Ram Agarwal started Vishal Mega Mart in Kolkata in 1986, in a 100 sq ft shop in Lal Bazaar. It was a struggle in the beginning, but within two years his store had taken off, and today Vishal Mega Mart has branches all over the country.
With a turnover of Rs 89 crore (Rs 890 million), Vishal Mega Mart has been one of the pioneers of bargain retailing in India, and now it is diversifying to become an all-purpose departmental store.
In the beginning
My family had a business in Calcutta (now Kolkata) when I was growing up, but I wanted to do something different, so I got a job instead. However, by 1984, I got bored and decided to start something by myself.
At that time, especially in Calcutta, there weren't really any retail stores. People would buy fabric and get their clothes stitched. I think I was one of the first people to put forward the idea of a large departmental style retail store that early on.
Financial worries
I started with around Rs 100,000, for which I had to take out a loan as well as dip into some family savings. This went into renting our workspace, which was an office and a workshop rolled in one, and hiring the three people I had working for me. We sourced all our material from Calcutta itself, and stitched our garments in-house.
It took two years for us to really take off -- until then it was a continuous learning process for me, since I was relatively inexperienced in running a business. I had to learn various tricks along the way, especially in terms of selling. We set up our first shop in 1986, and by 1990, we had four showrooms in Calcutta.
The first big outlet was set up in the popular Esplanade area in 1997. The thing that really made a difference was, around 1988, I had the brainwave of introducing sales. That idea really took off -- we would buy in bulk at discounted rates, and sell at really low prices. We took temporary shops and put up sales -- we'd get lines going around the corner!
Expanding sales
The first shop we opened outside of Calcutta was in Bhubaneshwar, and today we are present in cities like Jaipur, Indore, Hyderabad and Pune. We set up our first Delhi shop in 2002 -- now we have seven.
I owe all my success to the fact that I've managed to really differentiate my product: we offer pure value for money. We do business at a low margin, by cutting the middle-man -- and that's why we clicked. We're probably the only players in India who purchase with cash, and buy directly from the manufacturer. We started with a price point of
Rs 125 on average, and today this has only increased to Rs 250, pretty reasonable by today's standards. We even do formalwear within this range.
The inspiration
I got the inspiration to diversify my stores when I went abroad. Big retailers like Sears or Walmart cater to absolutely everything. They're multi-purpose department stores, and we don't have their equivalent here. While it is emerging now in India, there is still nothing like an organised retail sector.
In the beginning of 2004, we started to branch out into furnishings, cosmetics and other fast-moving consumer goods. We now have a 1,50,000 sq ft hypermarket in New Delhi's Mathura Road.
At this point, it is a little tough to manage this kind of expansion, especially with all the different varieties it brings -- you have to keep your fingers in several pies at once which is a bit of a juggling act -- but if you can manage this sector, there is no doubt that you will be king of retail in India.
Hope for the future
We hope to reach Rs 5,000 crore (Rs 50 billion) by 2010. This is a sobering thought, given that when I first started, we were making sales of around Rs 200 a day! Our expansion plans are still on target, we're planning more stores in Delhi and the big metros. I think the main reason for my success is that I was in the right place at the right time, and I realised that the middle classes were a vast untapped resource. They wanted to spend their money, but they also wanted bargains, and this is exactly what I gave them.
As told to: Samyukta Bhowmick
