks.
10,000 crore.
51
July 2013
Next Gen transitions
in Owner Driven Retail
overseas with companies such as Walmart,
Target, and Landmark in Dubai. Our business
design can accommodate both scale and
Chennai has been a market where the spirit of
structure. For example the service portfolio can
entrepreneurship has created strong regional
easily be spun off into a separate business;
retail brands. For many of these companies,
formats such as AC Bazaar and Digital 1 are also
transition to the next gen has been accom-
relatively independent. Strategically, we want
plished by adding complementary categories of
to create a design which allows everybody
product. For example, in Kumarans, the store is
commercial independence but which ensures
so large that each floor is managed by a different
that they are still joined at a corporate level. I also
family member. Similarly, Nallis created Nallis
think it's important to give business heads the
Next and then branched into jewellery. , says
experience of managing a Board and other
Kodandarama Setty . In Viveks case we have
stakeholders .
bought in the next generation, after making sure
they are qualified and skilled, having worked
In 30 years, we set up 3 large showrooms. We are now looking for a team that can set up the next 30 showrooms in 3
years. From a Vivek’s recruitment ad in the 1990’s.
52
July 2013
The ODOM advantage
When retailing got organized there was still a
professional skill gap. Modern retailers have had
to 'import' skills
in the form of inward
secondments of expatriates.
notes
Kodandarama Setty
This is one area where Owner Driven Owner
Managed (ODOM) retailers, do have a natural
advantage as the family also serves as a natural
university
to transmit commercial and
technical skills.
ODOMs have a combination of ingrown skills,
plus a sense of ownership and a deep consumer
connect. They have a natural advantage over the
modern retail companies
Take up one idea. Make that
one idea your life - think of it, dream
of it, live on the idea. Let the brain,
muscles, nerves, every part of your
body, be full of that idea, and just
leave every other idea alone. This is
the way to success.
- Swami Vivekananda;
the inspiration behind Viveks.
as this intersection
skill set is not available among either expatriate
professionals or home grown professionals. The
Our country is a nation of shopkeepers
we
not just in terms of
have 12 million retail outlets. But they are mostly
training but also motivation and inspiration. ,
family businesses, which we pass along to our
says Kodandarama Setty .
children. We don't let go and open up our
skill gap exists today
businesses. This together with the government
Over time, that gap will equalize.
But it's one
explanation why retailers like Viveks view FDI as
attitude towards retail, is what limits us. We must
being complementary to market development.
be more professional in our approach. , he says.
If there are no customers there is no business.
In his role as senior statesman of the retail sector,
Next is the interest of the employees and the
Kodandarama Setty was one of the founder
community we live in and have benefited from
members and continues to be actively involved
and then the shareholders. If we, as owners, can
in the Retailers Association of India
impact all these, then the Retail sector will
which
serves as the industry platform for organized and
prosper .
organizing retailers.
53
July 2013
Have bag, will Travel
The luggage market in India has been growing steadily
over the past few years due to an increase in disposable
income levels, rise in air travel, and expanding number
of retailers and specialty stores all over India.
The
branded luggage market is valued at Rs 1,800 crore
with Samsonite and VIP being the market leaders. The
unbranded market is much larger and is estimated at
between Rs 2,000 crores to Rs 3,000 crores.
Market growth is driven by consumer confidence and
sentiment. In 2009-11, with the global economic crises,
consumers in India did defer purchase decisions in this
category. Structurally, though, since 2000, luggage as a
V P Harris,
Managing Director,
Witco India Ltd
category has seen the impact of purchasing power
reaching the hands of the Great Indian Middle Class
the number of first time adopters of branded luggage
has increased. During a downturn, consumers might
trade down and defer purchases or only buy during
sales, but they will not relinquish brands, once adopted.
One of the largest retailers of luggage in India is the 60year-old WITCO, a South Indian, multi-brand, luggage
and personal effects chain. The company has 15 stores
across three cities (Chennai, Bangalore and Kozhikode).
54
July 2013
Do you really think this
will work?
Mirroring consuming habits
In response to changes in consumer tastes
That was the reaction from the Managing
WITCO has undergone changes in layout and
Director of Blowplast when he saw our Usman
design. Most consumers in the South market
Road store
it was 4500 square feet, mostly on
the second floor of the building with relatively
low frontage
recalls, V P Harris, Managing
Director, WITCO.
are used to endless range when it comes to
shopping, since capital purchase shopping
habits have been formed in the context of
categories like jewellery and sarees. In these
In its 60 year history, WITCO has seen sweeping
categories, the traditional store layout with its
changes in consumption.
Shopping has
impression of endless range protects from
become a habit , says Althaf Harris, Director,
consumers from 'buyers regret'. For us, luggage
WITCO, commenting on the changes in
is bulky and therefore we needed to use smart
consumer tastes.
People have become more
willing to trade up and adopt brands especially
in a category like luggage. Of course, when
economic sentiment is uncertain as it was in
2009 globally and in India in 2012, they trade
down on price points, but at a category level,
impression of an 'endless aisle'. Secondly, in a
category like luggage, too much choice confuses
and prevents a purchase decision; you need to
provide just enough range to help the customer
decide , says Harris.
adoption has been high .
Purchase Motivator
store design to give the consumer the
Luggage
Travel Bag
Laptop Bag
Hand Bag
School Bag
Longevity of product
Branded goods perceived as
high quality
Style Matters
Price Matters
Range Matters
55
July 2013
The solution was to introduce short segregated
aisles
similar to supermarkets. Each aisle
presents merchandise by use, (e.g. laptop bags,
cabin bags, midsized luggage etc) across brands
and price points with the most feature rich
products stacked first.
That ensures that
customers see a depth of range, but optimizes
actual range and therefore space costs.
