Amit Bagaria's Blog

This is THE SIXTH PART OF ‘YESTERDAY ONCE MORE’ – A series of stories initiated by Images Retail about successful local OR REGIONAL retailers spread across urban India, who continue to expand and grow despite tough competition from national and international retailers.

Following the closure of 2 Big Bazaar outlets in Ahmedabad, in September 2008, The Economic Times termed Ahmedabad as a retail graveyard. “The consumption pattern of local consumers has been a roadblock to modern retail. Although the cash-rich Gujarati consumer has lured brands to Ahmedabad, low acceptability of modern retail will turn the city into a retail graveyard,” commented analyst Harish Bijoor at that time.

Just 19 months later, the spectrum auction for 3G telephony saw the bid for the Gujarat circle at Rs.416.42 crores at the No.2 spot in the country, just a lac under the Rs 416.43-crore bid for Delhi. This article about three of Gujarat’s local retailers will show that the telecom services companies are wiser than modern retailers. I just don’t understand why modern retailers give up so easily – why they cannot analyse hard facts.

NARENDRA MODI’S TAILOR IS WORTH `80 CRORES

50-year old Jitendra (Jitubhai) Chauhan was only 17 when he used to do cutting and stitching in his father and elder brother’s tailoring business.  Today, he does a turnover of more than `100 crores from 23 retail outlets (7 JadeBlue and 16 Greenfibre) occupying about 71,000 square feet of retail space. JadeBlue sells more than 10,000 Modi kurtas per annum. “I took permission from Narendrabhai (Gujarat CM Narendra Modi) to use his name – after all, he is a loyal customer for more than 15 years,” says Jitubhai proudly.

JadeBlue was awarder as the Most Admired Regional Independent Fashion Retailer of 2009 at the 10^th Images Fashion Awards.  Jitendra Chauhan was awarded the Atlas Diamond Outstanding Entrepreneur 2009 by the Ahmedabad Management Association. In 2007 and 2008, JadeBlue received the Color Plus Best Dealer of the Year awards.

Armed with a B.A. in Psychology, straight out of college in 1981, Jitubhai, then just 20, opened a small retail store of just 250 square feet named Supremo Menswear in the Ellis Bridge area of Ahmedabad.  It sold fabrics and did tailoring. Jitubhai used to do the cutting and stitching himself. “The education in psychology taught me how to deal with customers and get to know their likes and dislikes,” says Jitubhai.

Encouraged by a few friends and with their investment, in 1984, Jitubhai set up a 10-machine factory in the basement of his store, to make RTW shirts, under his own brand D’Peak Point. He supplied these shirts to small retailers (indirectly known to him through his friends’ circle) in Mumbai. When a huge amount of money was stuck for almost a year, on enquiring, Jitubhai was told that the shirts were not selling in Mumbai.  He got the unsold stock back. His friends wanted him to sell these shirts at deep discounts through Ahmedabad retailers.

Instead, Jitubhai opened a RTW shirts showroom in 1986, just above Supremo Menswear, connected by stairs. “This was the biggest turning point of my life,” says Jitubhai emotionally, “if the shirts were not returned unsold from Mumbai, I would not be where I am today.”  In 1987, he expanded the store size and added RTW trousers.

Eight years later, in 1995, on the auspicious day of Dussehra, Jitubhai opened the first JadeBlue store on C.G. Road. He combined four shops on the first floor of a shopping complex to make one large store of 2800 square feet. The brand JadeBlue was developed with the help of celebrity graphic designer Subrata Bhowmick, an NID alumnus and creative consultant at leading communications agency Mudra (now owned by Anil Ambani’s ADA group). The word “jade” stood for the premium offering and “blue” because it was men’s favourite colour (it is mine). The letters J & B also stood for the first name initials of Jitubhai and his brother Bipinbhai. Jitubhai had requested Subrata dada to come up with a brand that would withstand time and would be accepted internationally. This only goes to show that Jitubhai was (is) a true visionary. He is also very humble, as he egged me to give credit to Bhowmick for the brand and the logo.

JadeBlue sold fabric, RTW shirts, trousers, sherwanis and kurtas and two non-house brands – Freelook and Killer. Four years later, Jitubhai more than tripled the store size, added a few brands and became a true MBO.  His motive was to give a wider choice (“basket”) to customers. Today, JadeBlue carries almost 40 brands, including Arrow, ColorPlus, Energie, Fahrenheit, Nike and UCB.

In 2000, he shut down the original Ellis Bridge store, as it was too small. The next year, JadeBlue added a 3500 square feet section for the dulha collection. Today, the C.G. Road JadeBlue is a 13,000 square feet men’s store and does annual business of more than `30 crores.

