Amit Bagaria's Blog

This is the SECOND in a new series of stories initiated by Images Retail about successful local / REGIONAL retailers spread across urban India, who continue to expand and grow, despite tough competition from national (and in some cases, even international) retailers.

The grandson rises in the East. This statement would not be very unrealistic in the context of two out of the three retailers from Eastern India in this story.

Little Shop is growing up

Founded in 1967, for 36 years, there was just one Little Shop in Kolkata, selling children’s garments in the iconic New Market – India’s oldest enclosed mall.  The retail business was not given too much importance, as the family concentrated on their main business of exporting children’s garments.

Then, in 2003, Shiv Daswani, the 26 year old grandson of the founder, armed with a MBA from the UK, opened the second store – an 850 square feet “little” shop at The Forum Mall on Kolkata’s Elgin Road.  The shop was very different – it had a modern, self-help format, compared with the traditional counter service format of the New Market store. “Our export business exposed us to international environments and best practices,” said Daswani.

Following another five year hibernation period, in 2008, the now 31 year old and more experienced Daswani opened a 2700 square foot flagship store on the Ground Floor of South City Mall. Based on extensive in-house research, the (much) larger store had an expanded merchandise mix, including books, toys, basics for newborns and infants, nursery furniture, footwear and a wide range of accessories for children. “I made a list of everything required for a child, from a parents’ perspective,” Daswani says proudly, “If you came with a list of eight things and couldn’t find four of them, you would never come back to Little Shop.”  The gamble paid off and there’s no looking back ever since.

Regular customer Payal Himatsingka says “It is very good for newborns up to the age of three. It stocks toys and accessories, apart from clothes. It is like a one stop shop for children.”

The not-so-little flagship store at South City Mall today clocks estimated annual sales of `12-15 crores (Daswani declined to disclose the numbers).  The store has witnessed 7500 footfalls on a single day. Another 2100 square foot store opened the same year at Mani Square Mall, followed by an 1800 square foot store in 2009 at Ambuja Realty’s City Centre New Town (Rajarhat). The sixth store opened in August on the Ground Floor of Forum Courtyard, the brand new annexe of Forum Mall.

“(Mall developer) Rahul Saraf had the choice of giving the shop to Next, The Body Shop or some other international retailer, but I persuaded him to give it to us, based on my being able to convince him that we had done very well with our first store at Forum Mall,” says Daswani, beaming with pride. While this new format store at Forum Courtyard – branded as Baby Little Shop – caters to 0-2 year olds, the older and smaller store in the adjacent Forum Mall caters to the 3-14 age group.

“Little Shop is very well known since the last generation. My mother tells me that she used to buy clothes for me as a child from Little Shop. They have been one of our best tenants, especially the manner in which they maintain the store. They have great visual merchandising and are the only retailer who keeps their show window lights on until the last movie goer leaves the multiplex,” comments the promoter and developer of Forum Mall and Forum Courtyard.

Little Shop is amongst very few local retailers in India that have strategically chosen to grow only through the mall route, as opposed to the more popular choice of high streets. “At New Market itself, we had realized that malls were better and more convenient for families, especially in extreme weather conditions,” says a confident Daswani, having tasted success in malls.

Daswani is emphatic (and very emotional) about his conviction that he will not sell the business to a Reliance Retail or a Mahindra Retail, even if they offered him a high valuation, but he is open to a minority stake sale, if this brings in the capital and the bandwidth required to experiment a national model. He believes that there is no real direct competitor to his multi-category format today, although he is watching out for Lilliput World, as and when it opens at Kolkata.

By 2015, Daswani hopes to have 10-15 stores in Eastern India.  He has no plans to go national, as he feels that he neither understands other regions as well as local retailers in those regions, nor would mall developers in other regions give him the right locations, as they don’t know him or his business. Although he has more than 20 franchising offers from people who are continuously chasing him, he is in no hurry to grow. Micky Jagtiani also started with the Baby Shop, didn’t he?

Sreeleathers is NOT FOR SALE

Manoj Modi does not seem to have too many acquisition opportunities, at least in Kolkata. Just like his fellow “city”zen Shiv Daswani, Kolkata based Sushanto Dey of Sreeleathers also won’t sell his `140 crore footwear retail business, even if someone offered `75 crores to buy him out.

