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August 30, 2024
In a startup world, founders are typically creators first while investors see themselves as the monitors. Therefore, conflicts between the two are almost a default feature of a relationship that in effect funds a dream. From ‘off’ chemistry to differences of opinion to what some founders see as shackles on entrepreneurial freedom, the reasons could be any or a mix of all. Watch this discussion, with a mega-panel of intense start-up founders on the one hand and investors with VC funds on the other, addressing the pain points on Cash, Control, Creativity, Chemistry and Culture in a supercharged encounter. Session Anchor, Devangshu Dutta (Founder, Third Eyesight) reflected, “Those who have heard classical music jugalbandi or witnessed jazz musicians jamming will appreciate the creative tension, the give and take that was the thread throughout this discussion, reflecting the reality of the relationship between entrepreneurs and VCs.”
Watch the video
INVESTORS:
Ankita Balotia, VP, Fireside Ventures
Aashish Vanigota, Principal – Investments, IvyCap Ventures Advisors Private Limited
Bhawna Bhatnagar, Co-founder, We Founder Circle
Nitya Agarwal, VP-Investments, 3one4 Capital
Harmanpreet Singh, Founder & Managing Partner, Prath Ventures
Vamshi Reddy, Partner, Kalaari Capital
Zoeb Ali Khan, Vice President, Sauce.vc
D2C FOUNDERS:
Abdus Samad, Founder, Sam & Marshall Eyewear
Akshay Mahendru, Co-Founder & CEO, The Pet Point & Nootie
Malvika Jain, Founder, SEREKO
Nitin Jain, Founder, Indigifts
Puneet Tyagi, Egoss Shoes
Radhika Dang, CEO & Founder, The Good Karma Company
Rahul Aggarwal, Coffeeza
Udit Toshniwal, Founder & Director, The Pant Project
Vaani Chugh, Co-founder & Director, D’chica
Yash Kotak, Co-founder, Bombay Hemp Co.
Yashesh Mukhi, Co-founder, Chupps
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August 24, 2024
Writankar Mukherjee & Navneeta Nandan, Economic Times
24 August 2024
Quick-commerce operators such as Blinkit, Swiggy Instamart and Zepto are aggressively trying to lure away consumers from large ecommerce platforms like Amazon and Flipkart by matching their prices across groceries and fast-selling general merchandise, triggering a price war in the home delivery space.
This is a departure from the earlier pricing strategy of quick-commerce players who typically charged 10-15% premium over average ecommerce marketplace prices for instant deliveries, industry executives said.
The strategy now is to win consumers from large ecommerce at a time when urban shoppers increasingly prefer faster and scheduled deliveries, they said.
An ET study of prices of 30 commonly used products in daily necessities, discretionary groceries and other categories, including electronics and toys, in both ecommerce and quick-commerce platforms reveal the pricing disparity has been bridged. “The pricing premium which quick commerce used to charge for instant deliveries is gone with these platforms now joining a race with large ecommerce to offer competitive pricing to shift consumer loyalties,” said B Krishna Rao, senior category head at biscuits major Parle Products.
It seems to be working. Quick commerce is the fastest growing channel for all leading fast-moving consumer goods companies, accounting for 30-40% of their total online retail sales, according to company disclosures in earning calls.
These platforms are also expanding their basket with larger FMCG packs to cater to monthly shopping needs but also non-groceries such as electronic products, home improvement, kitchen appliances, basic apparel, shoes and toys amongst others.
“Consumers have all the apps on their phones and all they want is quick deliveries at the best price,” said Rao of Parle Products.
The increasing competition is putting pressure on ecommerce majors to reduce delivery time.
‘Market acquisition cost’
Flipkart is even eyeing a quick-commerce foray by piloting a 10-minute delivery service called Minutes in some parts of Bengaluru.
Jayen Mehta, managing director of Gujarat Cooperative Milk Marketing Federation that owns the Amul brand, said now that people are buying regularly from quick commerce with an increase in their assortment, legacy ecommerce platforms like Big Basket and Amazon are trying to deliver faster and same day, which has increased competition pressure.
“At the end of the day, consumers compare across channels before buying. So, pricing equality has become important,” Mehta said. “But then, quick commerce has a delivery charge if the order is below a certain value,” he added.
But does their business model allow quick-commerce players to wage a sustained price war against ecommerce platforms?
