Viveks

Point of Purchase - - CONTENTS -

For a man steer­ing one of the big­gest and old­est re­tail chains in South In­dia, B.A Ko­dan­dara­man is amaz­ingly sim­ple and re­mark­ably self-dep­re­ca­tory. But ask him about the en­tity he has nur­tured and groomed and he is at his elo­quent best-- shar­ing, rem­i­nisc­ing, re­flect­ing and in the process shar­ing some in­valu­able tips and in­sights re­gard­ing the suc­cess recipe for a re­tail chain. Af­ter all, here is a group that has not only pi­o­neered con­sumer goods retailing in South In­dia but has also helped re­de­fine a cer­tain life­style for the typ­i­cal mid­dle class South In­dian fam­ily. Yes, Mr Ko­dan­dara­man is the Chair­man and Manag­ing Di­rec­tor of Vivek Ltd, pop­u­larly known as Viveks, a re­tail brand trusted by over three gen­er­a­tions of con­sumers for the last 47 years. The brand has been listed among the most im­pact­ful brands cho­sen by the In­dian con­sumer and has been hailed as “more trusted than the brands it sells” by CII and Mckin­sey.

To­day the re­tail chain has 47 show­rooms across Tamil Nadu and Kar­nataka, of which 14 are in Chen­nai alone, 9 in Ban­ga­lore and 24 spread across the length and breadth of Tamil Nadu with a pres­ence in all the ma­jor towns and cities in the state. The re­tail brand, which dur­ing the fi­nan­cial year ended March 2012 made a turnover of Rs 230 crore and plans to rake in a turnover of Rs 580 crore in the cur­rent year, is now set­ting its sights on other un­tapped mar­kets in the coun­try, hop­ing to build a pan-In­dia pres­ence.

Vivek’s story is a clas­sic ex­am­ple of how suc­cess can be built on the pil­lars of val­ues and sim­ple com­mon sense ap­proach, which not only builds busi­ness but also gen­er­ates good will. In a can­did and free­wheel­ing chat with Point of Pur­chase, Mr Ko­dan­dara­man, who is also a foun­der­mem­ber of the Re­tail­ers

As­so­ci­a­tion of In­dia (RAI) and who has pi­o­neered con­cept such as the New Year Su­per sale, talks about his whole jour­ney and what it takes to be a trail blazer. Pre­sent­ing ex­cerpts from the con­ver­sa­tion, read on …

As told to N. Jay­alak­shmi

The be­gin­nings and the jour­ney

We are a fam­ily from Ko­lar in Kar­nataka and Viveks was ac­tu­ally started by my brother in 1965. As a stu­dent he was very much in­flu­enced by the teachings of Swami Vivekananda and he wanted to some­thing mean­ing­ful. It was this same vi­sion to do some­thing mean­ing­ful that saw him get into busi­ness and set up Viveks in spite of ini­tial op­po­si­tion from the fam­ily.

The first show­room was set up in My­la­pore in Chen­nai on May 3rd 1965 with a store area of 250 sq feet. Af­ter about three years in 1968 my brother passed away and the fam­ily wanted to continue what he started, so the man­tle fell on me and my other brother. We de­cided to build it with the same vi­sion and to­day we have come a long way.

Ini­tial Chal­lenges Yes, those very tough and chal­leng­ing times. First, I had to run on a small cap­i­tal given by my fa­ther. The monthly rent those days was Rs 225 and we had to ne­go­ti­ate a lot for that. The store ware­house was also our liv­ing quar­ters in the night. So given all these chal­lenges I have de­vel­oped this motto over a pe­riod of time: Start small and fin­ish big.