In our
new store design even a category like hand bags
In my view, when generational shifts happen, you have to
step back and that s not always
the case in a business house.
has been divided into number of aisles to "slow"
down the browsing process and also effectively
making a quick scan impossible. So, in both
V P Harris,
Managing Director, WITCO.
Luggage and Bags we are ensuring focus and no
distraction when browsing a product. says
Harris.
Source: WITCO
56
July 2013
Customer Engagement
Process (CEP)
Every customer is presented the maximum
Also, products are showcased with aids such as
range of merchandise
both vertically across
charts detailing international airline luggage
price points and horizontally across brands /
dimension rules and staff use these to detail
categories. The objective is to help the customer
product attributes to the customers to help
make the best informed decision. This process is
shape the decision making process.
then documented and provides analytics on
trained to demonstrate the most feature rich
customer requirements, basket preferences,
product first so that any customer who is in a
frequency of visit, etc. This is done in each and
position to trade up, is assisted in that choice
every walk in. Data is digitally converted and
using a value for money argument.
Staff is
analyzed on a continuing basis.
Source: WITCO
57
July 2013
Customers have also come to prefer soft,
The form factor
lightweight luggage which has 'four wheel drive'
Another design dimension has been in the use of
and includes features such as TSA looks (this lock
mirrors. Irrespective of gender, most customers
is a security requirement for flights to the USA).
want to see how the item looks when held this
All these factors are a consequence of the
is especially true of backpacks and travel bags
increase of frequency in travel which has led to
and (expectedly so) with handbags. That stress
convenience and longevity driving the purchase
on 'form' is a change in consumption habits over
decision.
the last ten years; and WITCO has mirrored the
sides of its aisles in response. This has the added
advantage of making stores look larger and
further enhances the feel of an 'endless' aisle.
This concept has been implemented in WITCO's
stores in Nungambakkam in Chennai as well its
outlets in the malls at Forum (Vadapalani) and
Phoenix Market City (Velachery).
In the
Velachery mall, our store is in smaller size
sq feet
600
but the new design does not let it look
cramped, and customer feedback shows that
they experience the store as having a wide
range
A soft spot for sentiment
Another trend that Harris comments on is that
consumers in South India tend to be sentimental
about brand associations
Almost all
consumers have a view that a particular store is
'lucky' for them, he says. That is one of the
reasons for the continuing popularity of the T.
Nagar mile
the mile has traditionally been
associated with prosperity
something that
gained further currency, when a temple to
Tirupathi Balaji was set up on Venkatnarayana
road.
Also, first time adopters of branded
53%
luggage often do so in the context of the first
39%
37%
overseas trip, which is also associated with the
start of 'something new'. That positive sentiment
rubs off on the store from where they purchase,
14%
and creates a subliminal pull.
Range
Price
Service
Brand Experience
Rationale: % of customers (N = 49), in May 2013, who ranked
WITCO “Good" or "Excellent" on Range, Price, Service, Brand
Experience
58
July 2013
WITCO's journey
WITCO has gone through multiple makeovers
since its inception in 1951 as a manufacturer /
dealer of plastic ware, travel goods and
accessories. They exited the manufacturing
business in the 1970's. A couple of large-format
multiband stores ranging from 3,500 to 7,000
sq.ft. were commissioned in the early 1990s on
Anna Salai Road and Usman Road, positioned as
multi-level destination stores for luggage, bags,
and accessories.
stores of WITCO, 10 are based in Chennai.
In the last ten years, WITCO has been impacted
by infrastructure development projects in
Bangalore and Chennai.
The CMH road metro
construction in Bangalore and the North Usman
road flyover construction were both projects
which took longer than planned and impacted
all the retailers on those streets. We were no
exception says Harris. His view is that while the
projects are required because of the structural
changes they introduce in urban transportation,
the process of implementing and managing
These were followed with stores at Anna Nagar,
them needs to be improved. These projects are
Adayar, Cathedral Road, and Mylapore. The
not inclusive in the way they are executed.
company also opened stores in Bangalore and
During the CMH road Metro project, no
Kozhikode; and more recently at the new malls in
alternative service road was created for
Chennai Forum Mall @ Vadapalani and Phoenix
customers to approach the stores impacted by
Market City at Velachery. Out of 15 operating
the construction
which is standard practice in
Source: WITCO
59
July 2013
Purchase
Frequency
Price range
Average cash
memo size
Contribution
to topline
Luggage
Low (annual)
Rs 3,000 - Rs 15,000
Rs 5,000
40%
Personal Products
Medium
Rs 1,000 - Rs 8,000
Rs 3,000
60%
Segment
Brands
Samonsite, Delsey,
American Tourister,
Brand Witco, VIP
Baggit, Hide Design,
Widlcraft, Lavie
Source: Interview and store visit.
all other countries . It's ironic, then, that the
must do what is good for the City as a whole. If
current T. Nagar development project is
that means that one of the worlds best shopping
attracting flak from residents associations. The
strips needs to be scaled down, so it be. After all,
project has got misrepresented in popular
retailers will move to where the business is , he
media as being a tug-of-war between retail and
says.
resident's interests. The reality is that the
developmental agenda has to be inclusive and it
Everyone always talks of the
critical importance of location but
you may not be able to choose. The
challenge is to make the best of
even obviously handicapped
locations.We have successfully
pioneered upper floor stores with a
combination of innovation and
brand equity.
V P Harris,
Managing Director, WITCO.
V P Harris, Managing Director, WITCO
and Althaf Harris, Director, WITCO
60
01
July 2013
Harris says the key challenges in the business are
Brand WITCO
competition from the unorganized sector and
WITCO's own label is one of the oldest luggage
the increasing costs of raw material. One other
brands in India. The brand was given a makeover
perennial problem is that SME retailers who
and re-launched in 2012 and currently
believe in the rule of law and are strictly tax-
contributes about 30% to topline.