Quick commerce model requires multiple dark stores to be set up in close vicinity in each market, while ecommerce players mostly make deliveries from centralised warehouses.
But then, quick commerce platforms right now are at a phase where ecommerce was 7-8 years back, said Devangshu Dutta, CEO of consulting firm Third Eyesight.
“Price matching by quick commerce is to acquire market share and is part of market acquisition cost even when it might not be profitable at a per unit transaction level,” he told ET. “They may have to sacrifice margins in the short term to get customers shopping more frequently.”
Blinkit chief executive Albinder Singh Dhindsa earlier this month said the advent of quick commerce has made people want things faster than they would have otherwise got from ecommerce.
“This has led to a direct share shift of a number of non-grocery use cases to quick commerce where customers were primarily reliant on ecommerce for buying these products,” he said in the Zomato-owned quick-commerce platform’s June quarter earnings release.
Dhindsa said quick-commerce platforms are gaining sales by incremental growth in consumption, shift in purchases from next day ecommerce deliveries and mid-premium retail chains.
Citing an example, he claimed the demand Blinkit has generated for online-first oral care brand Perfora is a testament that such brands’ growth and adoption on quick commerce is much faster than on ecommerce.
(Published in Economic Times)
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August 19, 2024
Sagar Malviya & Faizan Haidar, Economic Times
19 August 2024, Mumbai/New Delhi
About a dozen listed lifestyle, grocery retailers and quick-service restaurants (QSRs) reduced their employee count by nearly 26,000 in FY24, retreating from the hiring spree of the past two financial years after they slowed down store expansion rate amid weakening demand.
According to their latest annual reports, the reduction was completely led by five retailers – Reliance Industries’ retail arm, Titan, Raymond, Page and Spencers – which saw their combined workforce decline 17% or by 52,000 people. The staff count was across permanent and contractual employees and adjusted for attrition in the retail segment, the second largest employer after agriculture. These retailers had a combined workforce of 429,000 people in FY24 compared to 455,000 employees a year ago.
“There is a shortage of talent and we are trying to tie up with universities so that the industry has the option to hire. Some companies might have reduced staff due to shutting of some business, but companies like Shoppers Stop and Trent continue to expand and will require staff,” said Kumar Rajagopalan, CEO of Retailers Association of India that represents organised retailers in the country.
Consumers had started reducing non-essential spending such as that on apparel, lifestyle products, electronics and dining out since Diwali 2022 due to inflation, increase in interest rates, job losses in sectors like startups and IT, and an overall slowdown in the economy. India’s retail sales expansion slowed to 4% last year after a surge in spending across segments-from clothes to cars-in the post-pandemic period, triggered by revenge shopping.
RIL in its annual report said the overall voluntary separations in FY24 were lower than FY23 and the retail industry typically has a high employee turnover rate, especially in store operations.
“Store productivity usually happens in cycles and we have seen consumers unleash their spending post pandemic, which led to retailers expanding their network or square footage. However, if some of the stores are unviable, then management teams are now highly objective, even ruthless, and will shut stores,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight. “In addition, any company planning to list would like to have healthy and lean operations, although we cannot pin-point it to Reliance in this case.”
Weak sales saw these retailers having the slowest pace of store expansions in at least five years at 9%. The retail sector took 7.1 million square feet of space across top eight cities in 2023, which is expected to dip to 6-6.5 million sq ft in 2024, according to commercial real estate services firm CBRE.
“There’s an enormous management bandwidth requirement to just get this entire ship running in the right trajectory, right direction, and with the relevant speed. We are thinking about what this company will be 10 years from now. And hence, if you want to reach there in a nice way without too much damage or bruises, then what is the kind of talent we need to have today in the next 2 years, in the next 3 years?” Avenue Supermarts CEO & MD Neville Noronha asked investors.
(Published in Economic Times)
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August 10, 2024
Faizan Haidar, Economic Times
10 Aug 2024, New Delhi
Japanese apparel major Uniqlo’s sales growth in India slipped by more than half to a still-strong 32% last fiscal year while its net profit expanded by 25%.
The Indian unit of Asia’s biggest clothing brand posted a net profit of ₹85.1 crore for the year ended March 2024 with net revenues of ₹824 crore, according to its latest filing with the Registrar of Companies (RoC). Uniqlo India had posted a profit of ₹68.1 crore with sales of ₹625 crore in the previous year. Its on-year revenue growth was 69% in FY23 and 64% in FY22.