The first store outside Ahmedabad (5200 square feet) opened in 2004 at Baroda.  Two years later, a 6500 square feet store started in Rajkot, followed by a 13,000 square feet store at Surat in 2007, the second store at Ahmedabad (6000 square feet in the Mani Nagar area) in 2008, another 6000 square feet store at Vapi in 2009 and the first store outside Gujarat – 8000 square feet at Indore – in 2010.

The Gujarat CM is not the only celeb to be counted amongst JadeBlue’s clients. The owners of companies such as Nirma, Adani, Cadilla, Torrent and several IAS/IPS officers are also regulars.

In addition to the seven JadeBlue stores, there are 16 stores (of 600-900 square feet each) of their VFM brand Greenfibre, including 3 SIS inside Central. Jitubhai expects to grow his turnover from the current `100 crores to over `250 crores in two years. Almost 70% of the current turnover comes from western wear, 20% from ethnic and the balance 10-11% from tailoring and fabrics.

On being asked about a 5-year plan, Jitubhai smirked that he can’t think five year ahead. He plans to open two stores of 2000 square feet this year – one each at Nagpur and Raipur – which will carry only house brands. The regular JadeBlue stores (6000 – 12,000 square feet) will open at Nagpur, Pune, Hyderabad and two at Mumbai.  “I know that Mumbai will not make money, but will give us much more fame and national recognition,” says Jitubhai, without flinching.

Apart from apparel, JadeBlue only sells accessories. Even footwear is not a part of their merchandise mix. Jitubhai says JadeBlue can be compared with other retailers such as Options in Mumbai, Jai Hind in Pune, Hi Style in Chennai, Prestige The Man Store in Bangalore and Kapsons in Chandigarh.

In addition to his brother Bipinbhai, their two sons assist in the business. Bipinbhai looks after the tailoring and fabrics business.  Although JadeBlue needs capital to fund its growth plans, Jitubhai is averse to raising private equity, “as the PE guys do too much interference.”  On being asked whether he is planning an IPO, the award winning Gujarati self-made retailer Jitendra Chauhan politely avoided answering the question as “he had to attend a wedding”. I am sure that the dulha wore a sherwani from JadeBlue’s dulha collection.

THE ASHOKA TREE BLOOMS

What JadeBlue is to men in Gujarat, Asopalav (Ashoka tree in Gujarati) is to women.  Founder Hirabhai Bhansali was also 20 years old (his father was a sahukaar, or moneylender) when he started a 500 square feet Asopalav store in 1968 – in his native place, the ancient fortified town of Patan, 108 km from Ahmedabad. The store sold cut pieces (fabric). The current population of Patan is under 200,000. History has it that Patan was the 10^th largest city in the world back in 1000 AD (1011 years ago), with a population of 100,000 people. The city-kingdom was destroyed by Alladin Khilji in 1298.

The very next year, Hirabhai opened another 500 square feet store – this time at Palanpur – 27 km away from Patan.  Palanpur’s population back then was less than 60,000. The Patan and Palanpur stores are still in business today and have both grown to about 2000 square feet each.

Six years later, Hirabhai (with his partner V. Vohra) opened his third store of 750 square feet – this time in the Ratan Pole area of the state capital Ahmedabad. This store has grown 10 times in size today. This was followed by a 5000 square feet store (now 15,000 square feet) on Ahmedabad’s Ashram Road in 1985. For the next 14 years, no new stores were opened by Asopalav.

The fifth store in the chain was started at Surat in 1999 – it occupied an area of 7000 square feet, and this store today does higher business than the similar sized store in Ratan Pole, Ahmedabad.

In 2001, the Bhansali and Vohra families diversified into IT, with a development facility at Cincinnati, Ohio, USA. They also have a centre at Bangalore. Two of Vohra’s sons look after this business.

In 2006, Hirabhai opened a 60,000 square feet superstore in Ahmedabad’s Satellite area. This is one of the largest women’s wear shops outside of southern India and does a business of almost `130 crores, although Hirabhai declined to disclose sales figures. Asopalav sells saris and lehenga-cholis from all over India (priced from `500 to `250,000), dress materials, salwar suits, western wear and jewellery.

Hirabhai feels that Asopalav has no competitors in Gujarat. His store is like Benzer in Mumbai or Frontier in Delhi. When he goes across the country for sourcing merchandise from weavers, Hirabhai often bumps into 33 other large women’s ethnic wear retailers. “We are a group of 34,” he says, “Chiman Savla of benzer, S. Ramesh of Pothy’s (Chennai), Beena Kannan of Seematti (Kerala) and T.S. Pattabhiraman of Kalyan Silks (Kerala) are all good friends of mine.” That’s national integration.

