Stuck in a time warp

AKBARALLYS: PERFORMANCE APPRAISAL

It was the stylish place to shop. When Akbarallys opened in Mumbai more than 100 years ago, it was classy, elegant "" and the only one of its kind.

Mumbai's elite came here to stock up on everything from pillowcases to perfumes.

As its three outlets became landmarks in the city, Akbarallys was constantly reinventing itself to stay ahead of the times: whether it was its enormously successful gift vouchers scheme or baskets of alphonsos during the mango season.

Even its promotions were different "" once the retail chain hired a low flying aircraft that displayed a banner wishing Mumbaikars a happy Diwali. "They had everything going for them," says Govind Mirchandani, a retail industry expert.

 

WHAT I WOULD CHANGE ABOUT AKBARALLYS

B S Nagesh, 
Managing Director and CEO, Shoppers' Stop

The positioning. Akbarallys' customers have changed, so the chain needs to reinvent its vision, operations and objective.

Kishore Biyani, 
Managing Director, Pantaloon Retail

Everything. Retailers must distinguish between soft and hard goods. Fashion and durables is a terrible mix.

Govind Mirchandani, 
Retail analyst

The diffused look. It stands for too many things and has focused on offering "everything".

Raghu Pillai, 
Managing Director, RPG Retail

Akbarallys should get more aggressive on retailer-driven promotions.

But that was in the 1980s, when large-format retail chains were still a novelty. Now, even as the retail environment has changed beyond all recognition, Akbarallys appears to be caught in a time warp.

The chain, which opened in 1897, is confined to three large-format stores, four convenience stores and two furniture shops in Mumbai. Turnover is a meagre Rs 50 crore, up 15 per cent from last year.

In comparison, a newer entrant like the Pantaloon group "" which was a supplier to Akbarallys in the 1970s and 1980s "" has carved out a Rs 650-crore retail business that straddles three retail formats and 30-odd stores.

Why did Akbarallys move from being hot to not? Part of the blame lies with the promoters "" the chain is owned by the Khorakiwala family, which has owns Wockhardt.

In the 1990s, the pharma business took the front seat and is now a Rs 1,000-odd-crore business. Add a family split in 2002, which divided the retail business as well (the Santacruz store is now separate from the rest) "" and naturally then, "expanding the retail business was never the priority," as company insiders point out.

Meanwhile, new retail chains such as Shoppers' Stop and Westside were setting up shop close by. While the Shoppers' Stop in Andheri was a 15-minute drive from Akbarallys at Santacruz, the Fort outlet of Westside is dangerously close the south Mumbai Akbarallys.

"The focus has been on passive sustenance rather than aggressive competition," agrees Sankar Dasgupta, general manager, Akbarallys. That meant continuing with an age-old business model.

When the newer retail stores positioned themselves as specialty stores, Akbarallys was a jack of all trades. Home appliances, durables, cosmetics, clothes or even medicines, the store had something for everyone.

It didn't quite work out that way. Generally, customers who step in for clothes don't spend time looking at durables, or vice versa. That meant there was little scope for cross-purchases.

Still, the store wasn't in a position to prune its inventory. Household appliances and durables accounted for 60 per cent of sales.

If the store stopped selling clothes or cosmetics, there was no guarantee that the 40 per cent loss could be made up by selling durables. Especially because even the durables business was under attack: new stores were opening that offered discounts on white goods.

The motley product mix took its toll on the store's image. "It was neither a departmental store because it was too small, nor a specialty store because its portfolio was so diffused," says a retail consultant who has worked with the company.

The result:the store was cramped, with little moving space. "Since we are not a large format store, every square foot matters," admits Dasgupta.

It's not as if Akbarallys hasn't tried to brush up its act. A store-level study was done to track successful product categories; the rest were hacked. The agenda was to free up space, even if it meant that one store would stock what the other did not.

For instance, stocking shoes at the small store at Fort was not working out. As Dasgupta points out, "Products like shoes need huge display space, not to mention the space to stock various sizes."

So, even though footwear was an average performer on the sales chart, it was booted out of the Fort store. At present, the Chembur outlet stocks shoes "" but only for men, which require fewer stock keeping units (SKUs).

Meanwhile, the Chembur store has closed its pharmacy section, while it continues at the Fort outlet. "The idea is to go ahead with what works at each location with minimum investments," says Dasgupta.

Then, the chain has also extended into small-format convenience stores at petrol pumps.

The extension is a result of an experiment at the Chembur store, where Akbarallys opened a mini-supermarket some years ago. Within two years, the supermarket accounted for 25 per cent of the store's revenues.

Gas station outlets may seem like a comedown from catering to Mumbai's rich and famous, but Dasgupta justifies the move. "We did not want to invest too much into extending the brand," he explains.

The focus has been on keeping expansion costs low "" a no-frills, convenience store at a petrol pump costs under Rs 1 crore; a stand-alone store in a similar location would require investments of at least five or 10 times more.

The store has also changed its no-discount policy to some extent. It now picks product categories and offers price-offs on them randomly. "We didn't want to become a me-too and put the whole store on discount," says Dasgupta.

While that's helped prune SKUs, it's also changed the look of the stores.

Banners and displays promoting the current discount deals or promotions are prominently placed right at the entrance "" something the elitist store abstained from previously. But then, sometimes style must give way to substance.