Uniqlo opened its first door in the country in September 2019, but lockdowns and other constraints during the Covid-19 pandemic delayed its store expansion plans. At present, it has about 13 outlets in the country. Overall retail sales growth rate across segments such as apparel, footwear and quick service restaurants (QSR) fell year-on-year every month in FY24, reflecting comparatively weaker consumer sentiment.
Last fiscal’s comparatively slower 4-7% growth rate sustained this year as well, with May and June seeing a 3% and 5% rise each, Retailers Association of India (RAI) recently said after a survey of top 100 retailers.
“The market was sluggish for the industry as a whole last year, and that will reflect in practice every brand P&L, whether Indian or international,” said Devangshu Dutta, chief executive of retail sector consultancy Third Eyesight. “However, any brand that is committed to the Indian market as a strategic market for its future growth will take the ups and downs in its stride,” he said.
“Uniqlo’s expansion plans now include store sizes that would be smaller both in the cities it is already present in and in newer cities, which should help it tap into the demand at operating costs that are appropriate to each location,” Dutta said. Inditex Trent, Spanish fast-fashion major Zara’s joint venture with Tata that runs 23 stores in the country, saw its revenue rise 8% to ₹2,775 crore last fiscal, significantly down from 40% growth a year earlier, according to Trent’s annual report. Its net profit fell 8% on year to ₹244 crore.
Over the past decade, global brands Zara and H&M have become market leaders in the fast fashion segment in India.
Uniqlo has said India is one of the most priority markets where consumers are increasingly shifting from ‘fast fashion’ to long-lasting essentials and functional wear. As the world’s second most-populated country, India is an attractive market for apparel brands, especially with youngsters increasingly embracing western-style clothing.
Uniqlo is globally popular for functional basics like T-shirts, jeans and woollen wear, unlike fast-fashion rivals which are associated with designs that move quickly from the catwalk to the showroom.
(Published in Economic Times)
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August 9, 2024
Manu Balachandran, Forbes India
9 August 2024
If it hadn’t been for a kind manager at Canara Bank in Malappuram district of Kerala, Shaju Thomas would have probably continued being a journalist.
It was around 2005, and Thomas had wanted a loan of ₹10 lakh from the bank, the only SME (small and medium enterprise) branch in his district, to keep his entrepreneurial venture going. The manager, impressed by the 26-year-old’s perseverance, finally decided to take a gamble on him, even though his predecessor had thought otherwise.
“It was God’s intervention,” Thomas says about that time. “If it weren’t for that money, Popees wouldn’t have existed today.” Today, Thomas runs Popees Baby Care, a business that rakes in well over ₹100 crore a year and has become one of Kerala’s best-known brands in a little over two decades. The company produces everything from clothes to soaps and diapers, retailing them through 70 exclusive outlets and some 8,000 other retail outlets across the country.
Three other stores, all in the Middle East, are being readied this year, which will see Popees go head-to-head with some of the world’s leading baby care brands in malls across Dubai, Abu Dhabi and Sharjah. “I am a believer in Indian cotton being the best,” Thomas tells Forbes India from his office in Thiruvali in Kerala. “Indian manufacturing is also the best. That gives me the confidence. I am obsessed with quality, and that’s at the centre of everything we do. Money is only secondary.”
Last year, Popees posted annual revenues of ₹122 crore and is now setting sights on a topline of ₹250 crore by 2025, before growing to ₹1,000 crore by 2027. The brand sells garments between 18,000 kg and 22,000 kg a month and employs over 1,400 people at its two factories in Kerala and Karnataka. “I am in this business not to make huge gains and profits,” says Thomas, managing director of Popees Baby Care. “We are in the business of baby care, and we must be very careful about everything we do because it involves babies. What I want is satisfaction at the end of the day.”
Last year, Thomas and his wife, Linta Jose, acquired a majority stake in Chennai-based publicly traded Archana Software Limited and renamed the company as Popees Cares Limited. Now, the privately held Popees Baby Care will merge with Popees Cares Limited, before raising private placements, as the company targets aggressive growth in the coming years.
“This year, we are not being very aggressive,” Thomas says. “We want to focus on the listing and merger. We also want to premiumise our collections because our customer profiles are changing. There are more premium customers coming into the market. What we are focussed on is an Ebidta margin of between 34 and 38 percent.” Ebitda refers to earnings before interest, taxes, depreciation, and amortisation.