WITCO
complaint always remain at a great
follows the classical private label strategy of
disadvantage compared to the competitors who
offering feature rich quality at a similar price
are not, he adds.
point to international brands. Since we are in
constant touch with the travelling customer, we
know the needs of the customers better and the
features they need or do not need. We can
implement these in a timely fashion, says Harris.
From concept to the market, we take less than
180 days, compared to the industry standard of
365 days, he adds. Margins on the WITCO's inhouse brand are higher by 15 percent compared
to the national brands. WITCO has also launched
a number of events to promote adoption
and
spends about 5% of its topline on these. The
event calendar spans on end of season sales,
back to school promotions, a Handbag gala
This is a business with
Customers all around you, Apart
from the obvious, the retail clientele, you need to look and treat your
Landlord, your Suppliers, the Govt
authorities and these days even
your Sales team as Customers! .
Althaf Harris,
Director, WITCO.
and an Office Bag expo.
Source: WITCO
61
July 2013
WITCO on Technology
Technology @ Witco
The company has invested to streamline the
Ecommerce
supply chain for its own label and has launched a
loyalty program, called the WITCO Priority Club.
Sept. 2013
Loyalty Program
Priority club customers are offered free home
delivery, free after sales service irrespective of
Social Media
warranty periods, travel tips and updates and
other special offers.
Supply Chain
Currently, Priority
customers account for about a fourth of total
revenue. On the anvil, is an e-commerce portal with a twist.
What we plan to do with the e-
commerce version
•
E-commerce platform to be
positioned as an in store sales
aid. Extension of the “endless
aisle” concept.
•
Active loyalty program.
•
Social media as a brand
engagement platform. Target
segment adoption of smart
phones is currently low.
•
Supply chain investment to
promote private label volumes.
is to use it to sell online
within the store. In other words, the portal will
serve as an extension of the brick and mortar
store
and further add to the perception of a
'long tailed' range of merchandise. It should go
live in a month and half. says Harris.
The next step is likely to be Social Media
engagement. We find that there is an increasing
adaption to use Social Media. But it's not as high
as it's made out to be.
For a category like
luggage it's arguable if Facebook can help sales
at the category level. At a brand level, yes, it can
help with engagement and informing
customers - the same way we do through our
membership program. Another dimension is
that a large part of our target customer base has
not yet adopted smart phones. Also internet
usage i.e., using the 'net to gain product
information or make a purchase decision is still
Source: WITCO
pretty limited , says Harris.
62
July 2013
More than social media, WITCO has found that
operations as their requirements are specific and
SMS campaigns undertaken in consonance with
represent the implementation of a carefully
its event calendar to be very effective.
thought-out strategic rationale.
Increasingly, we are seeing customers willing to
be 'impulse' buyers even in the luggage
category.
We see this at our mall stores (in
In my view, when generational shifts happen,
you have to step back and that's not always the
Forum mall in Bangalore and Vadapalani in
case in a business house
he says, wryly. In our
Chennai). says Harris.
case, we've made sure that both my children are
not only qualified but also skilled, having
undergone practical, high street, selling and
Next gen WITCO
design experience respectively, in other
Both of Harris's children have are now actively
inducted into the business.
markets .
As part of the
transition, he has stepped back from intensively
monitoring operations and has begun to devote
his considerable energies to industry
development activities. One area he does remain
involved in is in a daily scan of all customer
feedback which is faithfully recorded for each
transaction at each store. That's the one thing I
won't give up
it keeps us grounded and in
touch with the market , he says.
He serves on a number of committees and is the
Chairman of the South Indian Council Chennai
Chapter - of the Retailers Association of India.
Son Althaf handles business development and
For a category like luggage
it s arguable if Facebook can help
sales at the category level. At a
brand level, yes, it can help with
customer engagement.
V P Harris,
Managing Director, WITCO
buying while his daughter Amina, handles
communications and store design. For WITCO,
store design is a critical component of
63
July 2013
The 'last' mover advantage
We were one of the last 'silk saree' brands to enter
the Chennai market. That meant that we've had to
answer one simple question which would arise in
every customers mind: Why RmKV?
says K.
Sivakumar, Managing Director of RMKV Silks.
The answer to that question sent Sivakumar and the
company on a quest, which resulted in an institutionalized process of innovation to deliver something
new every year.
Back in the 1990's when I spoke to our manufacturers about product differentiation; I was told that it
wasn't feasible to manufacture the kind of sarees I
K. Sivakumar,
Managing Director,
RMKV Silks
wanted to bring out. But my brother told me, Kal e
erenje paar, kal vizharda, maanga vizharda in other
words If you think the tree is fruit laden, throw the
stone, and let's see what falls back
the stone or the
fruit .
That statement was Sivakumar's inspiration.
Uncle - don't you have
anything for youngsters?
The second incident which was a catalyst for him was
an interaction with a customer and her granddaughter. The old lady liked what I showed, but the
grand-daughter was not interested
I asked her
What is wrong?
64
July 2013
RmKV’s hall of fame.
Unique use of Leno
technology in
saree weaving .
40% lighter than
conventional silk.
Lino
Raja Ravi Varma’s
painting captured
in 6 yards of
resplendent red.
Hamsa
Damyanthi
Created by applying
optical art (inspired by
Victor Vasarely) Blending
of perceptual abstraction
and psychedelic colors
Embossed design silk, created
using a patented, first of a
kind technique.
Nagasu
Varnajalam
65
July 2013
Uncle I have seen everything
don't you have
anything for youngsters?
That's when I realized that not only did we need
something different, we needed to make sure
our products connected with tomorrow's
customer , he says.
We are one of the last to come
to Chennai. So we had to ask, and
answer the question in the customers mind Why RmKV?