The times then and now…

Those days, the buy­ers did not have any choice, it was a very closed econ­omy and it was a seller’s mar­ket. Even pro­duc­tion was reg­u­lated and lim­ited by the gov­ern­ment. We had op­por­tu­ni­ties to travel abroad and over there we saw how shop­ping could be made into an ex­pe­ri­ence. It was frus­trat­ing when we came back and saw that one had to wait for ev­ery­thing here – whether it was a gas stove, a phone or a car. Cash­ing in on changes, surg­ing ahead

Fi­nally in ‘92-93 the coun­try started talk­ing about lib­er­al­iza­tion led by the then PM Narasimha Rao and the then FM Man­mo­han Singh. They in­vited other mar­kets to come to In­dia and tap the huge as­pi­ra­tional mid­dle class pop­u­la­tion. So we de­cided to ex­pand too as we wanted to im­prove the life­style of the com­mon man. We had man­aged to open three show­rooms in 30 years’ time but our tar­get now was to open 30 show­rooms in the next 3 years. So we stepped for­ward with a vi­sion, a busi­ness plan and a blue­print.

Get­ting cor­po­ra­tized and pro­fes­sional

We re­al­ized that to grow we could not continue as a pro­pri­etary or a part­ner­ship firm. So in ‘95 we took a de­ci­sion to be­come a lim­ited com­pany. We changed our au­di­tor and brought in Deloitte, we roped in O&M as our ad agency, and in­stead of a sin­gle banker, we brought in a con­sor­tium of mul­ti­ple bankers . Be­sides, my other brother and I de­cided to move out of show­rooms and into the cor­po­rate of­fice. We iden­ti­fied peo­ple who could run the show, made them re­spon­si­ble and then we went in for ex­pan­sion.

Con­stant vi­sion and mis­sion

What has not changed from Day 1 is the founder’s ob­jec­tive which was to pro­vide em­ploy­ment and im­prove the qual­ity of life of the com­mon man. We are do­ing both. To­day 1,500 peo­ple work for the or­ga­ni­za­tion and our prod­ucts are a part and par­cel of the lives of our cus­tomers 24 hours of the day.

Change is in­evitable and we moved along with the cus­tomer. I al­ways say this: Ex­pe­ri­ence + Knowl­edge + in­for­ma­tion = power= money. Any­body who ex­cels in this is a very pow­er­ful per­son.

Our Learn­ings

Be­tween ‘95 and 2012 in 17 years, we went be­yond Chen­nai and es­tab­lished our pres­ence across 16 cities and towns in TN and to­day we have 47 show­rooms. We have re­al­ized that re­tail is one area where you can­not spread thin, you have to spread thick. Mar­ket share is very im­por­tant; it also helps you con­trol op­er­a­tional costs. Back­end is also very crit­i­cal: IT, train­ing, man­power, ware­house, ac­counts, travel, go-downs etc have to be very strong.

Change is in­evitable and we moved along with the cus­tomer. I al­ways say this: Ex­pe­ri­ence + Knowl­edge + in­for­ma­tion = power= money. Any­body who ex­cels in this is a very pow­er­ful per­son.

Com­pe­ti­tion and defin­ing USP

There is al­ways com­pe­ti­tion, so why should cus­tomers come to you? The an­swer is sim­ple: trust and ser­vice.

A few years ago we were the largest re­tailer, but to­day we are one of the largest re­tail­ers; there are many

oth­ers. Some­body cal­cu­lated in 2005 that the re­tail con­sump­tion put to­gether in the coun­try is $ 320 bil­lion, to­day it is $ 450 bil­lion. So ob­vi­ously, many big cor­po­rates came into re­tail. We can­not com­pete with them, we have to al­low them to grow be­cause wher­ever there is con­sump­tion, there is pro­duc­tion and wher­ever there is pro­duc­tion there is em­ploy­ment. Re­tail in­dus­try is in fact one of the largest em­ploy­ers in the coun­try. Or­ga­nized re­tail also brings lot of rev­enues to the gov­ern­ment.

Many of these big groups have money power and mus­cle power. But my big­gest strength is my five decades of brand eq­uity – three gen­er­a­tions of cus­tomer buy­ing and a strong pres­ence in TN with a good mar­ket share and ser­vice.