India’s childcare product market is expected to grow between 13 and 14 percent annually to ₹5.4 lakh crore by 2028, with younger parents focusing on branded apparel and consumables, according to a report by Redseer Consultancy. It also helps that India is the world’s most populous country, and has one of the highest birth rates globally, with 16 births per thousand people, almost 1.5 times that of developed countries. A growing Tier II and III market only adds to the potential for companies such as Popees.
“Global brands carry with them the momentum and visibility that has been built over decades, which translates into trust as well as aspirational value,” says Devangshu Dutta, founder and CEO of Third Eyesight. “But in many cases their pricing is higher than what would be affordable for most Indian consumers. Therefore, there is space for Indian companies to create strong brands that address both factors, trust and value.”
Taking the Risk
Thomas has always had an entrepreneurial streak in him and began venturing out on his own after school. Much of that, he says, is hereditary, coming from a family that had been in business, supplying rubber to the likes of MRF. Passionate about photography, Thomas had set up a small studio in Nilambur, his hometown in Kerala that is known for its teak wood, after his schooling.
Simultaneously, he studied economics before going on to finish his diploma in journalism from the Calicut Press Club in 2000. “Nobody wanted to study economics back then,” Thomas says. “Now it’s in huge demand. But I realised the importance of studying concepts such as scarcity, demand, and supply, now.”
After his graduation in journalism, Thomas picked up work with the Malayalam newspaper, Mangalam, and was soon posted to the hills of Wayanad. Around the same time, he invested in a baby care shop in Manjeri, a town near Kozhikode in Kerala. “I knew there was potential in the sector,” Thomas says.
Being an investor made him aware of the nuances involved in the baby care segment. To begin with, there were no brands, and clothes were often brought in bulk from garment manufacturing units and sold in the state for as little as ₹5. “Very often, these clothes would come in big cartons with naphthalene balls and smelled of sulfur,” Thomas says. “And regardless of that, they sold like hot cakes. Sometimes, people would come from hospitals after childbirth, pick up these clothes, and make the newborn wear them.”
That’s when Thomas realised the massive underlying opportunity in manufacturing good quality, branded clothes for children. “There were big brands for everybody except kids,” Thomas says. He soon packed his bags and went off to Tirupur in Tamil Nadu, India’s then-thriving garment manufacturing capital, to understand how he could venture into the business. With him, he also carried a few pieces of child wear that he had sourced from friends abroad, as a reference for the quality of the product that he was looking to make.
“I was thinking both domestic and international,” Thomas says. But Tirupur was something of a rude shock. Thomas found himself in a market near the railway station, with tiny shops, that had their stitching units outside, from where clothes were dispatched to various states under different labels. “When I enquired with them, they asked me if I wanted to sell domestic or international,” Thomas says. “If it was domestic, I had to buy from there. If it was international, I had to have a minimum order quantity. It was the first time I had heard of that concept.”
But Thomas wasn’t startled. Instead, he found a supplier, who would meet his demand for quality, and soon began working with a minimum order quantity, which is usually the minimum number of units a business is willing to sell to a customer in a single order. He also turned down an offer to join a television news channel, IndiaVision, much to the disdain of his family who had wanted him to remain a journalist.
Starting his own business also came with its own set of challenges. For one, in an era when customers didn’t bother about branded clothes for their kids, and when cheaper alternatives were easily available, Thomas’ products were significantly expensive. He could only sell for ₹60 what was otherwise available at ₹6.
“People in the Malabar region have a mindset to help others,” Thomas says. “Shops in the region started keeping my products. That gave me confidence.” Thomas also realised that he needed to set up a factory in Kerala if he had to make timely deliveries as business was slowly picking up steam, and shipments from Tirupur took time.
Saviour at the Bank
Setting up a small factory was no cheap affair. His family had already been opposed to the idea of doing business, which meant Thomas now had to turn to banks to raise capital. “I made a project report, and submitted it to the bank,” Thomas says. It was a branch where his father, a businessman, had a loan limit of ₹1 crore. “I wanted ₹10 lakh. But the manager wasn’t convinced by my business plan. He asked me ‘why don’t you start a curry powder business’ since people always want food. I told him babies are born every day and clothes for them were essential too.”
