The Bombay Store was started as the Bombay Swadeshi Co-operative Store in 1906 by Lokmanya Tilak and Mummohandas Ramji with Ratanji Jamshedji Tata as one of its founding directors. The company has evolved with time and has now embraced the online retail format and become a multichannel retailer with a clear focus on building a scalable and profitable business. The company has steadily grown its online format and expects its share in total sales to rise to over 15% in the next 3-4 years on the back of rising demand from consumers. Iamwire interacted with Asim Dalal, MD of The Bombay Store to understand the finer aspects of their journey from a brick-and-mortar to a brick-and-click format as well as their plans for the future. Here are the excerpts of the interaction:
How has The Bombay Store evolved so far in terms of reach, revenue and growth pattern?
The Bombay Store has grown tremendously over the years and we now manage 16 stores across multiple states. We have now also added the online format which has seen fair amount of traction. We’ve been on an expansion spree lately and have opened many stores last year. In terms of revenue, we have grown from Rs.23 Crores to over Rs.32 crores currently.
How much does online sale contribute to your business currently and how do you see that changing moving forward?
E-Commerce has definitely been beneficial, but we are still in the learning stage. Currently, the share of online as % of total would be about 0.5 to 1%, but we expect this number to rise to more than 15% over the next 3-4 years, which is indicative of the phenomenal growth that we expect from the format. We expect this growth to be driven by increased demand from consumers as well as we increasing the products being offered online.
How has the online retail channel evolved for you over the past year and what changes were necessary for you to move from an offline retailer into a multichannel format?
We are in the process of strengthening our back-end operations to cater to rising demand from the online format, and we would then be able to offer more products and choices to consumers. Right now, we’ve experienced growth month-on-month and are trying to build our brand online.
What are your key learning from the entire process of becoming a multichannel retailer? And what are the pitfalls that others should be mindful of?
We realize that online retail requires a completely different mind-set. It requires building your brand, with a lot of commitment from the company and management. One needs to be patient to understand that getting business online takes time and energy. This medium is very dynamic and rapidly expanding and thus comes with own challenges. In our case, logistics and getting the right human resource were the two primary challenges and we feel that companies should plan accordingly.
What are the various marketing channels used by TBS and how important is the use of Social Media to build its brand and attract customers?
We use multiple channels thru the brick and mortar format and are now also using Twitter and Facebook very effectively for the benefit of the company and the brand. We have dedicated resources within the company responsible for managing the same and they are doing a wonderful job. Social media is a great medium which has helped us positively to interact with our consumer and spread awareness.
How do you enhance consumer interaction with the company and what role has technology played in the process?
We have taken measures that our customers have the same level of interactions with the brand and we have a lot of customers who get in touch with us over the phone or mail and we respond in a very fast and effective manner.
We have built our brand on exclusivity and sourcing is one of our biggest strengths. We have our own designers who design products for us, and we do sourcing throughout the country. Over time, we may create some exclusive products for online. We have already done that for our physical stores. For eg. our Bangalore store has a lot of products designed specifically for that region.
What is the holding pattern of the company and what are your plans for raising capital in the future? What does it depend on?
Currently, the Dalal family owns about 60%, Fidelity Multi Trade owns close to 15% while the public holds the rest. We want to raise funds and need to get our plans in place before we go out in the market. This may take upto 3-4 months as we want to understand how much funds do we need and for what. We would essentially need working capital and to build capabilities to prepare for expansion. However, right now it may be premature as we want to build a business that we can cater to.
How many employees does TBS have and what are some of your Human Resource challenges?
Currently we have 200 employees which would rise as we expand in both the formats. However, getting the right resources for the online format is a big challenge as the number of skilled personnel is not that large.
What would be the impact of international players entering the B2C market on TBS and other domestic multichannel retailers?
Impact would always be there. Ultimately its about getting a share of the wallet. However, being an established player in a niche category, we don’t expect much impact on us. Overall, it would definitely impact the market.
You are a bit different from the industry in the sense that you do not offer CoD and also charge differently for shipping different items. What are your reasons behind the same and do you see that impacting your online sales negatively? Is that slated to change in the future?
Our focus is to build a profitable business model and the current set-up keeps evolving and changing with time. We are yet to finalize anything for the long-term and are just experimenting with what works best for us. If you talk about shipping charges, we charge a nominal amount and pay for the rest from our pocket and it has not impacted our sales negatively in any manner. This may change when our numbers start to grow. For COD, we have actually heard many horror stories about COD and thus want to keep away from it for some time. We would look at COD when we are more confident about the entire process and how to manage it effectively.
Given that you’ve moved to a brick-and-click format, what are some of your warehousing and inventory management challenges?
Online retail has brought about its own set of challenges. The online format makes it more challenging as now you are dealing with fulfilling individual orders as opposed to just delivering bulk quantities to stores. We manage over 25000 SKU’s and with such large numbers, inventory and warehousing does pose a challenge. Due to our move to online retailing, we have now moved from city specific depots to a central warehouse on the outskirts of Mumbai which has been quite beneficial. We now service all our orders through a single warehouse which increases efficiency and effectiveness.
Given the current state of affairs, what is your outlook about the market and do you see any major hurdle that may derail growth?
We expect that online would definitely grow and become an alternate channel for us which would complement our physical stores. We may not be able to service the length and breadth of the country by opening stores everywhere, and that is where we feel the maximum benefits would happen. It would definitely help us in getting additional business from Tier-II and III cities. Currently, the business is still happening from the Top 10 cities in India. In terms of hurdles, we feel that if the general slowdown in the retail market which has been in place since Diwali continues, then it may have an adverse impact if the market does not grow.
What has been your role in changing the company’s philosophy and outlook and what are your key focus areas?
My focus areas are to build the brand and make the business more profitable. I work closely with my team to ensure that operations are running smoothly and spend quite a lot of time with my senior team to ensure the same.