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29 March 2024

A case study of how to grow from one store to 500

Ved says retail is a tough business with low margins and requires detailed work. (EB FILE)

Published
By Vigyan Arya

In the past one year, Nilesh Ved, Chairman and Founder of Apparel Group, has been honoured with the Sheikh Mohammed bin Rashid Al Maktoum Award for Business Excellence in the re-exports category, given the Dubai Quality Appreciation Award and the Human Development Appreciation Award and a local publication honoured him with the Young Business Achiever Award.

Starting as the next generation of businessmen, Ved launched his venture with one brand, Bossini, in late 1990s, which he has now expanded with 48 of the most sought-after international brands. His network is spread across the Gulf with more than 500 stores. Even in the current economic crisis, he plans to double the number of outlets in the Gulf to more than 1,000 by 2012. The original plan was to reach this figure by 2011.

“We are quite confident about reaching this milestone and we would have achieved it a year earlier had it not been for the current financial crisis,” he told  Emirates Business in an interview.

What is the strength of the group?

People are our biggest strength and starting from as few as 65 employees in 1996-1997, when we started with just one brand [Bossini], today we employ more than 4,500 people of which 2,000 are working in the UAE alone.

A majority of our original staff are still with us and some of the senior management have shares in the establishment, encouraging them to be have a sense of belonging and commitment that can only be acquired and not bought. Most of the people who worked with us on our first store in BurJuman in 1996 are now managers and are handling important portfolios with greater responsibilities. We also employ a lot of nationals and they are working at various levels.

In some of our stores in Sharjah, some nationals are working on the floor level as young executives and learning a lot as they work their way up. We are happy and confident about their contribution and I personally feel today’s generation of nationals are keen learners and willing to work hard. In fact, we have been recognised by the government for our efforts in the emiratisation of the work force.

How did the Apparel Group start?

It started from humble beginnings with one outlet in BurJuman. After we acquired Bossini from Lal’s Group, we launched our efforts in the international market with Nine West, whose deal we signed with the United States-based brand for the GCC [except Saudi Arabia] in the year 1998-1999.

Since then, the group has grown with 50 leading brands in the portfolio and has spread with more than 500 outlets in 14 countries across four continents. Our first expansion out of the GCC was in India and since then we are operating successfully in Russia and Poland in Europe. In the Far East, we are present in Thailand and Malaysia.

What are your growth plans and have they been affected by the current crisis?

Our aim is to become the number one retail group in the world and make Dubai proud. We are steadily moving towards that with more than 500 outlets at the moment and hope to cross the 1,000 mark by 2012.

If it wasn’t for the economic crisis, we would have achieved it much earlier, perhaps by the year 2011 if not 2010, but current circumstances have compelled us to go cautiously, without having to sacrifice on our long-term goal.

In fact, the global scenario has compelled many retailers to leave this sector and move into other businesses and we intend to fill into those slots and take advantage of the void that needs to be filled. Retail is a tough business with low margins and requires detail work. I always tell all my employees that “retail is in details” and this prophecy has helped us in achieving our targets.

How much have you been affected by the economic crisis?

Of course, we have been hit by the recession, but our horizontal expansion has helped us to cope with it better. Some of the higher segments have been hit more than others, but the numbers have not been alarmingly high. The high-end brands such as Bally have seen a fall as much as 48 per cent but other brands have seen just seven to eight per cent drop.

Our profits have gone down by 20 per cent but that is because of our prior commitments we made despite slowing down of sales. This was not being foolishly courageous but part of our long-term plans and I have full faith in Dubai to bounce back. It may not happen as early as most of the analysts are saying, but it surely will bounce back to more realistic figures.

Have you achieved what you had set out to when you launched your business?

In all honesty, when we started our business we did not have any specific vision. In fact, we didn’t even have a strategy. The scale of business was too small and we had little time available to think of such accomplishments. We spent long hours running the business, spent a lot of time on the floors and the only agenda was to retain the brands, grow the list of brands and eventually grow the business itself.

After we crossed the landmark figure of 100 outlets we decided to strategise and chart out a business plan. It’s probably easy to open first 10 outlets. Even to open the next 100 outlets is not that difficult, but once you cross that figure, you need to have specific strategy and order to maintain those outlets than to just keep opening new ones.

The scale of things take a new dimension and one has to apply scientific formulas to your gut feelings and business instincts  because after a while its beyond that to run retail business.

