This session is to soak in the wonder of shared thoughts, joys, successes, and yes, failures too. How else will we get to the next level, if not together and without being inspired by each other and learning from each other’s foibles?
“My one wise decision, and a goof-up”
Chief executive officer, Hidesign
In India, the great plus for us has been the launch of the brand Salsa, aimed at the younger and more price-sensitive audience. The brand was launched in early 2006 and we recently opened our first standalone Salsa store in Delhi. The brand has met with very encouraging response. In fact, we are now quickly ramping up our production capacity to meet the growth in demand, and have had to put some of our distribution expansion plans on hold till we can meet the demand from the existing distribution points.
Internationally, we decided to ramp up our retail presence globally and opened our exclusive shops in Gottenburg, Copenhagen, Pretoria, Kuala Lumpur, and St Petersburg. This is not just giving the brand a tremendous boost in terms of its image, but is also helping us grow the distribution much faster in the regions.
In India the big bloomer for us was when we decided to go ahead and launch our first Hidesign couture store in a Delhi-based designer mall that did not have the necessary approvals. The result was not just the financial loss we suffered on account of the mall being demolished, but also the setback in terms of our plan for the launch of the brand. It is a lesson we have learnt to ensure that we are absolutely certain about the location before we make any investments.
For Russia, we had taken a decision to be choosy about the malls we want to be a part of, and as a result we opted out of some of the malls Ikea is building there. They have plans to launch 18 malls over the next five years, so we may end up weakening our association with one of the fastest developers in the region. This is something we will have to wait and watch.
Inder Dev Musafir
Director, M&B Footwear
Our tie-ups with large-format retail stores to open shop-in-shops within their stores, was probably the single-most correct decision that I took in 2006. This gave us the opportunity to tap the already existing customer base created by the big department stores, without bothering about effective footfalls. The complete effort was put behind product planning and conversions. This also proved beneficial for the large retail players, as it was a category outsourced to an expert player in the line of business, on a revenue sharing model.
The one goof-up that I can admit to, was being over-ambitious in signing up certain retail spaces, and being the first to open shop in a new mall. The definition of the mall being functional does not have any written parameters in our country, and therefore, in the initial six-to-nine months, the only person who is making money in the retail business is the real estate developer.
Managing director, RayBan Sun Optics India Ltd
One great decision of 2006 was to change the salary structure of frontline sales team to strike the right balance between fixed salary, commission and bonus. This worked like magic, taking motivation and morale to new highs. A highly-charged field force is a powerful competitive advantage – in a service industry it is the difference between success and failure. It is the motivation of the people, not the furniture or computers you use, that differentiates a winning organization from a mediocre one.
One goof-up was prioritization of top-line numbers over credit control to meet trade-fair shipment targets. Overriding credit controls never work; it is a short-term “solution” for meeting short-term targets and while the trade partner has a hundred good reasons to offer, they invariably boomerang. In an environment where legal enforcement of a simple commercial contract is next to impossible, credit control is a matter of survival.
After the initial frenzy of the launch of Orra, while we had the option of aggressive growth, in 2006 we decided to focus on profitability and consolidation. This meant slowing down on the number of our store openings and rationalising of costs including our marketing budgets – a huge call for a brand that was launched only a couple of years back.
While consolidation helped us build stronger systems for future growth, the reduction in new stores meant higher pressure on same-store sales. Also, the reduction in marketing costs implied the need to build and create excitement through alternate channels such as public relations and word-of-mouth.
In retrospect, the focus on profitability and consolidation was a good decision as same-store sales are up by over 30 per cent. Overall company sales went up over 40 per cent, with a huge impact on profitability and brand awareness.
On the flipside, due to our focus on consolidation, we did not set up two extremely high-end boutiques in Mumbai and Delhi catering to a new segment of elite/super elite. These launches have been deferred to 2007, since the market is seeing a consistent growth in high-value luxury purchase.