Tamil Nadu has always
K. Sivakumar, Managing
Director, RmKV.
stood for Bharathiyar
and Pattu (silk)
To create a one-of-a-kind product, Sivakumar
great grand-daughter. RMKV started to receive
resorted to
orders from the Chennai market even though
connecting one tradition with
another . One of the most emotive symbols in
they did not have a store there.
Tamil Nadu
is the poet Subramanya Bharathi.
created a problem of plenty for us , says
Popularly known as Mahakavi Bharathiyar, his
Sivakumar, Because - it takes time to weave
poems were responsible for igniting nationalis-
them, they need 40,000 cards on the loom versus
tic fervor in the 1940's in the then Madras
the usual 500 for other sarees. We also realized
Presidency and served as a bridge between the
that we would need to work to change the
freedom movement in the rest of India and what
mindset of weavers and take control of our
became the state of Tamil Nadu.
supply chain if we have to deliver regular doses
We worked with a designer to translate
That saree
of innovative product .
Bharatiyar's 'Chinnanchiru Kiliye' into bharat-
In 2001, RMKV participated in an exhibition in
natyam 'abhinayas' and asked an artist to draw
Bangalore. The response to their theme of
poses which were woven into the border .
product innovation was well received by a
The saree was well received, Ananda Vigadan (a
popular regional publication) carried a lead story
about the saree, and it was worn by Bharatiyar's
cosmopolitan metro market. That gave us the
confidence to set our sights on Chennai and to
think about making RMKV a national brand says
Sivakumar.
66
July 2013
Staying classic with Silk
One of the challenges the company faced was to
ensure that replication by others did not dilute
Along the innovation trail, RMKV has also
the positioning in the customers mind. Of the
discovered what their product promise does not
three, Design, Fabric and Color
stand for. Silk is a very traditional product. You
that color gives us the maximum competitive
can't deviate too much. For example, one of the
edge. says Sivakumar. That focus on color, in the
conscious calls we took was that we will not
form of the 50,000 color saree, and the optical
deviate from the structure of a saree. The saree is
illusion saree is about creating visibility, not
a garment, it must stay that way so we don't do
volume.
things like fusion sarees with pockets or zip-up
saree to sell
sarees.
Fabric,
sustain our 'innovation in product' promise The
Color and Design and we innovate through the
market had other ideas. Customers were willing
loom
to buy because it was different, even outlandish.
Our mainstay is innovation
we've found
We didn't expect the 50,000 color
for us it was about being able to
RMKV now provides a Weaver to Wearer line,
where customers can get any color from a
palette of 125,000 colors woven on demand.
 Technical specifications on warp, weft and dinear (thickness)
and dyeing standards adhered to.
Innovating through the loom
 Enforced through a Quality Circle of 2000 master weavers.
Certified by the Central Silk Board of India.
Fabric
 No glue used while weaving – ensures longevity of product.
 “Lino” sarees to reduce the weight of silk sarees, encourage
adoption by the younger segment.
 The reversible saree – 2 colors and designs on either side
with 4 pallus
 Theme based design using local icons and festival themes.
Design
 Example: For Bangalore market, Belur, Haleberu sculptures.
Bharatiyar in Tamil Nadu; the Padmanabhapuram palace in
Travancore for the Kerala market.
 Varnajalam saree: applying optical art to a silk saree.
Color
Source: Interview & Store visit.
 The 50,000 color saree
 “Weaver to Wearer” policy – Customizable for the consumer,
from a palette of 125,000 colors.
 Creates high barriers to replicability.
67
July 2013
The anatomy of quality
Delivering innovations on color, fabric and
Our focus on design innovation means that we will not
tamper with the Grammar of the
saree.
K. Sivakumar,
Managing Director, RmKV.
design with assembly-line like consistency has
meant changing the design of the supply chain.
For RMKV this part of the journey was not so
much about technology as it was about
collaboration.
There is an in-house R&D unit, and the company's own production is certified by the Central
Silk Board of India, at each stage of the produc-
Left: Manual loom
used by weavers.
The arrow shows the
pedals that the
weavers have to
move. For theme
sarees, the number
of these movements
can be high, creating
physical load on the
weaver. This is the
reason RmKV has
i n t r o d u c e d
hydraulic looms.
Pedals in the
manual loom
68
July 2013
tion process
from casting, to twisting, to
weaving to dyeing.
We have a Quality circle of 2000 master weavers
where we regularly share knowledge and train
them. Given the kind of product innovation we
want to do, we have to partner with them to
change their mindset and we also pay them
better than market. With 7 stores to be 'fed' we
have to ensure that the people at the other end
We ve introduced hydraulic
looms to reduce the physical load on
the weaver, without compromising
on craftsmanship.
K. Sivakumar,
of the chain also benefit.
Some of the design innovations in process have
From a quality perspective, RMKV provides
been patented
reversible silk sarees, creating
manufacturing standards and carries out
embossed designs on silk. Other innovations in
inspections to ensure that they are adhered to.
the manufacturing process include the introduc-
As an example
tion of hydraulic looms to reduce the physical
and insist that no glue be used in the process of
load on the weaver. Weaving our kind of sarees
weaving. Silk is naturally stiff, but softens as it
often takes more cards than the normal silk
gets seasoned. Using glue while weaving makes
saree
says Sivakumar, pointing to a traditional
the final product softer which creates higher
loom on display at his store at the Forum mall in
consumer acceptance at the point of sale, while
Vadapalani in Chennai.
reduceing the longevity of the silk. So, it's a
they specify weft insert levels
tradeoff. We don't allow our weavers to use
The weaver has to get up, stand on the pedal to
glue, instead we explain to customers, why the
move the loom. To make this easier, we've
silk is stiff and show them the correct technique
created hydraulic looms which need less force.
to drape it when new.