But his plea fell on deaf ears and was finally sanctioned a loan for ₹1 lakh without collateral. With his personal savings of another ₹4 lakh, he bought machines from Chennai. “All I knew was that if I set out to do something, I will complete it,” Thomas says. He soon set up a small factory, combining a few rooms in Thirunelly in Kerala. The idea was that the raw material would come from Tirupur, and the workforce in Kerala would do the final stitching before it was dispatched.
Thomas, however, was still desperate for working capital to keep the business running. It was around this time that a new manager had come to the branch and Thomas would visit him every day to pitch his business. “I used to tell him about my ambitions,” Thomas says. “I was particular about cleanliness and having everything in order and would invite him to my factory.” Finally, after much persuasion, the manager visited the factory and was quite impressed. “Within two days, he added another ₹9 lakh to my loan, and that’s how I started.,” Thomas says. “If that hadn’t happened, I would have shut down.”
With the additional funds, Thomas soon began expanding and selling products across Kerala. By 2005, Thomas was married, and his wife also joined him in the business, helping design products. His background in journalism also helped, as he began putting advertorials in evening newspapers about the importance of buying high-quality kids’ wear. By 2010, Popees changed its logo, a turning point in its growth trajectory. That splendid run lasted until 2019, Thomas says, when Popees would only be able to meet 70 percent of its demand and had already been distributing in markets including Punjab and New Delhi.
It was around this time that Thomas began toying with the idea of its retail stores. “My cycle was very long,” Thomas says. “Once you reach a certain turnover, you need to reduce your time. That’s how I thought of my showroom. Until then they were sold in other retail outlets.” The yarn for Popees clothes comes from organic cotton farmers in Ahmedabad, and the manufacturing is done in Tirupur, based on designs given by Popees. Only the final assembly and last round of stitching is done in its factory.
“I was scared to foray into retail,” Thomas says, “My business was already at about ₹74 crore, and I was worried if stores would stop taking my products. With floods in Kerala and Nipah virus in Kozhikode, there was uncertainty already in the market.”
Still, Thomas took the plunge and set up a proto store outside the company’s headquarters. That was a success, with customers flocking to the store and buying in bulk, with the store generating ₹5 lakh in sales. In 2019, Popees opened its first retail outlet in a 1,500 sq ft showroom in Kochi, before starting in Trivandrum and Bengaluru.
But Covid-19 came as a dampener. In early 2020, Thomas had almost finalised a deal with a private equity (PE) major to raise ₹100 crore for a 26 percent stake sale. The due diligence had been completed, and everything seemed on track before the PE firm pulled out after uncertainties about the future. Thomas had also met actor Aishwarya Rai Bachchan to bring her on board as the brand ambassador for Popees.
With Covid-19 shutting down operations, Popees turned to manufacturing masks and clothes for children, all given for free in Kerala during the pandemic. Simultaneously, though, it went on an expansion spree with its retail outlets going from some six stores to over 30 in two years. Today, the company has 70 stores, 35 of which are franchise-invested, company-operated while the others are franchise-owned, franchise-operated. Twenty more stores are expected to be completed this year, with the company gearing up for a launch in the UK and Australia, apart from the UAE.
There is also a focus on omni-channel distribution, with Thomas saying that as much as 30 percent of his clientele chooses to buy products online. The company already sells on ecommerce platforms. Today, it has the capacity to make 5 lakh garments monthly.
Alongside, it has moved to manufacturing everything from baby oil and soap to baby wipes and fabric wash. The product range includes toys, baby soap, body wash, shampoo, lotions, and towels, among others, although a significant share of the sales still come from clothes. “I have three children, and much of what we did was also keeping them in mind,” Thomas says.
That’s why he prefers not to give discounts on products, instead focusing entirely on the quality. “I am obsessed with product and quality,” Thomas says. “We can also provide discounts after raising our markups significantly. But we don’t want such high margins.” The company has now hired a new designer in Bengaluru to bring in a premium collection, which Thomas says, will put Popees in a different league in the next few years.
“We don’t want a lot of money,” Thomas says. “We didn’t have children for a few years after marriage. People are praying and waiting for children. So, you have a responsibility to give good products. If you give good products, they will always come.”
“While the large proportion of those are born to families in low-income segments, there is still a substantial number born to households that are middle and upper income,” adds Dutta of Third Eyesight. “Also, as incomes are growing and the size of families is reducing, the budget available per baby is climbing, which is obviously a strong driver of market growth.”
All that means, for Thomas, the baby steps are now complete. It’s time for the sprint, and the 47-year-old is all set for that.
(Published in Forbes India)
