Corporate: S. Kumars weaves a retail dream

With 300 exclusive showrooms and a refurbished distribution system for textile products, Nitin Kasliwal hopes to catapult his brands to the top.

Although 39, Nitin Kasliwal is as excited as a child about his new project. Nitin, Managing Director, S. Kumars Synfabs, feels that the exclusive showrooms he is planning will turn out to be ''beautiful showcases for the company's products.'' His brother, Vikas, 43, CEO of the fledgling skumars.com, animatedly talks about how the b2c Net start-up ''will add a new dimension to the S. Kumars Group's retail network.'' The group has other plans on the anvil too: diversifying into the ready-to-wear segment, revamping its traditional distribution system for textile products, and building shopping malls.

Evidently, the Kasliwals are weaving retail ambitions to achieve higher growth in the 21st Century. The Rs 1,000-crore S. Kumars Group has realised that even in the traditional textiles sector, a successful-and revamped-distribution strategy holds the key to success. Nothing could be a better indicator of that mindset than Nitin's template for growth. S. Kumars Synfabs' future, he claims, will lie in its ability to change its distribution network and diversify into the ready-to-wear segment. That, Nitin expects, should make the company's turnover grow from Rs 700 crore in 1999-2000 to Rs 1,600 crore in 2003-04.

So, what new distribution-wefts are being woven by Nitin? For one, the setting up of 300 franchise showrooms across 100 cities to supplement S. Kumars' existing network of 250 wholesalers and 30,000 retailers. Over the next 3 years, each showroom is expected to generate an annual turnover of Rs 1-3 crore. Together, they will account for a quarter of the company's sales. But the success of such outlets can be guaranteed only if backed by a strong brand. Thanks to its down-market image, S. Kumars lags behind competitors like Raymond.

THE MORTAR & MOUSE STRATEGY

Retailing and e-tailing are the 2 planks of S. Kumars' growth strategy. The former will take the shape of Landmark Citi, spread over 400,000 sq. ft in Central Mumbai, encompassing a leisure complex, multi-brand mega-store, and a few restaurants. Once the Rs 150-crore venture takes off, the group plans to set up 7 more complexes in cities like Delhi, Bangalore, and Chennai. But it is e-tailing which offers more e-xcitement for Vikas Kasliwal, who is spearheading both the ventures. Called skumars.com, the venture aims to rope in 50,000 cyber-franchises who, in turn, will sell goods through 30,000 cyber-kiosks in over 1,000 cities and towns. To overcome problems due to inadequate infrastructure like cable or PCs, the franchises will operate the multi-product kiosks through V-SAT links. Says Kasliwal: ''e-Commerce is about marketing, branding, and distribution. And our group has tremendous strengths in all these areas.''

However, the dot.com venture has a number of constraints. For one, S. Kumars has to take individual permission from the Department of Telecom for each V-SAT connection. And that could translate into delays. Two, each franchisee is expected to cough up an amount of Rs 2 lakh. Finally, e-Commerce is yet to take off in a big way in the country, and requires near-perfect logistics management. But then, skumars.com, which has already managed to get 25,000 applications in 3 weeks, is thinking about the future-not the present

Explains Gautam Singhania, 34, CEO, Raymond: ''We have built up a brand that the customers can trust.'' Agrees Lipika Ganguly, 25, Brand Manager, Benetton: ''We do not sell a product. We sell a complete look.'' As if these weren't daunting tasks, S. Kumars also has to focus on the store-architecture. ''Unless the ambience of the exclusive shops is distinct from the multi-brand stores, the purpose of setting them up is defeated,'' warns Thomas Puliyel, 45, Country Manager, Research International, which specialises in retail research.

To meet these challenges, Nitin has decided to diversify his portfolio. The company, which is the leader in the school uniforms and work-wear segments with a 40 per cent marketshare, has expanded into the Rs 1,600-crore worsted fabrics segment with the Reid & Taylor brand and the home furnishings segment. By the end of the year, S. Kumars Synfabs plans to enter the ready-to-wear segment, that is expected to become a Rs 10,000-crore market by 2005. And the company wants to grab at least a 10 per cent share of that pie in the next 5 years. Avers Nitin: ''A strong presence in this segment is crucial for our survival.''

S. Kumars' strategy is to tie-up with a few (read: 4 or 5) international brands, and sell their products in India. While the company will offer a complete range in the value-for-money, ready-to-wear category, its premium offering will target only men. With a mere 5 per cent of Indian males buying readymade trousers, and 60 per cent readymade shirts, the potential for growth in the segment is high. ''The segment will explode,'' predicts Nitin, ''once ready-to-wear catches on in the small cities and towns.'' The entry into the ready-to-wear segment does make sense. Says Sumit Roy, 47, Brand Identity Director, LocoNotion Idea Studios: ''The global trend is that companies selling only fabrics will be left by the wayside.''

However, competition in the ready-to-wear segment is intense. In fact, most existing brands jostle for space in the retail market, and new players are waiting to enter in the near future. One indicator is the segment ferocity with which the existing players are expanding their retail reach. For instance, over the next 2 years, Levi's will increase the number of its retail outlets from 90 to 110; Newport will add 100 more to its existing 225 outlets; and ColorPlus and Zodiac will expand from 75 to 100 each. And Raymond has several initiatives up its sleeves which it plans to announce in the near future.

Nitin is prepared for competition: he is looking at ways to cut costs to prepare his company for that era. And that includes a radical change in the distribution network: cutting the existing 4 layers-agents, wholesalers, semi-wholesalers, and retailers-to 3-company's salespersons, guarantor agents, and retailers. Although the change will be restricted to only a third of the company's retailers-and cover only a few products-it marks the beginning of a direct-to-retail network. Under this arrangement, the company's 250-odd salespersons will directly deal with retailers, and the wholesalers and semi-wholesalers will become agents. ''The salesforce will be in touch with customers, and we will get quick feedback,'' explains Nitin.

While S. Kumars Synfabs hopes to save money-as the combined commissions for agents and salespersons will be less than what was being earned by the wholesalers and the semi-wholesalers-the company will now need to maintain inventories at its end. And that could hike its costs substantially. Says Puliyel: ''For the new network to work, the company will have to work out a clear logistics strategy.'' But Nitin feels that will not create any problems as S. Kumars has manufacturing facilities at 22 locations and ample warehousing capacity. He adds: ''We will use the new network for a limited range of products.''

Clearly, the model is based on what is practiced by FMCG companies like Hindustan Lever. But, according to Nitin, this is the first time that a textiles firm is adopting it in India. The aim: to change a traditional, stodgy textiles major into a FMCG company. The hope: to catapult its brands into the top slots in the textiles market. It remains to be seen if the hype will belie the hope.