Hailed as Sri Lanka’s first fashion department store, Odel had very humble beginnings. It started off from the boot of Otara Gunewardene’s car and today has 18 stores to sell its brand. Nivedita Jayaram Pawar caught up with the entrepreneur who is now keenly looking at business opportunities in India.
Entrepreneurs are people who revolutionise business, open opportunities for others and change the way we think and live. Otara Gunewardene, founder of one of the largest chains of fashion and lifestyle stores in Sri Lanka, personifies all these attributes. Sensing an opportunity in the garment surplus business, this former model was quick to start selling them to a select group of friends and family – all from the boot of her car. As demand for goods increased, the boot soon gave way to a store on Dickman’s Road and the launch of the Odel private labels. Today, the Odel group is spread across 18 stores and is in the process of building the largest mall in Sri Lanka. Exerpts from the interview:
From selling clothes from the boot of your car to owning 18 stores in Sri Lanka, seems like an incredible story. How did this happen?
Otara Gunewardene (OG): Initially, my plan was to work with animals. That’s what I wanted to do all my life. After studying biology in an American university, I came back to Sri Lanka with the intent to work in the field of animal research and conservation. But fate had different plans for me. I got involved in modelling and the entire fashion business. However, my father always wanted me to do something in business, so he went ahead and registered the company Odel (O from my name Otara and Del is my second name). Around the same time, in 1986, the garment industry in Sri Lanka was flourishing. My friends in the business didn’t know what to do with the surplus stock. So I would go to their factory and pick up the garments. Initially, I sold these from my house to friends and relatives. I would carry the garments in the boot of my station wagon and show them to friends and fellow models during rehearsals or after a show. I also supplied the surplus garments to other stores in Colombo. It earned me good money which I kept rolling to buy more stock.
So when did you start your first store and what were the learnings from that store?
OG: My first store was a very small 500 sq. ft. outlet that was opened in 1989 at Dickmans Road. I put up a few rails and shelves to display the garments and hired two sales staff who are still with me. My mother used to help me with the cash point. Subsequently, I started making promotional T-shirts for companies. Around the same time, I launched a line of animal design T-shirts to promote wildlife. It was our first in-house label. Called Embark, it’s still one of the best sellers. The store started gaining popularity with tourists, airline crew and expats. Apart from surplus garments and the animal line tees, we also started doing a small range of sovereigns called LUV SL.
Looking back, what do you think were the factors that made Odel popular?
OG: One of the reasons why Odel could strike a chord with people at that time was the fact that we offered something different. Our range was not run of the mills. It was handpicked. We were fashionable and trendy with a narrowed-down choice. As an MBO, we get many choices on offer but it’s about how you select and narrow it down that makes all the difference. After the positive response we received for our first store, we started expanding to malls and hotels. I had nine stores by 1993. By then we had become a real company.
What were the challenges in bringing up the brand to where it is today?
OG: The biggest challenge was to find the right product at the right price with all the duty restrictions that we had. Sri Lanka, unlike anywhere in the world, has some of the highest duties. This acts as a major handicap as you can’t offer your customers all that you want to offer. The duties on shoes were as high as 400 to 500 per cent. It has come down over the years. But it’s still high as compared to global standards. So, the custom duty was the biggest hurdle.
Finding the right staff was another challenge we had to face. The floor staff can be brought at par with intensive training. But it’s the senior staff that is a challenge, especially when you are a leader in the country in retail. You need experienced people to grow the business further. That’s a constant challenge. But, fortunately, we are seeing a lot of experienced professionals who stayed abroad coming back to Sri Lanka. We have recruited quite a few of them.
You have no degree in fashion or business management. Did you see that as a hindrance in the journey?
OG: I don’t think so. In fact, I feel if I had a degree in business I would have stayed in a box, or within the limitations of what you are taught in business school. If you want to stand out and be noticed, you have to do something different. And it’s better not to be told what your limitations are. Since I didn’t know much, I looked at the business with fresh eyes. As the business turned around, I had to learn the financial aspect of running a business. Now I am very well aware of it. I learnt everything on my own – from marketing and selling a brand to the presentation part of it.
What about people management?
OG: I have a team of extremely focussed, dedicated and driven people who really love what they do. I think it’s the constant innovation that keeps them on their toes. I don’t allow them to stand still. That makes you complacent. I believe each one of us can do better and as a leader it’s my job to get them to do better; to drive them to achieve more. I don’t need people who put eight hours of work and go home. There are plenty of other places where they can do their 9 to 5 jobs. At Odel, every employee in every department is challenged to do their best, and I know very well that they can.
What are the day to day challenges that you have to face?
OG: Every day, there are pressures and pleasures. You can’t grow a business if there are no challenges. The usual challenges are the top line growth, profits and margins. The biggest problem is that the growth in a particular department never stays that way. It’s always a task to find out what’s wrong when the sales are plummeting. No department or product range stays steady. You have to keep your eye on every category, range and department.
Secondly, the duties continue to be high. It’s 50 to 60 per cent on apparel and almost 100 per cent on shoes. The market in Sri Lanka is not mature enough to take the very high-end goods. The volume is very small and you can’t sustain the business by selling only high-end products.
What’s the retail environment in Sri Lanka today?
OG: It has certainly changed a lot since the war. There are opportunities galore and space for growth. There is an increase in tourism – from 4,00,000 to 1 million and the target is 2 million by 2015. All these factors help and contribute to business. There are a number of new brands and stores opening in Sri Lanka. So there is a huge opportunity.