That means that skill at weaving is not linked to
physical strength, so women, for example can
RMKV also inserts a holographic logo into the
also graduate to becoming master weavers .
weave of the saree. This was done initially, back
in the 90's, to distinguish own manufactured
RMKV has created a Design Studio where they
product from the product we sourced from
experiment with themes using CAD / CAM
others. Over time, it has become a mark of
before moving towards production.
quality , says Sivakumar.
69
July 2013
The price of innovation
Does innovation and investments in R&D make
sarees more expensive? The R&D budget is not
passed onto the consumer , says Sivakumar
We spend between 7 and 15 lakhs per concept
saree but we can't load that into the price. Other
than that, manufacturing standards (e.g. deep
dyeing, or specifying twist warp 22 to 24 dinear
per inch)
these things will translate into a cost
increase of 2 to 3 paise per gram. The trade off is
that these standards increase the longevity of
the saree.
And since we stand by these
standards, we are willing to take returns even
after 25 years. Using the hologram we can track
the purchase
the customer does not need any
record of the same .
Finding people
RMKV's biggest challenge today is to find skilled
weavers. Weaving is not considered to be a
'destination career' and master weavers are not
respected socially and in the marriage market.
The amount of physical labor involved is high.
RMKV has patented and mechanized parts of the
process, without losing the artisanship of the
final product. The company has also partnered
with the government, so that weavers who join
the quality circle are eligible for a subsidy of up to
90% of the Rs. 30,000 it costs to buy a loom. The
70
July 2013
partnership came about because the company
was willing to share its technological breakthroughs in its collaborative efforts with the
government.
The pull factor
RMKV has also been using technology to pull
customers.
They have an active ecommerce
portal which, in addition, to the normal features,
also gives allows customers to
Our model of managing our
supply chain is to make freely
available, patented manufacturing
innovations to the Government and
to train the weaver community.
shop by
occasion . In addition they have a loyalty
program ( Bonus ), and are becoming increas-
K. Sivakumar,
ingly active on Social Media via Facebook. One
innovative practice is Skype sells - using video
chat in their stores so that transactions with
overseas customers are more inclusive and
Technology @ RmKV
 Strong e-commerce presence, focus on
Ecommerce
Loyalty Program
overseas customers. Functionality to “shop
by occasion”.
 “Bonus” Loyalty program
 Social media is 1.5 yrs old, growing base.
Social Media
Supply Chain
 Focus on supply chain – collaboration based
model which makes patented innovations in
manufacturing available to government,
weavers.
71
July 2013
The call of the Mall
In the last 2 years, RMKV has adopted the mall format
to sell. It started in 2010 when they set up a store in the
Brookfields mall in Coimbatore. There were apprehensions on whether people would visit malls for
wedding purchases. But the store is doing well and
this gave us confidence to open in more malls. says
Sivakumar. They have opened in Orion mall in
Bangalore and recently in the Vadapalani Forum mall
in Chennai.
One of the reasons is that
T. Nagar is getting
saturated , says Sivakumar. Congested roads and lack
of adequate parking space tend to put off the young
and the more affluent shoppers. We want to tap
these shoppers too and hence we decided to expand
in malls. Rentals in malls are cheaper compared to the
high-street. Running costs are also lower thanks to the
shared facilities such as parking, security and
generators, points out Sivakumar. The feedback from
the malls has been good. Even loyal customers at our
T. Nagar store are curious about our mall stores. To
cater to the more cosmopolitan nature of the mall
visitor
RMKV is using a Silks of India theme in its
An innovative practice is Skype sells - using video chat in RmKV
stores so that transactions with overseas customers are more inclusive and
visual.
72
July 2013
A place for Professionals
One of the drivers for scale is the ongoing
integration process to infuse professional retail
T. Nagar is getting saturated.
Younger affluent customers are
willing to go to malls and shop for
occasion wear. That s a trend we
cannot ignore.
skills into the company. Not only does it leave
the owners free to focus on the core of our brand
promise which is innovation, but the fact is that
professionals get into the kind of detailing,
which, as an owner you don't have the bandwidth for.
says Sivakumar.
Secondly, the
product promise of innovation serves to attract
K. Sivakumar,
professionals who see the opportunity to be part
of that dynamic. The company has professional
managers heading the marketing and technology functions and the plan is to integrate them
into other functions, going forward.
Future forward
The design for the future is to expand into Hyderabad and Kerala. One of the models that Sivakumar
follows is that of localized product . Given diversity of customer taste
the focus of expanding reach
into new markets is to learn what switches to push in the customer mind. For example
Bangalore
customers are demanding, knowledgeable and very cosmopolitan in their tastes. They are driven by
convenience, and are not as price sensitive as a customer in Chennai or Kerala where the brand is the
main pull says Sivakumar.
It has taken RMKV 85 years to come from Tirunelveli to Chennai. With that kind of foundation, expanding
into the north and then internationally is likely to be - correspondingly and exponentially - shorter. If you
think about it, there is 'design innovation' in that logic as well.
73
July 2013
Spice up your Life
We were in this business before words like 'gourmet',
and 'delicatessen' were used and before people knew
what Master Chef was , says Sunil Sanklecha, Managing
Partner of Nuts'n'Spices.
His story started 65 years ago, when his grandfather
started a store, named after himself - M Kewalchand &
Co. Sanklecha dropped out of school in the 11th grade
to help his father with the business. In the mid-90's he
had an idea of creating a specialized store for dry fruits,
and the first
Nuts'n'Spices
was opened in
Nungambakkam in 1999.
Sunil Sanklecha,
Managing Partner,
Since then the company has set up 21 stores
19 in
Chennai & 2 in Coimbatore, and the plan is to grow that
to about 30.
Nuts n Spices
74
July 2013
Surfing the wave of
changing tastes
There is an element of serendipity about
Nuts'n'Spices timing in terms of its venture.
