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Nalli

- Ramnath Nalli, vice-chairman of Chetty's, decided in 1991 to expand the family business of silk sarees beyond their home market in Chennai, India. - They first held an exhibition in New Delhi to test the northern Indian market, which is now their second largest market after Chennai. - Nalli now has 24 stores across India, Singapore, and the US, and aims to open 2-3 new stores per year to reach a turnover of Rs 650 crore. - Key strategies for expansion included establishing a strong home brand first, educating new consumers, maintaining quality and trust, funding internally, and owning all stores for better control.

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Sadurya Govindaraj
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131 views2 pages

Nalli

- Ramnath Nalli, vice-chairman of Chetty's, decided in 1991 to expand the family business of silk sarees beyond their home market in Chennai, India. - They first held an exhibition in New Delhi to test the northern Indian market, which is now their second largest market after Chennai. - Nalli now has 24 stores across India, Singapore, and the US, and aims to open 2-3 new stores per year to reach a turnover of Rs 650 crore. - Key strategies for expansion included establishing a strong home brand first, educating new consumers, maintaining quality and trust, funding internally, and owning all stores for better control.

Uploaded by

Sadurya Govindaraj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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When and how the idea of evolving into a chain developed

Following the liberalisation of the Indian economy in the 1990s, Chetty's grandson Ramnath
Nalli, vice-chairman of the group, decided to expand the business. In 1991, Nalli held an
exhibition-cum-sale in New Delhi to test the north Indian market. Today, Delhi is our second
largest market after Chennai. Nalli currently has 24 stores in India, one in Singapore and one
in the US. With a plan to open two-three Nalli Silk stores every year, the company is
targeting a turnover of Rs 650 crore by next year.

Key things to keep in mind when venturing beyond home market

Before venturing into other markets and territories, a company needs to establish a strong
brand in the home market. When we came to Delhi, people wanted to see what
Kanchipuram saris looked like. They liked what they saw, so we decided to enter the market.
Second, educate consumers about your product. Third, build trust and quality.

Strategy/business model adopted for the expansion

We funded the expansion via internal accruals and bank loans. All Nalli stores are
company-owned. This business is hard to monitor. At Nalli, we supervise everything, from
weaving to designs, and this is why we are reluctant to get into franchising. We have our
own manufacturing centres across Tamil Nadu, Karnataka and Andhra Pradesh, and our
exclusive weaving. There has never been any discount sale at our stores.

Choosing a new location

The three key things in any retail business are: location, location, location. The metros are
expanding fast, making it difficult for customers to commute. We see lot of potential in the
metro cities, even where we are already present - in Bangalore we have four stores; we
recently opened a third store in Delhi.

Maintaining quality and consistent service across outlets

We educate and train our salespersons to offer personalised services. We teach them not to
push sales, but if a customer wants to see a hundred saris, show them a hundred saris. It is
also important to offer information on the product. At Nalli, we put appropriate labels on
every sari - pure silk, polyester sari, pure zari (gold and silver) etc.

Challenges faced

Our weavers are the backbone of the enterprise. However, the lack of adequate labour in the
weaving industry is a problem. With the lure of jobs in MNC factories, many weavers are
abandoning their vocation, particularly the second or third generation weavers. Look at
Kanchipuram. They have companies like Nokia and Ford there. These young boys and girls
prefer call centres over weaving as a source of livelihood.

Scaling the model - at what point a chain becomes viable


We saw growth potential in the market and opened our stores one after another. For us, it
was never about economies of scale. We could have expanded faster but the issues here
are weaving, and supply and demand. We can open 10 stores but the store has to be
profitable. At Nalli, we make sure that the store is profitable from Day 1.

Branding decisions

We are the only retailer in apparel today that turns over the inventory 12 times a year.
Generally retailers turn over the inventory three to four times a year. This means they keep
stock for three to four months. We add new stock every month. We do quite a bit of seasonal
advertising. Our campaigns are planned around Diwali and the wedding seasons.

Lessons learnt

The key to success in this business is purity, fair price, quality and customer service. We
learn every day from our customers. We learnt that while one colour sells in one market, it
may not even move in another location. Times and fashion are changing and catering to the
varying customer tastes is an important lesson that we have learnt.

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