It is perhaps slightly uncommon, if not unusual, to find a North Indian running the operations at a traditional silk sari brand. Chennai-based Nalli Silks continues to be a stronghold of the Chetti family but it is slowly showing signs of moving with the times.
Having been around since 1928, Nalli had been steeped in the traditional mould for too long. But two years ago, Nalli Kuppusamy Chetti, Chairman, Nalli Silks, brought in Kamal Tandon – a business management graduate from the University of Washington with over 17 years of work experience in retail and banking – as its Chief Operating Officer in a bid to fast-track the pace at which Nalli was moving.
“It doesn't matter that Tandon is alien to the traditional silk sari business. He grasps things fast. This, coupled with his vast experience in retail, will surely be a shot in the arm for Nalli,” says Chetti.
Roping in Tandon is just one of the indicators that this Rs 550-crore brand, started by Kuppusamy Chetti 's father Chinnasami Chetti, is ready to shrug off its diffidence and get on to the fast lane. The ‘Nalli Next' retail format catering to the modern working woman is another attempt to bridge the divide. Major expansion plans are also on the anvil. But can Nalli, a household name in Tamil Nadu, weave the magic as it seeks to build a retail brand equity across the country?
Sure, the retailer has diversified into kurtas, kurtis , shirts and kidswear over the years. But these categories never really took off in a big way. Nalli was too set in people's minds as a silk sari seller.
Besides, Chetti just couldn't give up on the “principles” he grew up on. “We could have been a Rs 5,000-crore brand … But at the end of the day, what is important is job satisfaction. For that, we need to innovate every day. My father also believed in offering personalised service to customers. Going by these principles, we could never really open too many branches,” says Kuppusamy Chetti.
For long, Nalli remained a single-store brand in T. Nagar, a retail hotspot till date in Chennai. It was only in 1985 that it opened its second store in Madurai. Today, Nalli runs a modest 24 stores across major metros such as Chennai, Bangalore, Delhi and Mumbai.
“So far, Nalli has done little to really build the ‘retail brand' in a larger-than-life manner,” says brand consultant Raghu Vishwanath. Although Nalli opened more outlets over the years, it was rarely seen as “a true retail brand – people still associated the ‘brand' with the destination store in T. Nagar,” he says.
Nalli hopes a lot of this will change in the next two years. On the cards is a Rs 150-crore expansion plan, with the addition of around 12 stores across the country. “This is what the next generation wants,” says Chetti, referring to his son Ramanathan and grand-daughter Lavanya Nalli, who is now working with McKinsey in the US.
The focus will be on Tier 2 cities which account for a chunk of wedding sales. Wedding sales account for nearly 50 per cent of Nalli's total sales. “And a significant portion of this comes from people travelling from smaller cities (24 per cent of our overall sales). Hence, we plan to take Nalli to them. We kick-started our expansion plan in Tier 2 cities by opening a store in Coimbatore in April,” says Kamal Tandon, COO, Nalli. Stores will come up in Ahmedabad, Kanchipuram and Puducherry.
“Interestingly, Delhi is our biggest market after Chennai so we are looking at increasing our store count in the North (NCR and Punjab). We also want to enter the East (Kolkata),” says Tandon. More stores will come up in Bangalore and Mumbai as well. Nalli also has two stores abroad (the US and Singapore). There are plans to expand in the Asian market – possibly Sri Lanka.
Apart from the traditional ‘Nalli' format, the retailer also operates three ‘Nalli Next' stores in Chennai, Bangalore and Mumbai, catering to the demands of modern working women.” “We want to extend it to all metros where we are not present, especially the North,” says Tandon.
The sari business is a tricky one. Competition can be from anyone, even a small store round the corner. A fact Nalli is well aware of. But it rests its trust on products, not marketing. It does not believe in discounts, something several sari buyers clamour for. When several retailers in Chennai resorted to marketing strategies such as producing the longest sari or a sari with 60,000 colours, Nalli steered clear. “These gimmicks are of no use to the consumer or the business,” says Chetti.
It is only real innovation that differentiates, emphasises Chetti, as he meanders into the past when in the 1930s his grandfather introduced the chemical dyes so that a multitude of colours could be developed through the mixing of various dyes.
“In those days, there were limited colours, because only vegetable dyes were used. My grandfather introduced chemical dyes from CIBA, Switzerland. And the stringent weavers accepted the dyes since they did not hamper the shine on silk saris or compromise the yarn strength.”
So in came the ‘mustard' colour which is still in vogue. Then there is ‘MS Blue', popularised by eminent Carnatic singer the late M.S. Subbulakshmi. “ For this Diwali, we have a range of interesting design innovations in a riot of colours in a huge price range from Rs 9,000 to Rs 1 lakh – for pure silks,” says Chetti.
As you listen to the 70-year-old Chetti fondly recollect the good old days, you can't help but wonder if the brand is still stuck in a time warp. Chetti breaks your wee reverie with his take on what ticks with customers: Transparency.
Innovation apart, it is also important to offer the customer “information” on what is being sold, says Chetti. With the market flooded with fake silks and duplicate border ( zari ), customers need to be educated with appropriate labels. “At Nalli, every sari is labelled as pure silk, polyester sari, pure zari (gold and silver) or tested zari (this uses copper). Ever since we started labelling, customers are more aware and are asking questions wherever they go.”
“Nalli – then and now – stands for quality and honesty. We have dabbled in new things but our fundamentals are the same. Our pricing policy is also friendly and affordable,” assures Chetti, who has no interest in his company going public or infusing private equity funds. “I want Nalli to remain a family business with its values intact.”
While the brand has drawn up an ambitious plan, personalised service will not suffer, assures Chetti. “We will never open stores without basic facilities for customers like car parking, seating for all. I have often seen in sari shops where the daughter or wife is busy choosing, the poor father is found standing. That won't happen in Nalli.”
Saris have been Nalli's staple for long but Chetti's son Ramanathan has been dabbling with the idea of gold jewellery retailing for some time now. But the plan is yet to fructify.
“I don't believe in doing a business I don't know. My son wanted to get into the starch and glucose business 35 years ago. I told him I won't do what I don't know. I won't be able to adapt to the ups and downs in a new business,” says Chetti.
Having the appetite to grow alone won't help. Mere extension of product lines and expansion of outlets is not good enough, reasons brand consultant Vishwanath. Nalli needs to redefine its unique value proposition as a business.
“The brand still has limited awareness and perhaps limited appeal among the non-traditional, younger audience. The business needs to evolve a well-defined business brand strategy with well-delineated brand architecture. Otherwise, it may run the risk of having done too little, too late,” says Vishwanath.
Does increasing raw material price worry Nalli? “The raw silk rate has doubled in the last one year. Zari price has more than doubled. Weaver wages have also increased 40-50 per cent. While our turnover has increased 20 per cent, our sari volumes have certainly dropped,” says Kuppusami Chetti.
Growing inflation is also a concern. “But traditions and customs are like habits and people won't compromise on that, whatever be the price. Silk sari is a matter of taste and likes,” says Chetti, who sources silks from over 30,000 weavers across Tamil Nadu, Karnataka and Andhra Pradesh.
Lack of adequate labour in the weaving industry is also compounding woes. The tradition of weaving is fast dying. “With mass production today, there are no skilled workers who can weave the magic of yesteryear. Olden days' weaves do not collect rust stains or tear even after ages. But today's saris are not that durable. That skill is just not there anymore.” With the lure of jobs in MNC factories, many weavers are abandoning their traditional vocation,” rues Chetti.