While the country liberalized from 1991
onwards, successive trade and EXIM policies
have dismantled / reduced duties on many of
the categories of specialty food. At the same
time, current account convertibility together
with a thriving IT sector and sustained high
Consumer tastes in Chennai
are not as conservative as popular
stereotypes suggest.
Sunil Sanklecha,
Managing Partner, Nuts n Spices
growth GDP put purchasing power into the
hands of a class of customer who travelled, and
experienced different varieties of food.
That has increased the market potential in
Chennai
in 1999, we thought that the market
In the last 15 years, the SKU's in the customer
would be saturated after 5 stores today we are
fridge have increased exponentially Tastes have
at 19 stores and looking at another 10 stores
changed, have become more cosmopolitan.
within the city .
Of course , he adds
Chennai still cannot
compare with Mumbai and Delhi which are
In the last 15 years, SKU s in
the customer s fridge have
increased exponentially. Tastes
have changed and become more
cosmopolitan.
order of magnitude richer and more exposed to
global media and trends
but it's certainly
nowhere as conservative as popular stereotypes
suggest .
- Sunil Sanklecha,
75
July 2013
One trend he has noticed is that in the last 3 to 4
month, because customers have discovered a
years, the purchasing power of the middle class
new cooking medium and are willing to make
salaried income segment is actually higher than
things like salads and pasta at home. Similarly,
the self employed or traditional businessman
customers who previously used only butter or
class i.e. what is considered old world wealth.
jam
are today using spreads like Nutella,
peanut butter, marmalade etc.
In the last few years
most of the business is
Lifestyle and
eating habits have changed. Even a category
coming from the mid segment. People who
like juice
would previously pay Rs 50 for a Ketchup bottle
bought juice
are now willing to Rs 120 for a 60 ml Tobasco
OnJus. Now it's a standard part of the weekly
sauce bottle. In 1999
olive
grocery list, and there are 10 or 11 brands of
oil is going to be sold for massage purposes only.
various segments of juice - unsweetened, mixed,
Initially we didn't stock 5 litre cans because we
pulpy juice - in the market .
we used to think
back in 2000 not too many families
and there was only one brand
didn't think customers would buy those. Today
we sell 120 numbers of the 5 litre cans per
76
July 2013
Transitioning to being an
Emerging retailer
professionals. When we become a multi-state
player that's something that will happen
naturally
is his relaxed answer.
For Nuts'n'Spices, the last 15 years have seen the
transition from a traditional, cash based retail
business to modern format retail, based on a self
service, open aisle design and automated billing.
The family took some time to accept the
change, but now, the prevailing view, even
among people of my father's generation is that
'it's easier to pay tax and relax than worry . That
transition means that there is a degree of
flexibility about whether the next generation
will come into the business. Well, we are three
brothers and two of us are involved in
Nuts'n'Spices. All of us have one son each
but
It's about the bottom line
Sunil's mantra has been to focus on profits and
his assessment of the pan-national retailers who
are in investment mode is characteristically
blunt I don't see how anybody who builds a
thousand crores of turnover at a EBITDA loss of
Rs 200 crores can ever make money. For us, the
focus on store profitability is paramount and we
are one of the most profitable in the Food and
Grocery segment in India .
the choice to enter the business is voluntary
That focus has driven overall business design.
Given the business model, at the current level of
scale Sunil doesn't see the need to induct
Keeping it profitable
Depth: Single
city brick and
mortar network
Small store
format
Private label
merchandise
Supply chain
leverage
E-commerce for
breadth of reach
77
July 2013
For Nuts'n'Spices, economic recessions which
have taken place twice since 2000 have not had a
business impact. Adopting gourmet food, is a
lifestyle / habit change. Once consumers adopt,
they will not easily relinquish such structural
consumption changes. The bigger challenge
was building the brand. From day one, I was
clear that I wanted to build this as a brand. I never
thought about it on a commercial basis. We
continue to focus on improving the product line
and keep our positioning as a premium store .
Maintaining quality of merchandise is
something that Nuts'n'Spices keeps a vigilant
eye on. Sourcing an agricultural product is not
easy. I knew the ins and outs of the business so
for me it was an advantage. For Diwali, we start
holding stock six months before. Crop failures
given that gourmet food is an adopted taste area
can be taxing .
in Indian Kitchens. Typically, customers spend 10
This is one of the reasons Nuts'n'Spices has
minutes and they would spend between Rs 2000
followed a depth over breadth approach.
and Rs 3000. In a small format store 600 to 1200
The company has expanded to become the
sq feet
'neighborhood' store in many of the micro-
supports 15 turns of stock in a year says Sunil.
that leads to superior ROI
and
markets in Chennai, but has retained its focus on
the small-store format. For us, our model is
That level of inventory stock turns, is at par with
based on small stores
global retailers like TESCO who turn over stock
i.e. between 1200 and
1500 sq foot of plate size. Also, we have a
between 16 and 18 times
different take on customer convenience. Bigger
scale.
stores mean a range of merchandise which is
at a much larger
One of the other reasons the group has held back
outside the comfort zone of the customer
78
July 2013
from expanding outside Tamil Nadu is the
That supply chain advantage is historical
absence of a uniform Goods and Service Tax
has leveraged past relationships in the trade and
(GST). Without GST, expanding to other states is
extended them to sourcing for agricultural
like going to another country. says Sunil. They
products for the snacks and dry fruits segments
are not worried about 'losing' the first mover
of the merchandise mix.
advantage because their merchandise mix is
inventory is built about 3 to 4 months in advance
heavily weighted in favor of their own private
and we manage this carefully so that we are able
label products.
to ensure that we don't drop our stock turns
Sourcing for agricultural
produce is complex in India
building a supply
Sunil
For these segments,
metric he says.
chain takes time to perfect. The reason the
business is robust is because of the time spent on
For other retailers, the share of specialty foods
this area already. With GST coming in it would be
would be 5 to 7% of the turnover which means
possible to scale this model into other states.
that management attention to sourcing would
This is not a barrier to entry, of course, but it does
be proportionally lower. For us - about half of
buy us time and it's not easy to replicate in India.
turnover is from our private label snacks so we
- he says.
are going to work to shave every last paise of
inefficiency from our supply chain. That's what
makes the model robust. Once we get a stable
tax regime (via GST)
we believe this would be
saleable to other markets
Without GST, expanding to
other states is like going to another
country.