Well, the one decision that I took right in 2006 was to hire a young dynamic team for our new set-up in India. I very strongly feel that it was the best decision for the year gone by, because I have seen this young team work extremely enthusiastically! The best part is that they do not carry any previous baggage from the earlier organization and, hence, are all set to give in their best at work. Another advantage of this is that I am able to connect with them not only at a professional level, but also at a personal level.
Now, coming to the decision where I feel I have goofed-up…. Honestly, I have never looked back to what has gone wrong. I have never let my past affect my present. I believe in working towards my goals and living life to the fullest!
Executive Director, House Full International
Retail is usually identified with its competition. Diverse sales channels, global players and changing customer preferences have altogether created stiff competition that is putting the retailer’s profit in tight pressures.
The profitability is impacted by both top-line and auxiliary expenses. When we launch a new retail venture and a new format, the location becomes a very critical issue. I took a call on the launch and roll-out – both in metro and non-metro cities. More than calculated risk, the decision was almost akin to gambling since we were working with an advance format like home improvement, a big-size plate, and that too in second-tier cities. Furthermore, we were even taking the suburb in two-tier cities. Today, we are all pleased about this decision at House Full, as the way customers responded at all locations has proved us right. Our ability to explore the business drivers across business locations, the challenge to understand and manage the business effectively, is realized.
The goof-up was listing too much advice/caution on second-tier city launch and delaying another nine small town-location lease sign-up for three months, resulting into incremental rentals at later stages.
Chief executive officer, S Kumars Nationwide Limited
I joined S Kumars in May 2006 as the chief executive officer of their new business of home textiles.
We had the direction and understanding of the market. We wanted to become the number one brand in the next three years. So, our primary objective was to build a brand in the first year of operation. This was a challenge by itself. With a highly competitive and unorganized market, we unleashed our brand Carmichael House in a manner which has helped us build a strong brand recall for the entire chain – right from our suppliers and channel partners, to consumers and investors. A strong product range along with an impressive communication platform brought in good results. In just over five months of operation, we have signed up over 100 exclusive retail shops over multiple formats and have built up product placements in over 300 multi-brand outlets. It was the decision to do multiple brand-building activities in tandem that has helped us.
However, all this takes a lot of energy, drive and patience. Although all our activities were thoughtful and were backed with proper plans for implementation, we did not completely deliver and fulfill the demand our launch generated from the consumers. One of the primary reasons for this was the weak supply chain and also the slow pace of retail shop-opening activity. Due to many reasons, we could not start as many exclusive shops as we had planned. I suppose a right mix of architects, contractors and IT support would have helped. This, in spite of getting shops signed up. Nevertheless, the activity is now in a good pace.
Had we moved slowly, we would not have been able to achieve our objective for year one of operation. With this learning, I am confident Carmichael House will be the number one home fashion brand in the near future.
Subhinder Singh Prem
Managing director, Reebok India
We were riding on a growth of 50 per cent in 2005 (over 2004) and had already cornered 50 per cent of the market share. We knew we had maximized the distribution pipeline. If we tried to push too hard, we would have collapsed under unprofitable sales. That’s the time when I realized that instead of looking for a step up, we should look for a step change. We would “load the wagon”, but instead of riding the normal wholesale/distribution channel we thought of creating a consumer channel that could funnel the latent demand. We would create our “own retail.”
True, we had 200 exclusive stores by end-2005. However, our exclusive chain was simply another channel of sales working alongside the dominant wholesale/distribution channel. The plan was to flip it around completely, stay focused, and keep our fingers crossed.
At this point, I am happy we took the decision. We have bettered our growth of 2005 and ended the year at a growth of 55 per cent. Today, our exclusive store channel contributes to over 60 per cent of our sales. In terms of sheer numbers, we have doubled our exclusive stores in one year. We opened more than one store every second day, taking our tally to 405 at the last count. In terms of scale, recently we opened a Reebok Store in Jubilee Hills, Hyderabad, with a size of 18,000 square feet. Today, we have the best retail in the best locations at the best rentals, which is a sustainable competitive advantage. We have also expanded in B and C category towns covering 130 of them. Now we have an exclusive store in places like Begusarai (Bihar), and Jharsugoda and Angul (Orissa), to name a few.
