Low Price for Success
UNSUNG HEROES OF INDIAN
By Naresh Kumar
Munisami walked into
one of the most well known stores in Chennai, with his
wife and two children – one boy and one girl.
He bought a 2 metre shirt piece for himself, a saree
for his wife, shirt and half pant set for his 4 year
old son and a frock for his 3 year old daughter. Tired
but happy, they then made their way up to the 5th floor
of the building. There Munisami bought idlis and vadas
for all of them, coffee for himself and his wife, and
icecream lollies for his children.
Munisami had entered the store
with a little more than Rs. 200 in his pocket. He walked
out with enough money to get them all home by bus.
Surprised? Here’s the
clincher - this scenario is not set in the 1960’s.
It is set in year 2001 A.D.
The saga of Saravana Stores
begins in 1970. The three brothers who started this
– Yogaratnam, Selvaratnam and Rajaratnam- were
born in a village near Tuticorin in Tamil Nadu, called
Panickar Kudiarrappu. They had an agricultural and rice
mill business there, which was doing very well
Then, in the late 1960s, discontent
– that divine catalyst of greatness- began to
gnaw at them. There was an increasingly strident voice
inside them, which told them that there was great fame
and wealth waiting for them, and that this was not going
to come about in the agricultural business in Panickar
Kudiarrappu. Heeding that voice, they went to Chennai,
and in 1970 started off their journey to stupendous
success in a small shop that sold vessels. The next
six years were spent in consolidating and growing this
business. It was in 1977 that the Saravana Stores of
today first took shape.
Off the main street in T. Nagar,
there is a small lane. A casual stroller along the main
road might actually miss it, which probably explains
a signboard on a lamppost on the main road opposite
the lane, pointing towards the lane with the legend
“Saravana Stores” on it. The lane itself
is small and crowded, reminiscent of a thousand such
bazaars in any city. Hawkers peddle small ticket items
on the sides of the street, and there is a loud buzz
of cheerful, busy voices.
Halfway down the lane, you
see the side of a five-storey building that hasn’t
seen paint in years. It is only when you come to the
front of that building and look up above the entrance
that you realise that this is Saravana Stores. It takes
a few seconds more to find out that the building next
to it, and the building opposite it, are also Saravana
Stores! The first of these is a store selling all conceivable
household items, the one next to it is – hold
your breath – a jewellery store(!), and the one
opposite it is a garments and textiles store.
If you walk into any one of
these stores, the immediate impression is that of a
railway station. There are hordes and hordes of people-
so much so that there are actually traffic controllers
on each floor- whistles, uniforms, et al-who noisily
direct people to the left or right flight of stairs,
depending upon whether they want to go up or down to
In the household items building, there are 4 floors
besides the ground floor. The ground floor is breathtaking
at first sight – rows and rows of vessels are
to be seen, hung from the ceiling, scattered all around
the floor, in fact everywhere. In the other four floors,
you find household items of every conceivable kind –
crockery, cookers, household decoration items, thermoware,
sofas, beds, dressing tables. One floor even sells TVs,
washing machines and other electronic appliances.
The garments building also has 5 floors, covering a
range and depth of textiles and garments that simply
has to be seen to be believed. The top floor is a small
eatery, where one can get idlis, dosas and other popular
snacks, as well as beverages like coffee, tea and cold
The jewellery store has just two floors, but even here
the range and depth if merchandise is incredible. Rows
and rows of gold, silver and diamond jewellery are exhibited
along the walls and in showcases.
The common thread underlying
all of these is that they are all discount stores. Prices
are on an average at least 20- 30% lower than elsewhere.
In the jewellery section, the percentage difference
is somewhat less- around 10% or so- but for an item
costing around 8-10,000, that works out to a saving
of almost Rs. 1000- a considerable amount. In the household
section, there is similar saving for the high-ticket
items, such as TVs and fridges.
OK, so there is a discount
store, selling all kinds of items. What is it doing
in an “Unsung heroes of Indian retailing”
The magnitude of Saravana Stores’
achievement sinks in upon comparison with Shoppers’
Stop, considered one of the greatest retailing successes
in modern times. Shoppers’ Stop has outlets in
6 cities, a total space of over 2,25,000 sq.ft. The
outlets are air-conditioned, well maintained, and have
beautiful store displays. Their advertising campaign
is considered to be pathbreaking, and the staff is well
dressed and articulate. They have a good loyalty card
system in place, and their service is reasonably quick
and efficient. They have spacious, pleasant cafes, with
a variety of different snacks.
Saravana Stores has only one
outlet in Chennai, consisting of three divisions, has
a lower middle class clientele and a total space of
not more than 25,000 sq.ft. The exterior of the outlet,
as mentioned before, has not seen paint for many years.
To a person accustomed to store interiors like that
of Shoppers’ Stop, a first exposure to the interiors
of Saravana Stores is tantamount to a mild shock. There
is a huge crowd at all times. Goods are piled on top
of one another (sofas, plastic chairs), or displayed
all along the wall (garments, textiles). The staff is
dressed in uniforms that are generally mildly grubby,
and is not likely to win any popularity contests when
it comes to courtesy towards customers. Billing and
delivery can take almost 20-25 minutes. The signboard
across the street is about as much advertising as they
have ever done. The eatery at the top of the garments
store has no tables and chairs- customers sit on the
floor on their haunches. They sell a total of about
8 items-coffee, tea and cold drinks included.
Shoppers’ Stop has a total turnover of 160 crores.
Saravana Stores has a turnover in excess of 600 crores
– earned through 20,000 customers per day!!
At first glance, it is
an intriguing case. Here is a store that ostensibly
flouts all the norms, the so-called “best practices”,
and continues to do so whenever it gets time from laughing
all the way to the bank. Its customer orientation is
nothing to speak of when it comes to the normal parameters
of courtesy and efficiency. Its efforts at store display
are non existent. The bulk of its products are unbranded.
It takes care of its employees, but its efforts in that
direction are by no means remarkable, like, for example,
its namesake, Saravana Bhavan. It has no facilities
to speak of in terms of entertainment or convenience.
What, then, could account for its incredible success?
Is price all that matters? Can it be that when it comes
to price, all retail management theories break down,
like Newton’s laws at the subatomic level?