- Sunil Sanklecha,
but in each case we
would move in a measured manner
after
ensuring that the supply chain arrangements are
in place and pass quality standards.
The focus on profitability together with
measured growth has translated into the
company being a zero debt company, funded
entirely by internal accruals. That's a model he
wants to continue.
People have come calling
on us with structured solutions for capital
management
whether it's private equity or
venture capitalists. We listen to all of them but,
79
July 2013
frankly, more than capital, we would look at
is based on impulse buys
the ticket size of
someone who has a long history in the business,
online sales is lower. What happens is that
can add value to us and is willing to be a strategic
people who come into the store usually end up
partner. We're not keen on a pure play financial
increasing the cash-memo size due to impulse
investor; we would not want to give up control.
buys. But of course, every online order is
We are not building this to sell after all . For the
additional business so we don't really have
same reason, he doesn't believe in franchising as
concerns about that , he says.
a means to achieving scale.
It also means that the company does not want to
do anything, which will distract the
in-store
customer from the billing process. For example,
The focus on profitability
together with measured growth has
translated into the company being a
zero debt company, funded entirely
by internal accruals.
they found that 'Live cooking demos' in-store
lead to a higher number of abandoned carts.
Given the small size of the store, the distraction
factor for both customers and staff is high and
creates lines at the single billing counter. If the
line grows more than 3 deep, customers will
abandon the transaction and chose to leave.
Because of the high level of impulse buying,
Depth over Breadth
billing delays directly translate into lost sales .
The approach of depth over breadth also drives
the e-commerce business design. Nuts'n'Spices
launched their e-comm. portal a year back and
they use it to service customers who have moved
out of Chennai but have seen high adoption by
existing customers in Chennai.
So, I expect in
about 3 years that e-commerce would reach
significant volume for us. Because specialty food
Specialty food is a category
where the number of Impulse buys
are high. Any marketing effort
which creates lines at billing means
abandoned carts and lost sales.
80
July 2013
While they are planning to launch a loyalty
Technology @ Nuts'n'Spices
program by September, they are active on Social
media
and use Face Book as a infomercial
Ecommerce
platform. For example one of our posts which
spoke about using Apple Cider Vinegar as a
Loyalty Program
Sept. 2013
home-made cure for an upset stomach attracted
Social Media
a lot of likes . The company has also seen that
email marketing with targeted offers,
Supply Chain
undertaken on a Friday afternoon (i.e. just in time
for the weekend spend) are successful.
Currently we deliver all over the country
it's a
•
Strong e-commerce presence,
used to create virtual national
reach, backed by pan-India
delivery capacity.
•
Loyalty program to be
launched.
•
Social media is main
mechanism for customer
engagement.
•
Focus on supply chain –
collaboration based model
which leverages on past trade
relationships. Physical supply
chain arrangements managed
by vendors.
pre-requisite in this business, especially in order
to handle peak festival season volume. Our
target though is the retail market
and not
institutional orders .
A future expansion area is the NRI market. We
are evaluating the economics of international
delivery. In addition there is work to be done on
understanding regulatory and a food safety
standards for that segment , says Sunil.
Storming the bastion
Nuts'n'Spices wants to occupy the gatekeeper
to Chennai
position.
From a strategic
perspective, anybody who wants to enter
Chennai in the food category, should come in
through us
twinkles Sunil as he signs off.
Source: Based on interview and store visit
81
July 2013
T echnology Nagar
One of the questions posed to all the retailers covered in this issue was their perspective on
technology in Retail i.e. on E-commerce, Supply Chain, Loyalty Programs and Social Media.
E-commerce
The graphic summarizes the key words used by the various retailers when they described their ecommerce ventures.
Attract younger shoppers
Innovation “Shop by occasion”
Extend the “Endless Aisle” concept
“Create National Reach”
“Satisfy repeat orders”
Source: Interviews
Growth by Design
Extension of the Store window
82
July 2013
In each case, the e-commerce portal is seen as an
extension of the core business design and
strategy. For example; in RmKV's case, business
and marketing strategy is driven by innovation
so the e-commerce portal features a Shop by
occasion functionality which layers consumer
need over product. Nuts'n'Spices, Nallis, Naidu
Hall and VBC all use the e-commerce portal as
variants of a theme of
reach .
WITCO is
planning to use the e-commerce portal as a instore sales aid
so that customers can view
We do everything possible to shave
the last paise of inefficiency from
our Supply Chain.
- Sunil Sanklecha,
Managing Partners, Nuts n Spices
merchandise not available in-store and still buy.
VBJ is branding its e-commerce portal (Za Amor)
volumes are high which means, as Sunil
and using it to attract the younger segment of
Sanklecha of Nuts'n'Spices puts it
customer with differentiated merchandise.
everything possible to shave every last paise of
We do
inefficiency from our supply chain .
Supply chain
Loyalty & Social Media
All the retailers featured have made significant
Most of the
Most retailers have a loyalty program or are
investment is technology but for some, e.g.
about to launch one in the next six months.
RmKV and Nuts'n'Spices the investment is also in
Customer acceptance is high, except in the
the form of creating collaborations.
jewellery category, where there has been some
investments in supply chain.
resistance from the traditional customer base to
As Kodandarama Setty from Viveks puts it In the
last 20 years, power has shifted from the
Manufacturer / retailers to the consumer.
