Asim Dalal, Managing Director, The Bombay Store, is a graduate from the Sydenham College of Commerce & Economics, Mumbai. Asim went on to acquire a Diploma in Financial Management from the London University and attended the summer school at the London school of Economics ( LSE ). In the last 20 years he has gained experience in international banking, project finance, stock broking & retail. Asim joined Bombay Swadeshi Stores Limited as Director in October, 1991 and in April, 1994 took over as Managing Director. His earlier assignments include a successful stint with Hill Samuel Bank Limited in London in their International Banking Division, followed by a stint in the Equity & Euro-products division of Societe Generale Strauss Turnbull Securities Limited in London. Asim’s main areas of responsibilities at the ‘The Bombay Store’ include expansion, business development and financial planning. He was also responsible in raising funds for expansion from an angel investor group in 2007/8. Apart from the above responsibilities Asim is also the Jt. Managing Director of the family owned Printing Company, Western Press Pvt. Limited which focuses on Financial documents printing. Asim is an active member of the entrepreneurs’ Organization (EO) –Bombay Chapter since 2001.
The Bombay Store is one of Mumbai’s oldest and most recognized popular shopping destinations. The idea for the Bombay Swadeshi Co-operative Stores Co. Ltd. was conceived on 14th December, 1905 by Bal Gangadhar Tilak, along with eminent industrialist and businessman Munmohandas Ramji. The flagship store was inaugurated by Dr. Dadabhai Naoroji on 17th December, 1906. The product line boasts of exquisite artifacts in clay, metal, leather, paper and wood in the home décor range. It has a large product range including, western and ethnic Garments for Men & Women, Accessories, Home Linen & Furnishings, Home Products, eco-friendly handmade stationery, Body Care Products, Organic Food Products such as tea, herbs and pot-pourri and semi-precious and costume Ethnic Jewellery. The Bombay Store has 12 stores in 7 locations across India in Mumbai, Pune, Bangalore, Hyderabad, Goa, Lonavala and Navi Mumbai.
In an interaction with Anil Mascarenhas of India Infoline, Asim Dalal says, "By FY12 we aim to have 30 stores."
What are your views on the budget? Do you see more money in the hands of the customer translating into gains for your stores?
The budget has been a mixed bag for the retail industry. The Goods and Services Tax (GST), which would have benefited retailers, is now scheduled for next year. We were expecting some announcement regarding service tax on rentals but nothing positive has emerged. It is an additional burden to our cost and remains a concern. Retailers are seeing growth since October and we obviously don’t want any moves, which could break the momentum. If GST had come in as scheduled this year, we may have had some set-offs. But that is not the case now.
With more money in the hands of the public, it is definitely going to benefit the retail industry. The organized retail still remains in single digits and the next five to ten years are going to witness enormous growth for retail.
What are some of the opportunities you see for stores such as yours?
With retail infrastructure opening up, the retail space is getting more exciting. There are a lot of high streets, which are being spruced up to become retail destinations. We are seeing higher growth in the mall stores vis-à-vis the high street stores.
A good number of malls are being added. Families are visiting these places as it gives them a good combination of shopping, entertainment and food. This is bringing us more and more opportunities to open shop. Once the infrastructure is created, retailers will want to set up stores. Well-run malls, which already have good footfalls, would be the place where customers would like us to be. We have to think of being at places where the customer likes rather than trying to attract them to our flagship stores.
What are your plans for stores in airports?
We are in the Mumbai airport since 1997 and so understand airport retail quite well. In future we would love to be at all the airports; especially the ones which have been privatised and renovated. We have started a shop-in-shop model at the international airport in Mumbai. In this model we either have a minimum guarantee or revenue share depending on the model.
Wherever we have a store in the city, automatically we will have a store in that airport. We have two stores at the Hyderabad international airports. In Mumbai when the new terminal is ready by March, we also would be ready.
What are some of the challenges retailers continue to face?
With the industry growing so fast, it is always going to be a challenge to find enough competent people. In the metros this is not a major issue. But in the upcoming metros, it is difficult to find enough people for retail. With so many training institutes and courses being offered there has been an ease in finding talent though.
Markets like Gujarat have completely underperformed as far as retail is concerned. Baroda is definitely suffering though Ahmedabad is a shade better. Buying from the organized sector in these cities is alarmingly less. While places like Pune and Hyderabad are witnessing good growth markets like Chennai have not shown the kind of response we would like to see in the organized space. We retailers need to understand what is not inducing them to shop in organized retail.
Comment on your expansion plans.
