BA Kodandaraman, chairman & managing director, Vivek Limited, has been in the retail business for almost 50 years. Organised retail was pioneered in the South and Vivek & Co has been in the forefront of many innovations that have become the norm today. It is the largest retailer of consumer durables, electronics, IT, and telecom products in the region. Kodandaraman pioneered the concept of new year?s sale when products are offered at cost. Hire purchase was introduced for the first time by Viveks. The company went into a fast-track growth phase after 1991, instead of being threatened by the economic reforms and the markets opening up. Between 1965 and 1995, Viveks had only three showrooms in Chennai. Kodandaraman knew that global brands will enter the market, and that the consumers were going to be demanding. In 1995, the company planned on adding 30 more showrooms in three years. Today, there are 46 showrooms in Tamil Nadu (in 17 cities) and Bangalore. From a beginning with 250 sq ft, Viveks has grown to 3 lakh sq ft of showroom area. Its retail brand is stronger than some of the brands it houses, says a McKinsey study. All the showrooms are large-format, fully-air conditioned stores. Viveks employs 1,500 people and will end this year with a turnover of around R460 crore.
Kodandaraman is the moving spirit behind the formation of the Retailers Association of India (RAI), which is now the apex body of Indian retail. He continues to be a founder member of the organisation. What does he think of bringing in 100% FDI in multi-brand retail? Today the big Indian business groups such as the Tatas, Birlas and Reliance are also serious entrants into the retail business. Will they all gobble up the existing industry and destroy all small traders? I call him to fix up a lunch meeting to find out this veteran?s take on all this. True to Chennai tradition, I end up talking to him in his office with coffee and snacks. But then, properly made South Indian snacks are always welcome.
When I go to his rather functional office at 4 in the afternoon, he greets me with green tea. We South Indians are now experimenting with our beverages. I ask him about the budget implications of the increased excise duty on white goods and service tax. Kodandaraman is unflappable. He says the trade has to wait and watch to see how much of the additional duties the manufacturers are willing to pass on to customers. ?Last summer was not very hot. ACs and refrigerators didn?t move so well. But washing machines flew off the shelf.?
What does he think of this ongoing and never-ending debate on 100% FDI? He starts telling me about how it was when they started almost 50 years ago. Vivek & Co was set up by his elder brother, an electronics engineer, the first one in a rice trading family from Kolar to go to Bangalore for higher education, and who was inspired by the Ramakrishna mission. He wanted to provide employment and make people?s lives more comfortable. He wanted to do it in Chennai, which was a major move for the family. Unfortunately, he passed away very young and the parents wanted to continue what he set out to do. Kodandaraman and his brothers stepped in. ?Those were the days when there was such a limited range of products to sell. The only transistor radios available were Bush, Murphy and Nalco. There was a shortage of everything and the customer simply did not have a choice. People were scared to buy a gas stove or pressure cooker. They thought these new contraptions would burst. Do you know that customers had to wait to get Sumit mixies?? I wonder, biting into a hot onion pakoda, why I am getting this interesting lecture on retail history.
Kodandaraman notices my impatience, smiles and continues. ?Today, choice is at the customer?s doorstep. In 20 years, the country has changed from a seller?s to a buyer?s market. Everyone has moved on from those shortage days. If a customer buys an AC in the afternoon, he wants it fixed by the evening. Credit then meant people paying in daily instalments. If somebody bought something for R100, she would pay back a rupee each day. Nobody wanted collection agents coming home. There was this great fear of credit. Today, people flaunt several credit cards with impunity.? We pause to taste some of the other goodies served. Says Kodandaraman, ?We have seen the trade grow from a shortage to plenty. Manufacturing was easy then, but selling difficult. This has been turned on its head. We have seen so many things happening in these 45 years. This is my strength. We have experience, knowledge and information. These three are equal to power and money. We understand products, customers and value.? Kodandaraman believes that this is what differentiates Viveks from its competition. The quiet confidence comes from the fact that every other household in Chennai is a customer of Viveks. The knowledge acquired over selling to three generations helped anticipate the competition. ?Whatever happens in the rest of the world has to happen here also. We all travelled, saw what a shopping experience really was, and were ready to bring it here. When lifestyle improves, everything changes.?
Why is he so sanguine about the entry of foreigners? ?We know that FDI is a huge challenge. Consumers will be exposed to the best products because of their global sourcing power. But then, we are also doing that. I know that eventually every top global retailer will come here. There is also competition from the Tatas, Birlas, Reliance, Biyani and Goenkas. But are they doing well? It takes years before you become profitable in this business. But then they are so huge that they can burn money for ten years. I can?t do that for a single day. We try to anticipate events and stay several steps ahead.?
An example of that is getting into customer relations management with total emphasis on customer care and after-sales service. Today, Viveks has more than 100 trained professionals who are provided with cellphones and transportation. The division takes care of installation of all products sold at Viveks and offers extended warranty. The service backbone is provided by the service centre, which has 400 employees. Viveks has tied up with Vector Consulting Group to revamp its supply chain. This will help the group redesign its supply chain and store stock management and achieve better sales. It is expected to improve the quality of its inventory??We would not buy what does not sell??and reduce inventory (from the current levels) while ensuring availability of almost 99% of all fast-moving SKUs (stock keeping units) in every store at any point in time.
I ask Kodandaraman about his expansion plans as I polish off the remaining savouries. It was in the nineties that Viveks went on an acquisition spree and bought out retailers Jainsons and Spencer?s Speciality Store. ?We haven?t closed the doors for acquisition. I don?t want to acquire just one store. I would rather we establish new stores. The city is expanding rapidly. We have renovated and refurbished our stores. The next five years will be crucial for our growth.? Why has Viveks not gone beyond Tamil Nadu and Bangalore? ?In the all-India market, South is the largest and Chennai is the biggest. This is a low-margin business. One showroom in 50 cities won?t work. We will scale up and expand to new markets at the appropriate time. Growth has to happen step by step and market by market. You can?t win all battles simultaneously. It has to be battle by battle.? Retail is detail, says Kodandaraman, as he sees me off.
sushila.ravindranath@expressindia.com
