Ebony Retail to expand operations

Chennai: The Delhi-based Ebony Retail Holdings - which sells garments, household items, gift articles, perfumes, jewellery, furniture, bathroom accessories through the Ebony chain, and books, music and coffee through its Wordsworth chain - is on an expansion spree.

The Rs.56-crore turnover company has plans to open a dozen outlets by investing Rs 130 crore. It recently opened a 40,000-sq ft six-storey departmental store in Chennai costing Rs 8 crore. Ebony already had seven such stores in major metros in the country.

Part of the $350-million NRI-promoted UK-based DS group, with interests in real estate, trading, leisure management, infrastructure, Ebony Retail had set up its first store in New Delhis upmarket South Extension area. Since then it went into hibernation for quite some time. In the meantime, the country saw apparel retail chains like Lifestyle, Shoppers Stop, Globus, Pantaloons, ITC Wills Lifestyle and several others mushrooming all over the country.

We first decided to test out our format in detail so as to correct the glitches before stepping out of Delhi, says executive director B S Narula. After four years, Ebony Retail finally decided to move to other cities. Our store layout is user-friendly in terms of movement from one department to another or in display of goods.

Ebony Retail struck alliances with other retail chains like Viveks Ltd for consumer durables, Bata for footwear and Qwikys for coffee pubs. Simultaneously, Ebony Retail also started promoting its own brand, Ebony ETC, by offering these as add-on to other popular brands that are displayed in the departmental store. Shoppers like to try out a new brand while buying well-known brands. The sales of new labels will remain low initially as building brand-equity takes time, says chief operating officer H S Kohli.

This learning is vital, as retail chains have to focus and spend on attracting quality footfalls before spending on their private label promotions. Building brand-equity is an expensive affair in the readymade garment market. For the destination stores, conversion of footfalls into purchases is important to get the bottomline right. According to Kohli, the company will be spending 5 to 7 per cent of its turnover on store promotion.

The company has gone for simple IT solutions rather than spending a fortune on ERP solutions. We started with a simple FoxPro-based system. Now a US-based company is developing solutions for our front- and back-end operations that will also support our customer loyalty programme. For the bookstore, a Chennai-based company is doing the work, says Narula.

Ebony Retail has decided to set up its own training institute for apprentices who would be given jobs in Ebony stores after their training is completed. The company opened its second outlet in West Delhi followed by stores in Noida, Chandigarh, Ludhiana, Jalandhar before moving to Chennai. The next Ebony store will be opened in Indore this month. Ebony Retail will be opening outlets in Coimbatore, Hyderabad and Bangalore at a cost of Rs 30 crore.

The company is selling books, music, toys and coffee under the brand name Wordsworth. So far, there are three Wordsworth outlets within the Ebony Retail stores, but the company is now planning standalone Wordsworth outlets as well.

The bookstore chain accounts for 10 to 12 per cent of the companys turnover. Sixty per cent of the bookstores revenues come from the sale of books, 25 per cent from music and the balance is from toys and coffee, says Kohli.

Why did the company go in for an alliance with other retail chains? We decided form partnerships with leaders in the field of consumer durables, footwear and coffee. They can offer a complete range than us, says group vice-president Lalit Kumar.

Narula says the alliances are revenue-based and the company doesnt charge rent for using the Ebony store space. The company is considering the idea of spinning off the household section - bed linen, crystals, gift articles and furniture - into a separate format. This will take at least one year.