What’s the Odel turnover and at what percentage is the business growing?
OG: Last year, we grew by 22 per cent. Though there has been a slight drop this year, it’s still positive. The growth percentage was higher in the range of 30 per cent in years before that, as we opened quite a few stores. Last year, we didn’t open any new stores since we opened eight in the previous two years and we wanted to consolidate the growth. Now we are looking at opening a few more stores. The turnover last year was LKR 4 billion. We are looking at LKR 5 billion this year.
Tell us something about your private labels? How do they contribute to the overall revenue?
OG: We realised early on in the business that the surplus concept was not a long-term sustainable format; always depending on others’ leftovers. So we moved away from it and launched our own labels. The contribution of our private labels is quite high at about 50 to 60 per cent. Odel, Embark (the animal range), Backstage (the accessory line) and Luv SL (the sovereign line) are some of our private labels. On offer under the Luv SL label are T-shirts for ladies, gents and children; boxers, ties and cuff links; mugs, cloth bags, slippers, body lotions, pens, pencils, notebooks and other items of stationery; picture frames, toys, baby products, essential oils, lacquer ware, masks and an extensive collection of elephant souvenirs. The fastest growing segments within Odel are men’s and women’s apparel and accessories. I think it’s a global trend. Our brands Embark and Backstage are doing very well.
Tell us something about your marketing strategy.
OG: We try to be very different and clean in our advertising. We are not a discount format store. Our communication is in line with the brand ethos. It’s really important that the marketing and branding match what is on offer at the stores. We advertise in newspapers and magazines, apart from a lot of social media. We have a very active facebook page. There is a dedicated team that works on the regular updates, promotions and communication for social media. We have recently updated our corporate site and now offer online retail too. The online sales have been encouraging. Our facebook page receives the third highest traffic in Sri Lanka. As a unique initiative, I invited some for our facebook page fans to join me in opening our new stores. Instead of just updating the site with offers and promotions, it’s always nice to have a dialogue with the customers.
Our loyalty programme, which was launched last year, now boasts of 70,000 customers. We also conduct mystery shopping regularly. If a department is not doing well, we do an ipad survey of around 8 questions. This immediately throws up the reasons for the downfall and we can zero in on the issue. It could be something as simple as poor lighting to a narrow choice in merchandise.
What are some of the qualities that have helped you achieve what you have today?
OG: That’s a difficult one. It’s a combination of total dedication and drive. I am very focussed. I believe one should openly accept the challenges that comes one’s way. I love what I do and I am totally committed. To some people it may be too much. But for me there are no half measures. Either you do it to the best of your abilities or you don’t start it at all. I still have a lot to achieve. On holidays, I long to get back to work after the fourth day. I wonder what I’d do if I didn’t have this. I am considered a tough task master. I think you need to give proper direction to the team you lead. Eventually, the team you lead reflects who you are and the state of the company. People may crib but eventually
they like it if they are directed to be better than what they were yesterday.
What is the biggest consumer insight you have gained over the years?
OG: Consumers are not so much bothered about the price but about the product – its quality, style, feel, and look. For us price is always the third criterion. It’s the product, the atmosphere and then the price in that order. I am always working on improving the product line and bring in newness. As a consumer that’s what they like to see. In Sri Lanka, we are perceived to be high-end and slightly premium. But I believe if the customer can’t afford some of the items at Odel today, they might want to come back and buy it sometime later. It’s always nice to build a segment of aspirational customers.
Has there been any course correction along the way?
OG: Yes. As I said earlier, we are not a mass brand. But there was time when we thought that we could be, especially during the recession when we tried to offer cheaper products just to be able to be affordable to the people and try to sell more and make margins. But that didn’t work. Our customers want to stand apart and they want differentiated products for which they are willing to pay more. But there was a time when we thought we had to do more volume but it didn’t work and we had to drop that strategy. The biggest lesson we learnt from it was that no matter what recession takes over, you don’t change who you are and what your brand stands for. You may need to fine tune a little bit. It was a mistake to change who we are.
Going ahead, what are your expansion plans?
OG: We are in the process of building a mall this year. It will house shopping, entertainment and food. The first Odel Mall will be 3,50,000 sq. ft. and will be ready in a year near New Parliament, Kotte. We are planning to open two more malls in the coming years. On the store front, we will be opening around four stores this year.
Last year you sold a majority stake in the company to Parkson Malaysia.
OG: Yes we did. Parkson is a large business group with 130 department stores in China, Vietnam, Malaysia and other countries. The move was to bring in more funds for the expansion in order to take the business to the next stage. I still think we are quite small because I know how much more we can achieve. My biggest dream for Odel is the Odel Mall, which we are building right now. I am really excited about it.
Lastly, what are your plans for India?
OG: I made multiple trips to India a couple of years ago as retailers there were very much interested in our accessories range, Backstage. But it required me to have the business there and send the consignment. It was a bit difficult to get that going. By then the war here in Sri Lanka came to an end and things really started moving, and I decided to focus here.
We have a very good Indian client base who loves the Odel brand. Even the Indian cricketers and prominent personalities who visit Sri Lanka always come to Odel. So yes we know what the Indian customer likes. And we would love to come to India. But this time it will be with a bigger concept and offering. With Parkson in the picture, we will be looking at launching in India with a bigger format and not just with our accessory range, Backstage. For the moment we have big plans for Sri Lanka and we need to get that off the ground. But very soon we will be looking at India.