A Small Entrepreneur’s Forward Integration Strategy
Deepak Thakral, a small entrepreneur from Nagpur, had transformed his traditional family business of manufacturing and selling incense sticks and other fragrance products. Leveraging his experience of selling and distributing local brands in an unorganised market, Deepak conceptualised ‘Sugandh Shoppe’, an innovative model, a onestop shop for all devotional products in the year 2008.
In 2004, Deepak joined ‘TIE’, a nonprofit association for entrepreneurs and attended his first TIE program in Delhi. Deepak heard eminent personalities like P Chidambaram, Nandan Nilekani speak about business on a larger scale with huge numbers, which impressed Deepak and made him question himself about the size and scalability of his own business.
This became the foundation stone to take his business from existing distributor model to a retail model, which eventually gave birth to the concept of Sugandh Shoppe franchise system.
Deepak decided to modernise and expand his business using franchising approach, very different from the one used by traditional small players in the incense stick industry. In early 2008, Deepak finally launched his retail business of selling fragrances and related items through franchise system as a pilot project in Nagpur. Deepak registered a new company in the name of Sugandh Shoppe Pvt. Ltd. By the year 2009, Sugndh Shoppe grew into 10 franchised outlets. Getting into multiple channels helped the business increase its reach and sustain business in one channel if the other was not working.
The family business inherited by Deepak was established in the year 1950. With over 50 years of experience in incense stick manufacturing, the business was well established within central India. The core strengths of Deepak’s family business was the long number of years of experience in manufacturing incense products.
Core competence in manufacturing of incense sticks was retained by outsourcing and re-branding other related products. Internal learning and growth led to favourable financial position and a growing customer base along with a clear vision that would unite people and lead them all to success. With only one store in Nagpur to over 40 pooja special stores in the last 7 years, Deepak has been successful in retaining interest of franchisees and suppliers in this business format.
However, the future growth and success of this model depends on several critical parameters. Is this model replicable in smaller cities and towns? Are there any strategic alternatives available to Deepak apart from franchising Sugandh Shoppe stores in order to expand the business geographically?