DTDIY SPECIAL THE 'HOW TO' ISSUE 2012
How to 'Build a Successful Retail Brand'
Armed with a background in Engineering and an Advanced Degree from Harvard Business School, Thomas Varghese, CEO, Aditya Birla Retail Ltd., tells DTDIY How he build the Retail Business during a time when the market was already dominated by well established retailers.
Onkar pandey | Issue Date - 03/02/2012
Q. At a time when organised retail is evolving in India, what is it that differentiates Aditya Birla Retail Limited (ABRL) from other hypermarkets?
A. At the end of the day you have to stand for something. Our proposition is we guarantee low prices everyday to our customers. And we live that proposition in everything we do at the store. People who are able to live up to their proposition have a differentiated offering. Now if everyone have a differentiated offering and they are able to live it, then you have a great discount concept blooming in the country. But retailers fail to live up to their propositions and therefore, we end up retaining our customer by reinforcing confidence.
Q. What is the biggest challenge that organised retail faces in India?
A. Real estate continues to be the biggest challenge for retailers in India. It has been and it will continue to be. We have realised that the only way to counter this issue is to create a distinctive retail strategy. We have some notions about our execution. For instance we don’t want to place ourselves in malls at high density locations. Therefore, we build our own malls, or get developers to build it for us in partnership. As such, we end up having a stand alone site. That ways it’s convenient for us, but of course there’s a gestation period of 18-36 months to get them running. That's our way of managing the real estate problem.
Q. What does ABRL do to deliver a distinctive shopping experience to customers?
A. I think within our stores we offer internationally benchmarked quality. Unlike other hypermarts, we have 2-3 meter wide aisles, so that up to four people can take their shopping carts to it. In summary, we offer a simple international shopping experience.
Q. Do you think that private labels have become a necessary evil? Are there any downsides to it?
A. The downside is pretty obvious. You start up with the belief that these labels will earn the company much higher margins, but as you encounter mug-downs, liquidations and excess inventory, you actually end up with much lower margins as against the original assumptions. It's a kind of a paradox. You’re not doing private labels for the heck of it. You do it because you feel there’s a merchandising gap, and there’s a brand that you can introduce, which will gain traction with consumers and offer some benefits to them. These are me-too products and not evolutionary in nature. As a result, international retailers only make such a foray after being in business for 10-15 years.
Q. Given recent developments as far as the global economy is concerned, how do you plan to take forward your expansion plans?
A. There’s no change in our growth strategy per say. We are going to add 12-13 hyper-marts every year for the next five years. We have invested roughly Rs.300 crore in the current fiscal, and expect to make similar investments in the next fiscal as well.
Q. Given the unruly nature of inflation in India, do you think the lull in the consumer buying behaviour has had any impact on your business?
A. We aren’t seeing much impact of this, except in apparels and consumer durables which happen to be discretionary categories. Apart from that,. we have had a fantastic growth so far this fiscal.
Q. Being a new retail player on the block, how far have you been successful in building brand equity?
A. Our focus has been to execute brilliantly. And I think we have been able to do that with great success in our hyper-markets and limited success in supermarkets. The challenge remains to achieve the same with our 590 super-markets.
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