 "Franchising does not work in our business: Nilesh Gupta")
A brief history of the enterprise
The first Vijay Sales was opened by my father, Nanu Gupta, at Mahim in Mumbai in 1967. It was just a 200 sq ft shop, and he sold only television sets. Black-and-white television sets were the craze then. The foundation of our business is our customer service and my father emphasised on it from the very start. He used to engage directly with the consumers, even going to their houses to fix their gadgets. We opened our second store only in 1986.
When and how the idea of evolving into a chain developed
The original store was running at full capacity and this led to the opening of our second store. When its sales picked up as well, we opened a third store in Mumbai. Till 2001-2002, we were present only in Mumbai and had 15-20 stores. It was only when MNCs came in with their large retail outlets that we realised that we needed to expand beyond our home turf to survive. The first Vijay Sales store outside Mumbai was opened in Surat 2002. Next was Pune (2004). We are now in Ahmedabad, Delhi, Haryana and UP.
Key things to keep in mind while venturing beyond home market
It's important to think local - think from that territory perspective. One has to study the market well. Although the basic principles remain same, the model or a scheme that is successful in Mumbai, may not work in Surat. On the operational side, the product assortment will vary across markets. Even the acceptability of schemes will vary - credit cards and EMIs don't work well outside Mumbai.
Strategy/business model adopted for the expansion
The seed capital for our expansion has mainly come from internal accrual and bank loans. We chose the company-owned model instead of the franchise model, which is preferred by many because it allows faster expansion. But the franchise model doesn't work in our business. We are not selling our own brands, but are aggregator of all brands under one roof. If we were to bring on franchisees, they'd learn the ropes of our business, gather experience and branch out on their own.
Our approach has been to enter a city with maximum potential and open multiple stores there. That gives us a strong foothold in that particular state. And when we open in other cities in the state, there are greater chances of brand recognition.
Maintaining quality and consistent service
We offer continuous training to our personnel. When we open a new store in a new city, we send a team of trainers from Mumbai, who have been with us for long. This team understands the brand and knows how Vijay Sales operate. They hand-hold the local recruits for six to eight months; then the local team takes over.
Challenges faced and lessons learnt
The greatest challenge has been to get the right people in the right places, working in the right roles. We have circumvented this problem by bringing on board local people who understand the customer profile, language and quirks specific to the particular city.
Scaling the model - at what point a chain becomes viable
In our segment, after 15-20 stores, the economies of scale becomes redundant. We are in the technology space and every time a new technology arrives, it has to be made available to the customer.
We take 45-50 days to set up a store. That time doesn't go down just because we have the experience and know how to streamline the processes. But what has changed is the time needed to start generating footfalls at a new store: we now have customers coming in from Day 1, instead of taking two to three months.
PE/venture funds' interest
Markets are growing rapidly and products are selling across categories. Earlier, sales were led by family consumption items like televisions, refrigerators etc. But mobile phones and laptops have been the game changers. Personal technology products are leading the genre now with multiple product lines like gaming consoles, tablets, mobiles, laptops etc opening up. The most noticeable change is that only big stores with wide ranges are working.
If you had to start over again, what would you do differently?
I am pretty happy with the way things have gone for us. The only thing I might do differently is our expansion plan. We went to Surat first, then Pune, Ahme-dabad and then Delhi. In retrospect, I'd like to have gone to Delhi first as it has the maximum potential after Mumbai.
The first Vijay Sales was opened by my father, Nanu Gupta, at Mahim in Mumbai in 1967. It was just a 200 sq ft shop, and he sold only television sets. Black-and-white television sets were the craze then. The foundation of our business is our customer service and my father emphasised on it from the very start. He used to engage directly with the consumers, even going to their houses to fix their gadgets. We opened our second store only in 1986.
When and how the idea of evolving into a chain developed
The original store was running at full capacity and this led to the opening of our second store. When its sales picked up as well, we opened a third store in Mumbai. Till 2001-2002, we were present only in Mumbai and had 15-20 stores. It was only when MNCs came in with their large retail outlets that we realised that we needed to expand beyond our home turf to survive. The first Vijay Sales store outside Mumbai was opened in Surat 2002. Next was Pune (2004). We are now in Ahmedabad, Delhi, Haryana and UP.
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We never had a very aggressive expansion plan. Our strategy was to build, consolidate and build further. We follow that strategy even today. We never wanted to open stores all across India at one go. All our stores are company-owned.
Key things to keep in mind while venturing beyond home market
It's important to think local - think from that territory perspective. One has to study the market well. Although the basic principles remain same, the model or a scheme that is successful in Mumbai, may not work in Surat. On the operational side, the product assortment will vary across markets. Even the acceptability of schemes will vary - credit cards and EMIs don't work well outside Mumbai.
Strategy/business model adopted for the expansion
The seed capital for our expansion has mainly come from internal accrual and bank loans. We chose the company-owned model instead of the franchise model, which is preferred by many because it allows faster expansion. But the franchise model doesn't work in our business. We are not selling our own brands, but are aggregator of all brands under one roof. If we were to bring on franchisees, they'd learn the ropes of our business, gather experience and branch out on their own.
Our approach has been to enter a city with maximum potential and open multiple stores there. That gives us a strong foothold in that particular state. And when we open in other cities in the state, there are greater chances of brand recognition.
Maintaining quality and consistent service
We offer continuous training to our personnel. When we open a new store in a new city, we send a team of trainers from Mumbai, who have been with us for long. This team understands the brand and knows how Vijay Sales operate. They hand-hold the local recruits for six to eight months; then the local team takes over.
Challenges faced and lessons learnt
The greatest challenge has been to get the right people in the right places, working in the right roles. We have circumvented this problem by bringing on board local people who understand the customer profile, language and quirks specific to the particular city.
Scaling the model - at what point a chain becomes viable
In our segment, after 15-20 stores, the economies of scale becomes redundant. We are in the technology space and every time a new technology arrives, it has to be made available to the customer.
We take 45-50 days to set up a store. That time doesn't go down just because we have the experience and know how to streamline the processes. But what has changed is the time needed to start generating footfalls at a new store: we now have customers coming in from Day 1, instead of taking two to three months.
PE/venture funds' interest
Markets are growing rapidly and products are selling across categories. Earlier, sales were led by family consumption items like televisions, refrigerators etc. But mobile phones and laptops have been the game changers. Personal technology products are leading the genre now with multiple product lines like gaming consoles, tablets, mobiles, laptops etc opening up. The most noticeable change is that only big stores with wide ranges are working.
If you had to start over again, what would you do differently?
I am pretty happy with the way things have gone for us. The only thing I might do differently is our expansion plan. We went to Surat first, then Pune, Ahme-dabad and then Delhi. In retrospect, I'd like to have gone to Delhi first as it has the maximum potential after Mumbai.