F U T U RE O F BUS in E SSE S • Retail Giants of Tamil Nadu • 2011
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F U T U RE O F BUS IN ESSE S AUGUST 2011 • VOL. 10 NO.8 Rs 50 US$ lO • Retail Giants of Tamil Nadu • 2011 Outlook for Retail INDIA RETAIL FORUM SEPTEMBER 21-22, 2011 • FDI in Retail Boosting Customer Experience MUMBAI. INDIA spotlight o THI S IS THE NINTH PART OF ~ Everyone talks about them but (excluding jewellery) from nine stores, wear she "YESTERDAY ONCE MORE" most do not have a clue about the real Nalli of ~700 crores from 22 stores, RmKVat - A SERIES OF STOR IES size of their business. I am referring Pothys of ~650 crores from four stores sarees as INITIATED BY IMAGES RE1/IIL to the traditional retail giants of Tamil and RmKV of ~510 crores from four operated Nadu which have dominated the stores. These five Tamil Nadu retailers ABOUT SUCCESSFU L LOCA L it sh ifted state 's retail landscape for decades. do sales of ~4200 crores every year sq.fL me AND REGIONAL RETAILERS Even today they do not seem to be collec ti ve ly, which is more than the in the sa SPREAD ACROSS URBAN INDIA affected a bit from the onslaught of turnover of Shoppers Stop, Lifestyle, turned 0 WHICH CONTINUE TO EXPAND modern department stores and malls Westside and Reliance Trends put by leaps AND GROW DESPITE STIFF in their llome turf. together. RmKVat COMP ETITION FROM NATIONAL Saravana Stores does annual This is the power of regional retail, hub. AND INTERNATIONAL RETAILER S. business of ~510 crores from a single when modern retailers are still trying Accord seven-floor store - that is more than to figure out how to make this kind a third-g, By Ami! Bagaria what any single Lifestyle, Central of business happen. After months of now run or Shoppers Stop store does. From effo rt s, Asipac's research team finally no coine four stores, Sa ravana does about got hold of two of these regional the bran, n200 crores annually. This is two giants. Read on about what they had day one, thirds more than the U 17 crores to tell us. witha rr: turnover reported by Tata's Trent, and tran which includes Westside (54 stores), RMKV OF TIRUNElVElI efficienc Landmark (18 stores) and Star Bazaar Back in 1924, when India was under the 1920 (12 stores). the British rule and organised retail each pro Chennai Silks is estimated to be was non-existent, Rm K Vishvanatha numberi doing a business of ~1l50 crores Pillai set up a 1000 sq.ft. women's of comp' 54 . IM AnES RE rAIL . AUGUST ?OII spotlight stores, wear shop in Tirunelveli, named .oIlIlIrt IIlIn,'" much easier. The transition was es, RmKV after his initials. With silk 1_ Even today, ihe retail giants of Tamil however smoother for us because of stores sarees as its core product, the shop i Nadu do not seem to be much the system he had put in place, and affected frrJm tile onslaught of Jur operated from the same location until we follow the basics of that system modem department stores and malls tailers it shifted to a much larger 35,000 until today." ill ll1elr 110me lurf. This IS tlle power 'ar sq. ft. megastore in another location For 80 years, RmKV operated as a of regional retal/. the in the same town in the 1950s. As it single store. Eventually, the market tyle, turned out, that market was to grow became so big and crowded that, It by leaps and bounds, positioning THE FIVE TAMIL NADU Sivakumar recalls, the customer RmKV at the centre of a thriving retail RETAILERS DO SALES OF experience started deteriorating. etail, hub. \'4200 CRORE EVERY YEAR Access had become a problem and rying According to Rm K Sivakumar, COLLECTIVELY, WHICH IS there was hardly any parking for the ind a third-generation family member MORE THAN THE TURNOVER increasing number of shoppers with IS of now running the business, it was their own vehicles. With organised inally no coincidence that RmKV became OF MANY 81G NATIONAL retail emerging at the turn of the I the brand it is today. He says: "From RETAILERS PUT TOGETHER. century, RmKV decided to expand and had day one, my grandfather worked take the brand outside Tirunelveli. with a mission of being honest According to RI11 K Sivakumar, a A 35,000 sq.ft. store was opened in and transparent, while focusing on third-generation family member, Chennai in 2004. Four years later, efficiency at the back-end. Even in it was no coincidence thai RmKV RmKV opened its biggest store, a nder the 1920s, he had a system to identify became the brand that it is today. 