Daswani and Dey share the same initials (SD) and are both grandsons of the founders of their respective businesses.  That’s where the similarity ends.  Malls do not feature in Dey’s dictionary, he is already franchising (Dey calls them dealers) and Sreeleathers has gone national.

Sreeleathers’ first store opened in 1952 opposite New Market. Today, the chain has 31 stores, of which 26 are franchisee owned and operated. Apart from eight stores in Greater Kolkata, there are stores in Delhi’s Connaught Place, Varanasi, Raipur, Bhubaneshwar, Cuttack, Jamshedpur, Ranchi, Dhanbad, Bokaro, Patna, Muzzafarpur, Gaya, Bhagalpur, Guwahati, Asansol, Behrampur, Purulia, Naihati and Malda. While researching Sreeleathers, I refreshed my high school geography with my son’s help. A new 8000 square foot store is opening in Jaipur this year and a 10,000 square foot one in Chennai next year.  All stores are on properties owned by the family or by individual franchisees. “We don’t believe in paying rentals,” Dey says, “so we cannot be in malls.”

He sees everyone from a Bata and a Reliance Footprint to a footpath vendor as competitors. “We take Reliance Footprint very seriously,” comments Dey. Last time I looked, there were no footpath shoe vendors in Bangalore at least, thank goodness.

Regular Sreeleaethers customer Cheryl Ann says “They have shoes, chappals, belts, bags and leather accessories which are durable and suitable for rough handling.  Shoes are priced `200 to `800 while chappals are available even below `200. The most expensive shoes at Sreeleathers cost less than the cheapest shoes of its rival shops.”  Nishant Kumar Pandey adds “Sreeleathers is known for durability and economic cost, if they could work out on varieties and style, they will be the No.1 in India.”

This 58 year old pure retail business (Sreeleathers does not manufacture any products) sells all products only under in-house brands.  Four family members are involved full-time in the business.  One of Sushanto’s uncles has diversified into the hospitality industry.

Sushanto Dey believes that The Loft – a retail chain promoted in the early 2000s by the well-known real estate developers Hiranandanis – failed because they only had premium offerings.  “Bally is the Porsche of the footwear retail sector, Metro is like Audi and we are the Maruti,” Dey says, “see who is the biggest amongst them in India.” I’m still trying to figure out where Bata and Reliance Footprint figure in this analogy.

Sreeleathers has been instrumental in the establishment of many footwear retail hubs across the country. After they opened a 2500 square foot store in the basement of a building at Patna, four other footwear retailers opened shop in the same or adjacent building. A similar mushrooming effect has been witnessed across other markets too, but Dey is quite humble about the phenomenon and does not want any credit for it.

G. Sankar, Chief Executive of Reliance Footprint, says “They are a good value retail player. They do well in the eastern parts of the country, especially in Kolkata. In footwear circles, we talk about their crowd pulling ability during the pujas in Kolkata which is almost surreal – thousands of people wait in long queues outside their shops. This is very impressive – how many other businessmen can boast about customers standing in a queue to buy their product?”

Shoppers Stop of the North East

Variety is the spice of life, the popular 18^th century English poet William Cowper wrote. Manohar Lal Jalan of Assam’s retail chain Sohum Shoppe – winner of the Images Retail Award for the Most Admired Regional Independent Fashion Retailer 2009 (East Region) – is not the grandson of the founder. He is the founder.  He does not speak in English as well as Shiv Daswani or Sushanto Dey.  In fact, he does not speak as much as them either.  And he is ready to sell his business, if he gets a good price, of course. Is Kishore Biyani reading this?

Guwahati (Assam) based Jalan, 54, came from a family in the business of sarees, operating under the regionally popular brand of the 1980s Assam Silks.  In the early 1990s, Jalan recalls that, following the success of Kishore Biyani’s John Miller shirts – then retailed at `110 – he also started a readymade shirt brand named after a West Indian cricketer (he couldn’t recall the name) and priced it at `90 per piece.  This business did not do as well as anticipated.