The one miss of 2006 was the kidswear business. Internally we had a couple of meetings, but never really committed ourselves to putting the shoulder to the wheel. The year rolled by. It was only towards the end, after observing consumer buying patterns (the influence of kids with double-income parents, the increasing aspirations of even low-income parents to get the best for their kids), that we woke up to the reality of a new India where kids were no longer the marginalized consumer segment. As 2006 drew to a close, we realigned ourselves. We realize that the problem was not in the business, but in the manner that we were approaching it in terms of product offering and the channel of sales. We have done our course correction and Reebok hopes to make a mark on all the kids of India in 2007.
Country manager, Levi Strauss India Private Limited
The year is no longer significant as a chunk of time. Given the scorching pace of our economy and the rate of evolution of the controlled-retail, branded-lifestyle category, 12 months is too long a period to reflect on and too far away to wait for results. We are going through a phase of “here and now”, and what comes to mind is the short poem I was taught in Class V – “kal karey jo aaj kar, aaj karey jo ab, soch soch key hey vats, beet na jaye barso!”
Actually, at this stage and especially for brands like Levi’s and Dockers, there are very few wrong decisions. Our ethos is – do the right thing, do things right, and you will get the right results. Hence, the big difference between success and failure is to do with the timing of decision making or the scale of the decision rather than the decision itself.
The decision we took at the right time and in the right scale was to invest in large-format retail and build our brand through compelling retail experiences. We have realized that retail is just not one part of the brand, but is the brand itself. This realization and the decision to invest top dollar in retail helped us build stores like the Levi’s Square on Brigade Road (Bangalore) and South Extension (New Delhi), and the Dockers flagship stores on Brigade Road and CG Road (Ahmedabad). These stores have powered the brands to life in a six-dimensional sense, and continue to create compelling moments in the lives of our consumers.
What we could have done faster and better is to capture even more space in well-managed malls and high streets. Today, we need almost double the space in almost every mall or high street that we are present in, and the space is just not available anymore. There are consumers out there who are keen to buy good brands and products in an international shopping environment. The sooner we provide the same, the faster we make the future happen. Twelve months is too long, dear readers… we need to make tomorrow happen yesterday!
CMD, Shahnaz Husain Group
“We achieved an ayurvedic coup of sorts with the opening of the Shahnaz Ayurveda Aesthetic Clinic at Harley Street in London. Harley Street has become synonymous with the finest medical care in the United Kingdom. To open a clinic in such a prestigious location is no mean achievement, and I think it is one of the best decisions. Ayurvedic beauty treatments have become an important part of cosmeceuticals – cosmetics used for treatment by doctors. The apostles of western medicine have finally recognized the importance of our ancient Indian healing system. I have dedicated my life to spreading the Indian herbal heritage with a crusader’s zeal and the Harley Street clinic is a giant stride forward. The clinic is operating on our franchise system. The wife of a British plastic surgeon, practising on Harley Street, has opened the clinic on the same premises, in order to incorporate the Shahnaz Husain ayurvedic treatments as an alternative to certain cosmetic surgery procedures. The curative aspect of Ayurveda cannot be ignored. We have seen the miraculous effects of ayurveda on the skin. The opening of the Harley Street clinic has strengthened the position of the Shahnaz Husain brand and its global presence.
“We were offered six acres of land by the Noida Development Authorities, to set up a factory. It was an attractive deal. I decided to take three acres and refused the balance three, telling them I did not need that much land. Immediately after refusing it, I realized I may have made a mistake – a terrible goof-up! I faxed them back to say that I wanted the total six acres. But, by then, it was gone to the next lucky buyer. What a major goof-up! Never have I felt so sad at my instant answer and instant loss. If it had not been for the goof-up, our factory would be double its size.”
(An excerpt from IMAGES Yearbook, Vol IV)