Aditya Birla Retail Limited (ABRL), the retail arm of the Aditya Birla Group with 640 supermarkets and three hypermarkets at Baroda, Mysore and Aurangabad, is one of the major players in the modern retail space in India. With the scheduled launch of a fourth More Megastore hypermarket in Indore at the end of the month, it has further planned to launch more hypermarkets in the major cities and supermarkets across India throughout the year, informs Thomas Varghese, CEO, Aditya Birla Retail Limited.
An engineering graduate from IIT Delhi and an AMP Harvard Alumni, Varghese took over as the CEO of ABRL in 2008 and oversees the overall growth of all formats of the company across India.
He started his career as a Senior Management trainee with the DCM group and was with the group till 1989. He joined Grasim Industries Limited, a flagship company of the Aditya Birla Group, in 1999 as Chief Marketing Officer of the group’s Pulp and Fibre Business. In mid-2007 he moved as Business Head of the Pulp Operations in the Group before becoming the CEO of ABRL.
At present, he is also the Chairman of the CII – National Committee on Retail and a member of the Services Council of CII. While cherishing the moments of success, Varghese shares his thoughts on modern trade in India with IndiaRetailing. Here are the glimpses:
IndiaRetailing (IR): What is the driving philosophy of retail operations at ABRL?
Thomas Varghese (TV): There are two key philosophies that drive our internal systems. First, understanding the customers and the catchment, and then aligning the processes and systems to this understanding is the key to success in the recent context. Secondly, understanding the business model and aligning our operations and mindset to running the business as per the business model is another critical element of the ABRL retail operation. In the process we ensure that all elements of the retail business — location selection, assortment planning, pricing of the merchandise, store-cost economics and our CAPEX — are streamlined exactly as defined by the business model of our group as a whole and this is something that is now well engrained in the DNA of the organisation.
IR: While taking your retail operation forward in the Indian context, what is the biggest learning from the current slowdown?
TV: I am firmly of the opinion that consumers will continue to shop from outlets that offer them value for money. This is particularly true in the food and grocery segment, which makes up a significant component of the consumption basket of the average consumer in modern retail. This theory is even more relevant in the midst of a slowdown. We have continued to grow in the current slowdown by ensuring that we align our consumer-value proposition to offer more value to our customers – in terms of product assortment, pricing of key value items, launching promotional activities, which communicate value to our ‘More loyal club’ members and of course, our private label products, which offer quality products at very competitive prices. This is something that we are emphasising on as every day business in our retail operations.
IR: Your personal vision when it comes to leading your retail team.
TV: My personal goal is to build a business for the long term – not just for the time being. A business that is known for trust, for the quality and value that we offer consumers and a low cost mindset that governs every facet of the organisation. I know that while we combat for short term gains, we are in the business for the long haul and the only way to build a long term sustainable relationship with the consumer is to consistently deliver on quality and value in a manner that is so important for the business. All my actions are geared to deliver on this goal.
IR: Given the two schools of thought that are currently dominating the Indian retail industry — ‘aggressive expansion’ versus ‘slow but steady expansion’ — which has attracted you as your own retail strategy?
TV: Over the last 10 months, we have clearly followed the route of slow but steady expansion. This is a growing business, but it is important to grow profitably in a manner that is consistent with our business model and this has been core to our retail strategy.
IR: Your comment on the expression ‘Powerful Retailer’. According to you, which are the three most ‘powerful retailers’ in the world and why.
TV: There is much to learn from the operations of the international retailers in terms of sourcing and assorting merchandise, supply chain process or their ability to mould their business context to their customer value proposition as and when required. My first choice is Wal-Mart, which has clearly established itself as a powerful retailer in the US context. While Wal-Mart is known as the behemoth it is today, what I find interesting is the philosophy that has shaped its business in the initial years. Tesco is another great retailer who has many lessons to offer in terms of its assortment and pricing strategy, its choice of formats and its operating model as well as its use of data to analyse customer behaviour and shopping trends. Third, I guess, would be Carrefour, which has had great success in several countries through their marketing and operations network.