How to Scale Your Retail Business?
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| How to Scale Your Retail Business By Md Meer Hasan |
How to Scale Your Retail Business?
Overview
the Chairman of V-Mart Retail Ltd. – Mr. Lalit Agarwal, explains:
How to branch out your business?
Learnings
1. Highlights from Mr. Lalit Agarwal’s Life
Mr. Lalit Agarwal’s father has a tailor shop in Cuttack, Odisha. Mr. Lalit used to sit with his father in his shop and learn the basics of retailing business like:
- Which types of customers are there in small cities?
- How to run a shop?
- How a product is made using different ingredients?
- What are customers’ needs?
- How to handle customers?
2. Entry of Mr. Lalit Agarwal in Retail Business
Mr. Lalit Agarwal incorporated Vishal Mega Mart, in the year 1999 and then V-Mart in the year 2003. V - Mart was a pioneering shop offering quality & variety clothing at affordable prices.
When the first store of V-Mart was started, Mr. Lalit Agarwal used to take care of all transactions of business including:
- Check staff whether they are working properly and ensure that there is no theft
- Store the product himself or under his supervision
- Negotiate the prices with the suppliers
- Inflow and outflow of products
However, to expand the business, Mr. Lalit Agarwal introduced ERP in his business. Let’s see how.
3. Enterprise Resource Planning (ERP)
Mr. Lalit Agarwal implemented ERP in 1999. ERP is a technology platform that helps you to monitor and control all your business transactions.
Advantages of ERP:
- It keeps a record of everything - starting from placing an order to a supplier, receiving material, displaying materials and selling them to the customer.
- It helps in maintaining the safety of stock. For example, if you have purchased 100 pieces of material and 80 pieces are sold, then where are the remaining 20 pieces. So, it can easily detect theft.
- It provides all the information in one place like:
- Cumulative cost
- Selling price
- Margin
- Wastage
- Cash Flow
- Bank transactions
- Payment mechanisms
- Colour, size, or shape of the product that sells more
- A vendor whose products are sold more
- Customer’s record
- Customer’s loyalty data
- Stock
- Returns file
- Taxation authority
- Profit balance review
The above information helps a retailer to:
- Identify business opportunity
- Control the cost
- Manage the business processes
- Makes your customers and vendors happy
- Make business expansion easy
4. How to move from Regional Business Model to Scalable Business Model?
According to Mr. Lalit Agarwal, if you want to expand your business or increase your number of stores, then you should:
- Identify the business opportunity or business gap first
- Assess the demand for your product
- Start working on your internal capabilities like:
- Believe in your people
- Develop standard processes
- Develop control mechanisms for business processes
- Create a maker-checker process
- Centralize some control mechanisms and decentralize others
For example, in the retailing business, you centralize the purchase and decentralize the distribution. You should create a centralized purchase depot or warehouse and distribute the products to the retail stores wherever required. You can do this based on the information provided by the ERP like:
- Product demand in different areas
- Upcoming festivals and products demand during festivals
- Seasonal demand in different regions
- Logistics by fleet process
- Transfer by technology
- Monitor using CCTVs, attendance machines, and various other controlling technologies
- Understand the market by conducting market research
- Talk to customers to understand their taste or choice
- Take customers’ feedback
- Conduct customers’ assessment
5. Points to be considered while Increasing Your Stores or Branch Out
While sitting at one place, you need to be aware of everything going on in your different stores and monitor it.
- You need to trust and engage people to handle your different stores.
- They are neither as capable as you nor do they work for your business like you.
- They will make mistakes. If you are selling 100 products, they may sell only 80 products.
- But, instead of running only one store and selling only 100 pieces, it is better to open three stores and sell 80 pieces from each store, which means a total of 240 pieces.
- So, by increasing the number of stores, you can increase your income multiple times.
- It will also increase your capability and boost your confidence.
- You will be able to convert your store into an enterprise that is scalable and sustain for a longer time.
6. How to understand Customer Behavior of a Region?
You need to trust your gut feeling and expertise. Study the following points to understand customer behaviour:
- What are the Customers’ needs?
- What is the affordability of customers?
- At which price, the customer will be ready to buy the product?
- What type of quality does the customer require?
- At what time does the customer require the product?
- Are you selling your products to target customers?
- Why customers will buy my product?
- What is the Unique Selling Proposition (USP) of your product?
- How to connect with your customers?
- How to do marketing of your product?
When your customers start spreading positive word-of-mouth about your brand, it is the biggest publicity and your brand will be successful.
Key Learnings
- Try to implement the new and latest technology in your business
- Hire technology vendors and learn how to use the technology
- Identify the business opportunity
- Determine the customer needs and study their behaviour patterns
- Install ERP to manage your business from one platform