From Mr. Ramchandra Agarwal, the Chairman & Managing Director of V2 Retail Store, story on how a retailer can grow his business using different strategies, tips, and tricks. # **Journey of Mr. Ramchandra Agarwal** - Mr. Ramchandra Agarwal was born in Kolkata. While pursuing his graduation, he started a job (instead of joining his father’s business). - After one year, he left the job as he understood that he won’t be able to fulfill his dreams with this job. - He took a 50 square feet shop on rent and started his business. He has done various types of businesses in this shop like Xerox machine, selling Coco Cola, etc. but all these businesses were flopped. - At that time, customers have started moving from fabric to readymade garments. So, Mr. Ramchandra Agarwal started the business of garments, which proved to be a super-duper hit business for him. - He earned Rs. 1 crore in one year in this 50 square feet shop. This is a world record according to per square feet. - Later, he also started exhibitions cum sale in his shop. He used to buy products at discount from different brands and then put these products on sale. - Customers get value for money on these products as they get a shirt in Rs. 80-100. - This business of Mr. Ramchandra Agarwal worked pretty well. - Gradually, he opened a big shop in 1996-97. In 2001, he came to Delhi and became the first player of bringing value retail. - V2 retail has made great contributions to bring Modern Retail to India. # **Points of Success for an Entrepreneur** To be successful in any business, an entrepreneur should focus on the following points: 1. Team Building 2. Discipline 3. Proper planning 4. Technology 5. Review Mechanism 6. Cash Flow management When Mr. Ramchandra Agarwal has started his business, he didn’t have knowledge of the above mentioned products as he becomes entrepreneur at a very early age. He focused only on two things: 7. Team building 8. Bringing product at low cost and selling it at low cost He got success from these two points initially. So, it is not necessary that an entrepreneur has to be in-line with all the 7 points mentioned above. # **Details of Retail Business to make Your Business Successful** Mr. Ramchandra Agarwal has explained how to stabilize and manage your retail operations in the following points. ### **1. Product** _What you should sell?_ In retail business, you need to identify: - Which type of fashion does your clientele or customers want? - What price point does your customer wants? - Which color of product sells more? - Which size of product sells more? - Whether print design or check design sell more? To determine the answers of the above questions, you need to do assortment planning. Assortment planning is done on the basis of demand forecasting by: - Analyzing the last 2-5 years trend - Conducting market survey Demand forecasting helps in knowing which product is selling more. ### **2. Product value** Product value means how you can provide more value to your customers as compared to your competitors. To provide more value to your customers, you need to: - Control your retailing costs - Give product to your customers at low margins ### **3. Cost Control** Other big retailers have costing of Rs. 300 per square feet while the costing of V2 retail store is Rs. 165-170 per square feet because: - V2 retail stores take shops high street and cheaper rates. These shops have low rentals. - They hire people having low salaries. - They keep less people. - They save money spent on electricity and transportation. - They buy money at low prices by paying in cash. Thus, V2 retail store is able to reduce their cost of retailing and they are able to sell a product of Rs. 1 in Rs. 1.60 while other retailers (world-wide) sell Rs. 1 product in atleast Rs. 2-5. As a result, value retailing is so trending. ### **4. Technology** In retail business, you can install an ERP system to manage all your retail operations. ERP will help you in: - Inventory management - Inventory planning - Expense planning - Sales forecasting - Finance - Merchandising Don’t get afraid of ERP, Artificial Intelligence, Demand forecasting, Technology etc. Each of these things is all about logic. **If you use logic, then you can overcome all the hurdles.** ### **5. “Zero working capital debt based expansion”: A Strength of V2 retail** - If your assured ROI in company is 25%-30% and you are getting debt at 10%, then debt is not bad. - But, when you go for expansion based on only debt and take huge debts, it will be harmful for your business. - So, till the time you have good ROI and strong business model, then you should not go for expansion. Thus, you should: - Focus on your business model - Make a strong business model - Make an indispensable business model Once you made your business model indispensable, then you can take the debt easily. **`Mistakes done by retailers`** - If a retailer gets success in 3-5 stores, then he starts opening stores very rapidly. - For opening stores, they start taking debt and get stuck in debt trap because new shops are not giving you that much return. - So, everything starts getting against the business. - Take debt but do not go for overexpansion. ### **6. Review Mechanism** Review mechanism of small and big businesses are different. Let us see how. **`Small businesses:`** A small businessman sits on his shop for the whole day and before closing the shop he checks: - What was his opening balance today? - How much inventory he had in the morning and how much he has sold? - How much sell he has done? - How much money he had earned today? This is the simple review mechanism in case of a small business. **`Big businesses:`** If you have a big business and you cannot sit yourself in the office, then to manage and review the different business operations like inventory, sales, purchase, expenditure, etc. you will require a MIS. So, a big businessman should have a strong MIS system. An MIS will help you to take a good business decision. Process of review mechanism in big businesses: 1. MIS provides a crisp report of the business operations to the heads of departments. 2. The heads of the department review the reports and make the points on which action needs to be taken. These action points can be like sales is decreasing, inventory is increasing, etc. 3. The head of the departments can discuss these pointers with the business owner and take the right decision. It also helps in removing all the loopholes. MIS tells about the status of business based on different parameters like position of inventory, position of profit, position of sales, position of purchase, etc. It helps in identifying the problem points in the business so that corrective actions can be taken to run the business smoothly. Thus, it helps in controlling the business. **For example:** - MIS tells you that your inventory is more, so, you can decide how you can dilute it. - MIS tells you that your purchase is less, so, you can decide how you can make your purchase on time. ### **7. Retail Store Operations** If you have a shop of 10,000 square feet with 1,000 fixtures, then a retailer should consider one fixture as one shop and thus, you have 1,000 shops. In every fixture, a retailer needs to determine: - Which type of stock is in the fixture? - What is the monthly output of the fixture? - What should be displayed in the fixture? All the above questions need to be answered for all the 1,000 fixtures. The retailer, who knows the items to be displayed in every fixture and the monthly output of every fixture in his shop, is successful. As he knows that which product should be displayed in which fixture and at what time of the year, so, he can plan accordingly and can grow his business multiple times. This is also called per square feet transaction, per square feet profitability, or per square feet inventory turnover. ### **8. Supply Chain** Supply chain means making a particular product available at particular time and at particular place. **For example:** You require 20 varieties of round neck T-shirts in March in your shop at Patna. So, you need to determine the following: - When you should place the order of the T-shirts? - When you will get the manufactured T-shirts? - When the order will reach to the warehouse? - When the order will be dispatched from the warehouse? - When does the order should reach the shop in Patna? - Does the order reaches to the shop in Patna or not? This is all about the supply chain. - Supply chain is very crucial for every business. - You should plan your supply chain effectively and monitor the time and action plan regularly. - You should check whether your supply chain is working as you have planned or not. It is important to make your supply chain efficient otherwise you will not receive the product on time and it will be stocked and increase your cost. # Summary - Decide which product you should display and sell at a particular time - Determine ways to provide more value to your customers - Control your cost to provide products to your customers at better prices - Take the help of technology to manage your business operations - Make your business model strong - Don’t go for unmindful expansion - Don’t take huge debts that you won’t be able to payback - Have a review mechanism in place to monitor your business processes regularly