100,000 sq.ft. outlet in Tirunelveli. tail each product through a unique The reasons for its success arc; The original shop in the old market lath a numbering system. With the advent transparency and efficiency area still continues to operate. I'S of computers in the 1980s, it became L"""_",,, As a sign of RmKV's desire to move ,\UGUST 201 1 . 1 t,GE!:> 1 .55 spotlight That's more than listed companies Is it because they are 87 years old? the range of products and carrying on We such as Brandhouse (S.Kwnar's Group) Or that they work on lower margins? wholesale as well retail operations. so is and Provogue. If FDI was allowed in Or is it because a majority of Indian In 1991, Mudaliar set up a 25,000 ming multi-brand retail , the valuation would women still wear ethnic? I believe it is sq.ft. store named The Chennai Silks Dcess be above n 250 crores. a combination of all three. I see RmKV (TCS) at Tirupur, selling textiles, silks vth While on the topic of Nalli's, crossing a turnover of ~1000 crores by sarees and RTW garments. "At that was Sivakumar gives them credit for FY 2013 . Surely, a retailer of this size time, it was one of the biggest stores lew spreading awareness about Indian cannot be ignored by the industry. in the area", says P A Ravindhiran, s ethnic wear amongst India's youth, GM - sourcing and operations. A cided especially at a time when the general THE CHENNAI SILKS store of that size in Tirupur 20 years trend is towards western wear. "It is Born into a family of weavers at ago, with economic reforms yet to be kumar one of the challenges we face - getting Tirupur in 1962, A Kulandaivel introduced in India, had to be a rarity. [n younger women to wear sarees more Mudaliar set up a 100 sq.ft. shop in In 1996, Mudaliar opened a 45,000 d often", he says. Madurai, selling khadi products. Over sq.ft. store in Coimbatore. Another getting Like most businesses, identifying, the next 30 years, he set up 12 more store of the same size opened in IIi's is a recruiting, training and retaining high "khadi vastralays" across small towns Erode in 1999, followed by a 125,000 npetitor quality manpower remains a challenge in TamIl Nadu, gradually increasing sq.ft. store in Chennai in 2001 and a across lut how ion .d be ugh "it 10 IPO ". .eling outside (ive ) crores. for RmKV too. "Our frontline 100,000 sq.ft. store in Trichy in 2004. staff are from modest academic ~ Two stores opened on the same day backgrounds. We conduct weeklong ACCORDING TO RAVINDHIRAN in 2007 - 100,000 sq.ft. in Karur and training sessions three times a year, OF TCS, THEY ARE PLANNING a second 80,000 sq.ft. in Coimbatore. outsourced to a professional agency, TO TARGET 'ALL SEGMENTS, This spate of aggressive expansion thereby ensuring that the staff's AGE GROUPS AND INCOME continued, with a 75,000 sq.ft. store product knowledge and customer opening in Coimbatore in 2008 (the service are top notch. Our senior LEVElS.' THAT'S A MIGHTY third in the city), and TCS also started management, on the other hand, AMBITION, CONSIDERING THAT selling jewellery. comprises of educated professionals EVEN NATIONAL PLAYERS Another 125,000 sq.ft. store was from reputed institutions. Overall, OPERATE AT OPPOSITE opened in Ernakulam in 2009, spread we strive to instil in our employees ENDS OF TARGET INCOME across nine floors. This was also TCS ' a sense of ownership and belonging SEGMENTS. TCS CATERS TO A first foray outside Tamil Nadu, and towards the brand - it makes a an indicator of their confidence in the positive impact on customers and it VARIETY OF INCOME LEVELS brand, business model and market helps us counter attrition issues to BUT WITHIN A RESTRICTED conditions. A 150,000 sq.ft. store is some extent", says Sivakumar. RANGE OF MERCHANDISE. under-construction in Tirunelveli and So what makes RmKV achieve three HOW IT EXPANDS ALONG BOTH is expected to open by end-20ll. This times the trading density of Shoppers AXES NEEDS TO BE SEEN . will take up TCS' total retail space to Stop and four times that of Westside? over 870,000 sq.ft. AUGUST / 01' . IMAGES R~ AI .57 spotlight All TCS stores are located on high The development of all stores has designer sarees and wedding silks, On streets - not one is in a mall. What's been self-funded, and Ravindhiran they a ls o sell cotton sarees, kidswear mani more, TCS owns all the stores, maintains that TCS might not look at and western wear for men and have including the la nd under them, and external funding for their short-term women. are rE has an in-house project division to expansion plans.