According to Hirabhai, the women’s ethnic wear market in Gujarat is worth between `3500 and `4000 crores. As per Asipac’s research, this is almost similar to the market size in Kerala and half of the market size in Tamil Nadu.

“Gujarat is termed as the graveyard of modern retail because people here want quality at fair prices and are very calculative,” says Hirabhai Bhansali, “people have lost trust in malls and modern retail because they don’t offer quality.” I hope Manoj Modi of Reliance, Kishore Biyani, Kabir Lumba of Lifestyle and Govind Shrikhande of Shoppers Stop read this.

SURAT’S ACQUISITION KING

With a population of more than 5.5 million people, Surat is the ninth largest city in India. Gujarat is only the second state (after Maharashtra) to have more than one city in the top 10.

Just after independence, Dhirajlal Modi started a kiraana shop in the old city area of Bhagal. 37 years later, his three sons (Rajnikant, Bipinbhai and Prafulbhai), then aged 36, 34 and 32 respectively, started an 1800 square feet self-service convenience store named Dhiraj Sons, in Surat’s Athwa Lines. The store also sold crockery, home appliances and watches.

Another 16 years passed by. In 2000, a 16,000 square feet (mega) store was opened close by within the Athwa Lines area. Categories such as luggage, footwear, hosiery, fashion jewellery, gifts and cosmetics were added. In 2003, the 7600 Kutchi Superstore at Parle Point was acquired and converted into a Dhiraj Sons store. In the same year, the 42,000 square feet Rita Supermarket at Nanpura (Surat) was acquired and converted into a branded apparel megastore under the name of Dhiraj Sons Fashion World.

The sixth store of 9000 square feet was opened in 2005 in Surat’s Sumal Dairy area. Apart from grocery, crockery and watches, this store also has CDIT products. The next year saw the opening of two new stores, a small store of 4500 square feet in Bardoli (population 70,000), a town built for NRIs, 30 km away from Surat; and a 9000 square feet store in Surat’s Kumbharia area.

In 2007, the 7000 square feet Picnic Supermarket on Gordor Road was acquired (their third acquisition) and converted to Dhiraj Sons. Last year, the 10^th Dhiraj Sons store opened in the Adajan area of Surat. Apart from these 10 stores, the Dhiraj group also has three small specialty stores – one each in toys, plastics and gifts. Together, the 13 stores occupy a total retail area of about 105,000 square feet, giving the an annual turnover of `130 crores, of which 60% comes from grocery, 20% from apparel and 20% form CDIT and other categories.

The plan for this year is to open 7-10 new stores, in Surat, Navsari and Valsad. “The national retailers will all come and we have to not just compete, but move forward,” says Prafulbhai’s son, Ankur Modi, “we expect to achieve a turnover of `1000 crores in 3-4 years.”  Future Group’s Big Bazaar, Reliance Fresh and D-Mart are already in Surat. Tata’s Star Bazaar is opening very soon.

Commenting on the acquisition of three competitors, Ankur says that “all three shops closed down because they could not compete with us.”  Big Bazaar also shut down one of its two outlets at Surat. As many as seven family members are running Dhiraj’s business – the founder’s three sons and their four sons, and Ankur claims this is the main reason for their success.

Apart from the 13 retail stores, Dhiraj Sons sets up eight temporary retail counters (mostly in tents) during special occasions – selling colours during the Holi festival, crackers before Diwali and decorations before Christmas. Modern retailers have a lot to learn from this Surat retail giant.

Actually, the reverse has happened. Before Big Bazaar opened at Surat, Dhiraj Sons we studied their business model and realized that one of Big Bazaar’s key strategies was to have promotions every Wednesday. Dhiraj implemented this three months before the first Big Bazaar store opened. When Big Bazaar launched their Wednesday promotion, “the people of Surat felt they were getting nothing new,” says Ankur.  Dhiraj repeated this before D-Mart opened. They studied their potential competitor and caught on to D-Mart’s strategy of “daily discounts, daily savings”. Just as in the case of Big Bazaar, three months before the first D-Mart store opened in their home base, Dhiraj Sons introduced a standard 5% discount on all MRP products. Sales volumes have risen 17% since then.

Only one new store has opened in the last 3½ years because the promoters of Dhiraj Sons were busy hiring professionals at all levels and in getting formal training themselves. “We took classes at institutes such as the Leadership Management Institute and attended the India Retail Forum”, says Ankur, “all this has helped a lot.” I hope that modern retailers learn a thing or two from this enterprising Surat retailer.

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