|R Sriram, CEO and Managing Director, Crossword Bookstores Limited|
The name Crossword was coined, keeping in mind its dual positioning as a fun place where one goes to enrich themselves. In the past ten years, Crossword has established itself and has a national presence through its outlets in Mumbai, Pune, New Delhi, Chennai, Ahmedabad, Vadodara and Hyderabad. It is a name to reckon with many firsts attached to its name.
What perhaps made Crossword what it is today is that it had the customer at the centre of all its decisions. Whether, it was a call to move away from the usual dusty and cramped stores to spacious retail space or it meant innovation in terms of design and layout with clear signages and fixtures, Crossword had it all. A gut feeling and long discussions with customers on what they were looking for in a bookstore, inspired these innovations. For instance, all fixtures were 4 ft 9 inches tall, keeping in mind the average height of the Indian customers. Reading tables and chairs were kept for customers to browse through books. The staff was trained to be unobtrusive. We knew that we were competing for two Ws: wallet and watch and we had to ensure that people spend more time with us, says Mr Sriram.
In many ways, Crossword changed the perception o a traditional bookstore, by bringing international standards of book retailing to Indian customers. Like every household has a wardrobe we want to ensure that it has a bookshelf too, and we want to make a place for ourselves in that shelf, says Mr Sriram. In order to increase the market, Crossword chose to decide to cater to a wide audience with its unique product mix of books, CD-ROMs, music, stationery and toys.
The first outlet in Mumbai was set up with an initial investment of Rs 1 crore, entirely funded by the Mirchandanis of India Book House. Subsequently, in 1994 the second store was set up in New Delhi and in the following year the company opened shop in Ahmedabad. Everyone was very sceptical about opening shop in Ahmedabad initially but I proved them wrong as it has grown to become our largest store, says Mr Sriram. The store is spread across 13,000 sq ft and has more than trebled since it started with 4000 sq ft. The outlet at Mahalaxmi still continues to be the largest in sales, and has become a destination bookstore where people come to be informed, entertained and enlightened. The shop at Ahmedabad was first of Crosswords franchisee outlets and since then the company has looked at the franchisee model seriously.
It was in the late nineties that Mr Sriram was in talks with the retailing whizkid B S Nagesh of Shoppers Stop on how to take the chain forward. The turning point came when Shoppers Stop picked up a 51 per cent stake in Crosswords in March 2000 and ICICI Venture Funds Management Company picked up the remaining 49 per cent. This move brought in a significant difference to Crossword, which now, not only had the backing of one of the fastest growing retail chains in the country but also institutional support to grow further. While, Mr Sriram is the CEO, Ms Anita is an Executive Director, largely responsible for sourcing and operations.
When promoters changed hands in 2000, Crossword had seven stores with a turnover of Rs 15 crore. The last two years have not only meant doubling of sales to Rs 30 crore but also addition of another 11 stores. Two out of the initial seven was forced to close shop. The first being that one at the Leela Palace in Goa, and the other one at Nashik due to lack of volume sales. Also, one of the shops at a supermarket in Ahmedabad was torched during the recent riots.
Subsequently, Crossword moved to cities like Baroda, Nashik and Goa, concentrating primarily in the western region. The business of retailing is very communication intensive and there are costs of managing retail in a particular city. Say the cost of advertisements in a daily is the same for Pepsi and a small store, but whereas Pepsi can reach out to millions, the store will just communicate to its niche customers at the same cost, explains an analyst.
To ensure that the cost of managing the business in a particular city is optimum, a conscious decision has been taken to enter and satiate a city with multiple outlets. Little wonder then that the company plans to have 8 to 10 stores in cities like Mumbai and Delhi. Mumbai, currently has five outlets, two of which are destination stores and the other three are Crossword Corners based on the shop-in-shop model. Even Pune and Ahmedabad each has a destination shop and two Crossword Corners.
Currently, the company has a chain of 15 outlets and plans to add another 20 stores in the next two years. These will be both company owned and franchisee outlets in the ratio of 1:3. The company is looking at cities like Kolkata and Bangalore to spread it wings across India. The Crossword Corners located at large departmental stores like Shoppers Stop, Pyramyd and large multiplexes have substantially boosted sales.
The company plans to invest on an average of Rs 2-3 crore to fund its expansion plans. Currently, the average cost of setting up a Crossword destination store is between Rs 75 lakhs and Rs 1.5 crore and that of a Crossword Corner is Rs 5-10 lakhs.
Crossword has also been instrumental in developing new marketing strategies for book retailing in India. It introduced value-added services like home delivery, with Dial-a-book, Fax-a-book and Email-a-book programmes. Adding to the experience, it pioneered the concept of an in-house cafe. The cafe which was self managed earlier is now being outsourced from Barista, which has a chain of coffee shops across India. Another defined strategy to draw people to books and to its outlets was its innovative events, which include book launches, interactive discussions with authors, book reading sessions, childrens hour, pictionary contests, book reading, quizzes, slide shows and the annual affair with Santa and his elves. The store also offers a platform to literary-minded people to voice their concern on current social issues like freedom or child abuse through seminars and discussions.
The Crossword Book Awards was launched in 1998 to recognise and reward the best of Indian writing. The best original work of fiction in English by an Indian author was rewarded with a cash prize of Rs. 200,000 in 1998. In 1999, Crossword added a new category, Indian Language Fiction Translation into English and also increased the cash prize to Rs. 3,00,000 for each category. While, it has served its purpose, it has also enabled Crossword to create a brand equity for itself.
Crossword is also first of the retail bookstores to invest in an ERP (enterprise resource planning) programme. The company has already invested to the tune of Rs 1 crore and has slated further investments to seamlessly integrate the entire business. Once we are on the ERP platform completely, it will be much easier for us spread across India, says Mr Sriram. Crossword is also in the process of strengthening its online architecture and plans to offer retail services online within the next few months. What is utmost importance in the retail business is managing inventory, and investments in IT will help the company manage it better, believes Mr Sriram. The company is also continuously trying to upgrade itself of all the parametres that it is measured i.e Gross Margin Return on Floor Space, Inventory and Labour (GMROF, GMROI and GMROL). For instance, it had downsized its outlets at Chennai and Hyderabad after evaluating itself. We are continuously learning from our mistakes and experimenting with new ideas, hoping that it would pay back, says Mr Sriram. So far the strategies seem to have been successful in solving the retail puzzle, it remains to be seen how effective it is in making consumers across India a Crossword addict.