7 Dec 2020, 15:40 — 10 min read
Every large business starts out as a single store. However, not all single stores manage to become large retail conglomerates with multi-city or even multi-national presence. One of the reasons behind this is a lack of the right guidance on how to go about business, especially in times of crisis. Here is sound advice from some of the most successful retailers in the country on various aspects of running a profitable retail business and making it big.
Also read: How the big 4 did it
When a big-ticket modern retailer opened its first store in Alibaug, people started lining up outside despite the hot sun. “We saw that people were not shopping products anymore, but modernity... wanting to choose their own products. Modernity is a must. Without adapting to modern means, the newer generations will not take an interest in the older stores,” said Damodar Mall, Chief Executive Officer-Grocery Retail, Reliance Retail, also known as the Supermarketwala.
Small and medium businesses should have a vision and a roadmap. The market is very big. You need to know how much of it you want to take. If you know who you are, then you can define. You also need to know how far you want to go.
- Kumar Rajagopalan, RAI CEO
Before 1997, Mumbai-based Society Stores was a traditional kirana store with the typical sacks of grains stacked up in a corner. Owner Laxmichand Gada felt this isn’t how customers should be entertained and that they must have more options to explore, buy and checkout. So he became one of the first retailers in Mumbai to modernise the store using technology. Immediately, a different set of customers started coming in. Today, Society Stores is considered a premium store patronised by the who’s who.
“We all must change and modernise. Where there is pain, there is growth. When to endure that pain, is up to you—while adapting to something new like technology or when regretting not adapting, a few years down the line,” said Manan Gada, Director, Society Stores.
Rafique Malik, Chairman, Metro Brands feels that this is one of the best times to ring in change. “Whether you have one store or 500, learn to take the opportunity every crisis presents as it is the only time when you can implement change. This is the time to do it, even if you are not 100% sure,” advised the veteran retailer.
Giving a different take on the topic Kumar Rajagopalan, CEO, RAI said, “The day the customers teach us instead of the other way around, it is time to close shop. The day the customer is more modern than us, we have failed. Modernising is not about getting scared, but about adapting.”
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Growing the business
Adaptability is key to growth. The other essential element is customer-centricity. “The times when one store would become two in four years is behind us. Now to flourish, your work should be great. The pandemic taught us many ways to take up opportunities. Pricing is great, but it is not everything. If you know how to tackle customer service well, you will find success,” advised Mall.
However, growth should be planned. Small and medium businesses should have a vision and a roadmap. “The market is very big. You need to know how much of it you want to take. If you know who you are, then you can define. You also need to know how far you want to go,” suggested the RAI CEO
Getting an investor
Growth requires funding, which SME retailers try to raise through internal accruals or from family and friends. They prefer not growing rather than bringing an institutional investor for the fear of losing control of their business. Through its example, Metro Brands has shown that this need not always be true.
Despite being profitable and debt-free, Metro Brands opted for an external investor. “It is always better to have an external person so that you don’t let yourself narrow your horizons. Also, the moment you bring an outsider, it becomes your responsibility to ensure that the highest form of governance is being followed,” said Malik explaining the rationale behind the move. However, finding the right partner is crucial, failing which the business could suffer rather than benefit, he warned.
The matter of size
Small retailers are painfully aware of their size, often making it an excuse for not growing. They fail to embrace best practices such as technology adoption, intelligent marketing and customer service often thinking that such things are only meant for big retailers. Some even view big retailers as a threat.
Mall, however, pointed out that big retailers have not come up recently; they have always been there. “Small retailers need not handle big retailers. They just have to handle their own catchment. As long as the pricing is reasonable, customers will not care about size. Keeping it simple, not being intimidated by size or scale, and focusing on understanding the customer are the things that work well,” he said.
According to Gulshan Bakhtiani, Founder Director, Wellness Forever, “There is no small retail or big retail, there is only retail. We must choose to be trustworthy retailers, offering reasonable pricing.”
Discounts and online
One of the biggest conundrums for a retailer is whether to take part in the discount war. “There are discounts and then there are the quality wars. Over time, customers realise that trust is more important that discounts,” shared Bakhtiani.
Then comes the question whether to go online, which is really not a question anymore but a necessity. “Going online is important. eCommerce has always been there, just the technology is new. All we have to do is adapt. Technology is now democratised, do not be scared. Be sharp and look for what you need,” advised the RAI CEO.
A lot of SMEs are hesitant to embrace more channels because they are not convinced of their profitability. To that the Supermarketwala explained, “Even if you are a physical retailer, half your customers use home delivery, just like eCommerce. The major point is not cost per channel, but profit per family… Keeping the customer loyal, which on some days may cost more, but one shouldn’t get wavered by this.”
Employee career progression
Employees are the heart of a retail business. It is important that they are trained well and they find a career with the retailer they are employed with.
“It is important to create a culture of an entrepreneurship. Make employees feel like partners and make them grow with you. At Metro, we give them a career path. All frontline employees who join us start from being a maaliya (the person who mans the loft in a store where stock is kept), then progress to becoming assistant salesmen, salesmen, then assistant managers, and eventually to managers,” explained Malik. He added that as a policy, all the managers at Metro Brands are internally promoted.
Once an employee becomes a manager, he gets a percentage of the store sales instead of a fixed salary. “Every time a customer walks in and buys something, or walks out without buying, the manager must feel it. This is why we feel we give a better service than other retailers,” the veteran retailer added, who is credited with expanding the Metro Brand footprint to 550 outlets.
Sharing his experience Gada said, “We too have a jhaaduwala to manager concept. We have people who start in that role, growing and eventually moving to sales or becoming cashiers or even managers. They are entrepreneurs in themselves.”
At Wellness Forever, new recruits are asked about their dreams, which the company then helps fulfil.
Also read: How to hire the right person for your team
It is important for SME retailers to know how to deal with competition. However, according to RAI CEO, “We should look at our own stores before looking at competitors because the minute you take your eyes off your customers to look at competition, you face trouble. The good thing about India is that there are enough customers for everyone, at least for now,” he said.
It is natural to look at competition as a threat but a growth mindset requires retailers to think differently like Bakhtiani who feels that “A competitor is not a competitor, but another businessman.” He said, “Like a batsman, I focus on the ball and not the bowler. Respecting the fellow retailer as a businessman gives you a new perspective. If two or three good businessmen come together, it becomes a good multiplier.
“We have been lucky enough to have intelligent competitors, who we have tied up with. Whenever we open a new store, we talk to competitors in that catchment and explore partnerships. There are just buyers and sellers, there is no other entity,” he added.
In summary, a change in perspective is one of the most critical things retailers need to navigate tough times and grow.
Also read: Designing the new normal
Image source: shutterstock.com
Article published in STOrai Magazine. Adapted from KCF & RAI Webinar on Strategies for SME / MSME Retailers in Current Times
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
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