Consumers are unwilling to pay for inefficiency,
which puts pressure on retailers and
manufacturers to eliminate the same from the
value chain .
For all the featured retailers, private label
being enrolled in the program. Some of the
programs are starting to mature; accounting for
more than 30% of turnover (as is the case with
WITCO, Nuts'n'Spices, and RmKV in Bangalore).
Retailers are also using sms and email campaigns
to communicate with members
e.g.
Nuts'n'Spices, and WITCO both use these media
to inform customers about the latest offers.
83
July 2013
Nallis is the only retailer who is not planning to
launch a loyalty program this is a consequence
of the fact that they do not believe in
discounting the product.
When it comes to social media, all the retailers
agree that it is an important engagement
platform but the direct connection with
incremental sales is unclear. Facebook is the
medium of choice, and brand personalities
assert themselves in the tone of voice used. For
example
VBJ uses trendy, inspirational
statements; Viveks uses a factual tone, Nallis
focuses on design, Nuts'n'Spices uses an
infomercial tone
focused on educating the
consumer about new food categories.
84
July 2013
Transition in Owner Managed Retail companies
One of the objectives of profiling the key
Family as University
retailers in the T. Nagar market was also to
get a sense of the ownership dynamic in
these companies. Two specific questions
were raised.
A common refrain (4 of the 8 retailers
interviewed) was that the family serves as a
university
for transmutation of
commercial and technical skills. As
When Gen Next from the family takes
Kodandaraman Setty of Viveks, explains,
over, how does that generational shift work?
 When and why do Owner driven Retail
The next-gen in an owner driven company

companies attract professionals?
have skills, a sense of ownership and a deep
consumer connect .
While a sample size of 8 interviews is too
small to draw statistical conclusions, the
following themes emerged:
Return on Proprietors' time
3 of the 8 retailers interviewed believed that
bringing in professionals frees up the owner
•
•
•
•
Family serves as a “university” to
transmit commercial and technical
skills.
Professionals are attracted by the
opportunity to be part of emerging
businesses in the Owner Driven
Retail company.
Bringing in the Pros can maximize the
Return on Owner’s Time and create
value for both owner and
professional.
Scale needs Professional skills.
to focus on the core of the business. That
core could be different: for a jeweler it might
be design or supply chain to guarantee
purity, for a retailer of consumer durables it
could be consumer connect. Armarendran
Vummidi, Managing Partner, of Vummidi
Bangaru Jewellery, summarized this best
when he said The business gains because
the Return on Proprietor's time is
maximized .
85
July 2013
Scale needs Professionals
This came through very clearly with seven of the
eight interviewees endorsing this view.
Businesses such as Nalli's which now have a
national footprint, or RmKV (which has a
presence in multiple states) have also inducted
professionals at senior levels. The entry of gennext usually spurs this shift, since they get
involved with expansion plans with the
attendant need for standardization of process
and policy. Many of the retailers have inducted
professionals in the corporate center functions
such as HR, Administration, Visual
Creating - for Gen-Next to grow
Whether the entry of gen-next is voluntary or not
varies from case to case and is an individual
decision. However, what does come through is
that the business model changes to
accommodate the aspirations of gen-next. For
example RmKV's move into manufacturing and
oversight of the supply chain was driven by the
need to innovate, Nalli's has expanded into
jewellery as a category as well as into other
markets overseas and within the country. In the
case of Viveks, there are plans to look at the
service business as a separate internal division to
be handled by one of the next-gen
entrepreneurs.
Merchandising, Technology, Supply Chain and
Marketing all of which drive standardization in
a growing organization.
Business design attracts
professionals
The 'design' of the business refers to the one
overriding principle or positioning that each of
these Retailers straddle in the consumers mind.
These are (sometimes unstated) brand values
for example, with Nalli's it is reliability & quality,
with RmKV it is Innovation.
Jewellery as a
business leads to a focus on design, while for
Nuts'n'Spices its adoption (of a new category of
food) by the consumer. For a brand like Vivek's
its Trust. These design principles were cited as
Technology for customer connect
One of the recurring themes among ownerdriven retailers is the use of technology for
customer connect (7 of the 8 retailers
interviewed mentioned this). While this is a
stated objective of every retailer in the country,
owner driven retailers see technology as a way to
create scale and retain customer connect.
Whether its targeted SMS campaigns from each
store of WITCO or Nuts'n'Spices or using skype
sells sessions in RmKV the focus is on adopting
technology as a means to the end. None of the
retailers interviewed spoke about long IT project
implementations, or were frustrated by silo-ised
IT teams, they spoke about the impact of
technology. That single factor was telling, and is
probably on account of the difference between
the 'fact' of ownership and the 'sense' of
ownership that professionals bring.
reasons for professionals to join the company.
86
July 2013
Customer Speak
With 59 malls in pipeline, southern cities represent 56% of the country's future mall supply
between 2012 and 2016. New mall capacity is projected to come up in Chennai, Bangalore and
Hyderabad.
RAI undertook a dipstick study of 100 consumers in Chennai and asked them whether they
preferred to shop at a mall v/s a high street such as T. Nagar. Customers were polled at both
locations.
87
July 2013
Afterword
Since I don't come from the retail sector, and have no professional links to
retailers, except for the happy accident of being married to one, interviewing
eight names in retail was interesting, challenging and insightful.
At the end of a hectic three days in Chennai, crammed with back-to-back
interviews, I was left with an overload of information and two clear insights.
The first was awe at the level of passion that it takes to build a business. The
second was appreciation of the depth of thought-clarity that each retailer has
for his business. Each of them has a clear view on where he wants to take the
business, and everything else is subverted to that vision
be it people,
process or technology.
This publication is my salute to those eight, crystal, sparkling strands of
thought.
Vidya Hariharan
Grey Matter Incorporated.
Mumbai.
88
July 2013

T. Nagar

Transcription

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