Pa­ram­e­ters For Mer­chan­dis­ing

Our mer­chan­dis­ing de­pends on the lo­ca­tion and city. For ex­am­ple, what I do at Jay Na­gar in Ban­ga­lore will not work in say, a town like, Theni. It de­pends on the cul­ture, the buy­ing ca­pac­ity, etc of the place. We study the mar­ket, the size, the trend, the pro­file etc and plan the mer­chan­dis­ing ac­cord­ingly.

Need for Staff Train­ing

Yes, large re­tail­ers have to put in lot of ef­fort into staff train­ing. As part of RAI too, we are con­cen­trat­ing on train­ing and have in­tro­duced newer cur­ricu­lum also. There is a short­age of man­power, at­tri­tion rate is high, proper and train­ing is of­ten not avail­able. To­day ev­ery­thing can be im­ported, but we can­not im­port man­power. Train­ing and de­vel­op­ment in re­tail in­dus­try is very im­por­tant.

Tech­nol­ogy upgra­da­tion

When we wanted to grow be­yond

Some­body cal­cu­lated in 2005 that the re­tail con­sump­tion put to­gether in the coun­try is $ 320 bil­lion, to­day it is $ 450 bil­lion. So ob­vi­ously, many big cor­po­rates came into re­tail. We can­not com­pete with them, we have to al­low them to grow be­cause wher­ever there is con­sump­tion, there is pro­duc­tion and wher­ever there is pro­duc­tion there is em­ploy­ment. Re­tail in­dus­try is in fact one of the largest em­ploy­ers in the coun­try.

three show­rooms, we de­cided to put in our sin­cere ef­forts into tech­nol­ogy. To­day with the help of a soft­ware we can track the move­ment in our show­rooms across 16 cities and two states and know what is hap­pen­ing ev­ery day. The right ac­tion at the right time is very im­por­tant in re­tail. It is a highly com­pet­i­tive mar­ket where there is no scope for any in­ef­fi­ciency. So we need to gear up with the right tech­nol­ogy.

The New Year sale con­cept we pi­o­neered

We have built this busi­ness with a lot of cus­tomer good­will. In 1977, we re­al­ized we had to do some­thing for our cus­tomers who had helped us build our brand. And we hit on the idea of the sale – wherein we would work one day with­out prof­its and we de­cided that the day would be the year be­gin­ning. That’s how it be­gan. As I al­ways tell peo­ple, “any­thing you do in the in­ter­est of the cus­tomer, will sur­vive and last long”. So what started in 1977 still gen­er­ates enough buzz. Our New year Sale has be­come a part of the peo­ple’s tradition and for the last 35 year we have been suc­cess­fully do­ing it, han­dling any­thing around 70,000-75,000 cus­tomers a day. We used to hire a 40,000-50,000 sq feet cen­tral ware house space for it, and in Chen­nai alone dur­ing those three days of sale we sell about 10,000 re­frig­er­a­tors and wash­ing ma­chines. So we learnt to man­age the lo­gis­tics of some­thing of such a large scale.

We are very happy and proud that we did it be­cause it ben­e­fited the cus­tomers over a pe­riod of time. Vol­umes also grew, mar­gins grew, ours and the man­u­fac­tur­ers’. So ev­ery­one ben­e­fits.

Fu­ture plans

Our im­me­di­ate tar­get is to be­come a na­tional chain and like a con­ser­va­tive South In­dian we are tak­ing it slow, the next three years are go­ing to be very cru­cial for us. We plan to en­ter the un­rep­re­sented mar­ket and be­come a South In­dian re­tail chain as 30% of the mar­ket in the coun­try is avail­able in the South and it is a very im­por­tant mar­ket for us

B.A. Ko­dan­dara­man Chair­man & Manag­ing Di­rec­tor

Vivek Ltd

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