In 1996, he was visiting his cousin in Mumbai.  He wanted to buy some socks and handkerchiefs for himself, as these were not easily available in his home town – Guwahati.  But he was too embarrassed to tell his cousin this – instead, Jalan asked his cousin where he could buy readymade shirts and trousers. His cousin directed Jalan to the only Shoppers Stop outlet at Andheri – India’s first modern department store.

He reached Shoppers Stop at 4pm and left at 9pm, but did not buy any socks or handkerchiefs in the five hours he spent there – not because they didn’t have any, but because he was so mesmerized with the shop, he completely forgot what he had come there for. He went back the next morning and spent the entire day there, followed by the same routine the next day. By the third day, he was convinced that “I can also open this type of shop back in Guwahati.”

Jalan spent almost 25 extra days in Mumbai, during which he went to Shoppers Stop each day. Fascinating, isn’t it? Well, it was for me, when I heard the story from the man himself.

Back home, this 40-year old entrepreneur starting assembling the blueprint of his own Shoppers Stop. The only high street area of Guwahati in those days was Fancy Bazaar.  A “shop” of 10,000 square feet was available for `3.00 crores. Jalan calculated that the interiors would cost him another `50.00 lakhs and he would have to stock at least `1.50 crores of merchandise.  So, the total investment required was a little over `5.00 crores. He figured that, with such a high investment, it would take 5-6 years to break even – so the business was not viable.  Instead, he bought a 12,000 square feet “shop” on the fourth floor of the building for just `72 lakhs, saving himself more than `2.20 crores.

It was a decision he regrets today, in retrospect.  The first Sohum Shoppe at Fancy Bazaar (named by his guru Sri Sri Ravi Shankar of The Art of Living Foundation) opened in 2000. It had sales of only `15,000 to `20,000 per day in the first five months.  By the third year, the business was still bleeding. He then went back to Shoppers Stop at Mumbai and immediately realized that most people were actually buying well known brands.  He decided to start stocking genuine brands. He got Mont Blanc pens, Swarovski crystals and Lladro porcelain figurines, amongst other well known brands in several categories. And I always thought the places to buy these brands were New York, Paris or Dubai. Anyways, it was then that the business really took off.

When Jalan selected the site for his second store – today the flagship – he did not compromise on the location.  The 28,000 square foot store on G.S. Road opened in 2005. By then, his older son Sandeep (then 24) had joined the business. Sohum Shoppe had arrived.  Three years later, the third outlet opened at Pan Bazaar of Guwahati.  By now, his younger son Siddharth had also joined the business.

In 2009, a 15,000 square foot Sohum Shoppe opened at Dibrugarh.  In just a few months from now, a 22,000 square foot store – the fifth in the chain – will open at Jorhat. For the time being, the Jalans have abandoned plans for a shop at Shillong in Meghalaya state, because of insurgency in that state.  They are looking at Nagaon and Silchar towns in Assam, and are also eyeing Ranchi and Jamshedpur – both cities in Jharkand state – for future expansion. “Business is good, but not in the Northeast,” says senior Jalan, “insurgency is a big problem.”  He considers Pantaloon and local retailer Goenka’s as his main competitors. “Agar maidan bada ho to koi bhi khel sakta hai,” he adds.

Bijan Deka of Guwahati says “One of its kind, Sohum Shoppe is the buzz of town. Its wide range of products and trendy collection of cosmetics, apparel and accessories defines its escalating popularity.”  College student Rakesh Sharma adds “It is the big thing in the world of style and comfort for people of Assam, an exclusive shopping extravaganza at nominal prices. It has a glamorous feel and ecstatic aura to boot. A recommendable treat called Sohum Shoppe.”

Young Sandeep Jalan feels that the future is very bright. Sandeep has brought in many changes in the business. By installing a modern specialized retail software package, he is able to control his inventory better. He has also initiated several activation programs almost on a daily basis to increase footfalls at the Sohum Shoppes.  Let us see what the grandson does 25 years from now, if I’m still writing then.

Amit Bagaria is founder Chairman and CEO of Asipac Projects. If you know about such a retailer in any Indian town (including Tier-II and Tier-III towns), please send the name of the retailer and the city (with contact details, if available) to ab@asipac.com.

This entry was posted on Sunday, November 13th, 2011 at 12:54 pm and is filed under Article in Images Retail. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.