We had targeted to open six stores in FY11 and by FY12 we aim to have 30 stores. We have exceeded our target for FY11 already. We are a niche retailer and not here to roll out stores for the numbers. We are very clear in our mind that we need profitable stores. We may be conservative but we ensure that we have stores, which are profitable. It normally takes a year to break-even but there are stores, which have achieved break-even in six months.
We are looking at extending and expanding our base in the cities that we are already present. Mumbai, Pune, Bangalore and Hyderabad can easily absorb more stores. It also helps us from the people’s point of view as well as logistics. In the north, we think Chandigarh is an interesting market to be in. In the East we would look at expansion at a later date. The Southern markets also offer good potential.
How would the expansion be funded?
We are sitting on some funds, which will take care of our expansion coming up within the next two years. In 2008, we had raised Rs200mn as equity from Fidelity Multitrade. Some money is also available with us from our internal accruals. We plan to raise some debt if the need arises; but nothing concrete has been finalized. We are not looking at setting up very large stores.
Brief us on your financials?
In FY09, the company clocked a turnover of Rs230mn and is expecting to end March 2010 at Rs270mn.
Are you looking at the online space in a major way?
Online is an extension of our existing business. We have just designed our website and waiting for our payment gateway to be ready in a week. Our inventories and marketing team is ready to start the activities. We did some online activities partnering with others in the past. I think we are still ahead of the market and it will take another two or three years before online shopping comes into vogue.
Indians still like to see and feel the product before making a purchase. There are enough products, which people can just see on the web and buy. Gifting also holds excellent potential. NRIs keen on gifting something for their family is an area we could benefit. Festivals like Rakhi and Holi have shown us the kind of the demand there is at present. In fact this year our organic colors for Holi sold out three days before the festival.
Who are your typical customers?
We have a combination of tourists, NRIs and local customers. On a pan-India basis, we would have 25% tourists and 75% local. However, select stores like The Bombay Store at Fort, Mumbai, would typically have more tourists. We are trying to target the younger customers (not teenagers but young working people) into our stores.
The Bombay Store has a perception of being a very serious store, with a heritage and a lot of history behind it. The perception perhaps is that it is targeting the middle-age to the senior customer. We are slowly changing that by introducing more vibrant colors into our new stores. Our merchandising mix will be more towards the younger generation.
We opened a new store in Bangalore with more vibrant colors. This is keeping in mind our intention to cater to the younger generation. We have got positive reactions and the same designs are being replicated in our new stores. Our existing stores will slowly adapt to the new designs.
What about international stores?
We are exploring with various people the options of setting up stores internationally. It could be a franchisee or JV. Managing the store would be easy for us but it is better to be with the players who already exist in international markets.
Our focus for the coming years will be to have good economies of scale by growing our domestic market. This will make us competitive in sourcing too. The international market may require some different things though with the same theme; maybe in terms of size, price and product-mix. We are currently doing more study to ensure that we enter the international markets successfully.
What is your sales-mix?
Home décor and artefacts would be around 40-45%. Anyone setting up a house and wanting a different feel will end up picking stuff from any of our stores. Fashion and fashion accessories are another big area for us.
Tea is another of the products for which we are a hot destination. Tea is something I am very passionate about. We have a shop-in-shop deal with the US based ‘Chado Tea’ - a specialty tea company. We sell around 60 varieties of teas. Our specialty was teas of India. But we felt our Indian customer should also have a choice; so we introduced teas from around the world including China, Japan, South Africa, and Sri Lanka and of course the Indian teas like Darjeeling. We also bring in estate teas.
We are trying to promote various wellness products. Besides tea, we promote aromatherapy products and personal care products of good quality.
What is the latest shareholding pattern?
Around 60% is owned by the promoters. A little less than 15% is owned by Fidelity Multi-Trade. FDI is not allowed in retail so we cannot get in FDI money even in terms of private equity.
What is your message to shareholders?
Our shareholders, vendors and team want to see the company grow. From the few stores we were running for so long, we have moved into an expansion mode when the slowdown happened. We saw rentals crashing by half and decided to move in as it made sense to get in at such times. We may have lost out on opportunities in the past; but that is better than losing a lot of money like some retail players. We have seen a bloodbath in the market as retailers went on an expansion mode focusing on number of stores and topline.
We may have not had the resources and perhaps not the will to lose money. We want not just our company but each of our stores to be profitable. Our stores are open throughout the year. Even if our staff goes on a picnic, we have the main corporate staff taking over the operations. The time is now. We are an over 100-year-old company with a strong heritage now set to grow.