Does the experience of opening the first 10 or 100 outlets help in achieving the big number of 500?

You may have worked out a formula when establishing the initial number of outlets but it cannot be just duplicated or apply the cut-and-paste phenomenon to replicate the exercise and open new outlets. To me it’s like driving a tuk-tuk when you are at the level of 10-20 outlets but once you are in the league of 100s of outlets in various parts of the world its like flying an Airbus 380. Tuk-tuk may have given you basic skills, but you are not on the same road now.

How do you avoid making mistakes?

You have to make mistakes to learn. The only way I look is that be passionate about your business but not necessarily about the brands or outlets. If something has worked before may not produce the same results elsewhere in different circumstances. The trick is to learn to let go. Cut your losses as soon as you can.

When you are in business, don’t apply any emotions to it. Having said that, maintain your passion that will drive you to strive, but if you involve emotions, that affects your decisions and compels you to take decisions that may not be the right ones.

After growing in GCC, how did you venture out in other parts of the world?

We started with retail outlets in India. We started our business there as early as 2001, but since then, business there has changed a lot. The market has evolved, the country has opened and the middle-income-group is on a spending spree.

Social and shopping habits of Indians are changing and malls are taking full advantage of that. The concept of mall in comparison to the open bazaar is relatively new, but the “yuppy” population and nuclear families are accepting the new mall culture, resulting in lot more shopping than before, which was earlier as per the needs.

We did have a very tough time in the initial stages, but its on of our best markets. In fact, India market is working to our advantage to brave the economic storm as that market has already started showing some very positive signs of recovery.

You are a big supporter of the mall concept as is evident from the fact that almost all of your outlets are in malls. Any reason why?

Malls drive the population to shops, even when there’s no need of shopping. Shopping malls have altered that age old concept shop per your needs. This happened with the introduction of food courts and cinemas in the malls. It gives an extra reason for people to visit the mall. In fact, the first timers to the mall are visiting only the food court or the theatre.

This is also the reason that alleys in malls approaching the cinemas or food courts are a better location for shops. In my opinion, location of your outlet in the mall is one of the key factors for drawing the footfall. I have always insisted to seek the “Sheikh Zayed Street” among the mall alleys. I do not want to open in the side alleys or in any other corners of the mall. We have so much faith in the mall culture that we have invested in two stores of the same concept in the same mall. Yes, we have two Aldo stores in Dubai Mall and we are getting a good number of footfall in both the outlets.

Does it not cannibalise your clientele and what about the restrictions that are imposed by certain mall operators such as the Mall of the Emirates that do not let you open your outlet in a pre-defined radius or else you have to either pay a heavy fine or share revenues?

Malls are one of the main essentials of retail business and we have to work hand-in-hand with mall operators to succeed. As for the canibalising part, we have to take calculated risk and compensate for the small portion of overlap that may occur.

As for the imposition of the “radius rule”, I would say that each retailer has to work out a deal with the mall operator that suits him or her and the mall. We have had very encouraging deals by all our mall partners and have no complaints about any such imposition that may be there.

What are your future plans?

As I said, we have clearly defined the company mission and whether we open 1,000 outlets or more, it’s all a part of the vision to be the top global retailer.

PROFILE: Nilesh Ved Chairman and Founder,Apparel Group

Ved was highly influenced by the North American retail environment and had a dream of bringing fashion brands of the West to the Middle East.

Today, his company, Apparel Group,has 50 international brands from the United States, the United Kingdom, Canada, Europe, East Asia and Australia and more than 500 stores across 14 countries spread across four continents. 

The group, an ISO 9001:2000 certified company, is also the winner of the Sheikh Mohammed bin Rashid Al Maktoum Business Award (MRM Biz Award-2007), Dubai Quality Appreciation Award (2006), Dubai Human Development Appreciation Award (2006), Super brands (2008-2009) and various other regional and industry awards.

Ved has also recently won the Young Entrepreneur of the Year award from IIFA, Mumbai and the Young Business Achiever Award from Ahlan Masala, Dubai.

With the vision of becoming the No 1 retailer globally, Apparel Group has set its mission of opening the 1,000th store by the end of 2012.

Beyond his own business empire, Ved is also a board member of the Indian Business and Professional Council (IBPC) and the member of Entrepreneurs Organisation (EO).

 

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