Executive Director | 20 Jun 2007
“There is a retail revolution that is taking place in the country. Consumers are well travelled, aware and quality-conscious. We thought that our only competition was from the unorganised market. With India getting so much organised retail space, we are sure that the growth phenomenon is here to stay. We have booked space in every possible mall that is coming up and hope to touch a figure of 230 stores by 2010.”
Pramod Arora has been associated with Archies since 1981, two years after it was started. Arora’s association with Archies began as a printing advisor, then doing outsourced work, and eventually joining the company in 1993 as Head of the Paper Rose Brand. When the company went public, he was inducted on the Board of Directors as Executive Director.
Arora’s role as Executive Director encompasses almost all spheres of the company’s operations. He is in charge of production, finance, corporate affairs and international tie-ups. In this conversation with exchange4media’s Pallavi Goorha, Arora talks about the growth of Archies over the years, the greeting revolution brought about the company, and Archies’ other plans. Excerpts:
Q. How has Archies developed as a brand over the years?
Conceived as an idea in 1979, from selling poster and songbooks through mail order, today Archies has emerged as the top market leader in the social expression industry in the country. In fact, Archies pioneered the category in the country. From creating novel concepts to bringing about a paradigm shift in the way Indians greet and gift themselves, Archies today is synonymous with celebration and emotions. Today, we are a retail company that truly believes in the business of emotions. A category where no brand experience existed, we introduced the concept of ‘dedicated galleries’ that provided browsing space, ambience, and varied range of greetings and gifts of all kinds of occasions. Today, Archies has become a family brand, and generic in its category.
Q. Archies can be credited with the greetings revolution, of inculcating a habit of sharing emotions. How do you sustain yourself in such a competitive market?
The continued product innovation and strong marketing propositions have placed the brand firmly in the Indian social expression industry. We focus on in-store research; and we understand the consumer psyche and buying patterns. This has helped Archies in consumer specific promotions and initiatives.
Q. What is your target audience?
Till about four years ago, our core target audience used to be teens and those in their early 20s. Over the last four years, we have introduced a lot of greeting card designs to cater to mature audiences as well. Our gift range has expanded beyond recognition to encompass these mature audiences. While people of all age groups shop at the Archies Gallery, it is safe to say that today our core target audience falls into the age group of teens to late 30s.
Q. How is Archies growing as a gifts company?
We have already become a gifting company, with a little over 50 per cent of our total turnover coming from gifts. We are presently focussing on the gifting segment, having identified it as a critical driver for revenue growth. Archies will be focussing on exclusive gifting concepts and corporate gifting largely this year. Thus, we would be catering to two different target groups in the gifting segment. We have tie-ups with many international companies to source gifts, like Carlton Cards, Expressions Gifts Co. from the UK; Russberrie from the UK, which is into designing soft toys; Brownie from Hong Kong, to name a few.
Q. Archies is now focussing on leveraging from the growing mall culture even in the non-metro cities by setting up company-owned stores, instead of the franchising. Please elaborate on this shift.
We currently have 85 company owned stores and plan to take this further to 230 stores by March 2010. We observed that malls are the place where the footfalls are. With the retail boom that the country is witnessing today, the traditional markets are making way for exclusive brand outlets and retail malls. Archies is consciously targetting malls and other prime retail space for opening its own stores. This is also with a view to giving the consumer a consistent feel of the brand across the country. We have also launched the new store brand ‘Stupid Cupid’ for fashion accessories and premium gifts. The company’s revenue from retail operations is just about 50 per cent for the year ended March 2007, and is expected to go up to 70 per cent by March 2010.
The company stores give the advantage of large format stores, allows display of a wide range of products, and assist the company in generating required consumer feedback to retain the leadership position.
Franchising continues to be a business option for growth in the tier II and III cities. We also have 400 franchise outlets in addition to the company-owned stores.
Q. What was the strategy behind launching a separate label ‘Stupid Cupid’? How is the market and how is that brand growing?
We introduced ‘Stupid Cupid’ about a year back, for fashion accessories and premium gifts. We are still putting our distribution network and backend in place, but the response has been tremendous. Since the category of fashion accessories is a fast moving category, we need to keep updating our stocks and bring in newer collections. When we test-marketed the category in our existing company-owned stores, which have an area of about 1,000 square feet, we got a welcoming response. But to put together a separate category for young women, we required dedicated space. So we decided to float a separate label and retail space. This also helps by giving us the option of having two stores in large malls, whereas with one retail brand, we would have been restricted to one store only.
Q. Who are the global majors that Archies has signed up with?
We have an exclusive tie-up with American Greetings for paper products and stationery, Simon Elvin, Carlton Cards, Expressions Gifts Co. and Russberrie from the UK; Browne Toys from Hong Kong; and CKK from the US.
Q. You don’t seem to be advertising a lot. How do you still enjoy a superb brand recall?
We continue to advertise during events and festivals, as gentle reminders to our customers. I think, the brand recall has much to do with our category. In the organised category, we are the leaders. So when people think about greetings and gifts, they naturally think about us. Our market penetration has also helped us maintain the recall. We are present in the malls, hi-streets and traditional market places everywhere.
Q. Do you have plans of introducing any more products in your portfolio?
To grow and succeed, one has to constantly improve and innovate in whichever category it functions. We have been adding new greeting card designs every year, new gifts in our portfolio, and would continue to do so. Gifts are a vast category -- even a car could be a gift, as also a wristwatch -- but we aim to be a family destination. Our galleries need to be stocked with items that appeal beyond age groups and all pockets. So we choose to introduce categories and products, which would appeal to most of our customers.
Q. You can be credited with bringing and promoting so many celebration ‘days’ in the country, like Father’s Day; Mother’s Day; Friendship Day, which is an Archies innovation, and many more. Are you not introducing any new days?
Yes, it is true that we are credited with this trend and sometime have also been criticised. But we want to be associated with every possible occasion and emotion that exists. Having ushered the social expressions industry in the country, Archies has always explored new opportunities and occasions for people to express their feelings. Valentine’s Day, Mother’s Day, and Father’s Day all international events brought to India by us. Friendship Day is a something that we have created. There was no such day until we created it. We are working on a special day, to be created in September, for a very special category of people -- daughters. This concept is on the drawing board and we are trying to gather universal support from across industries as this also serves to highlight a very critical problem in our country.
Q. There has been news about raising funds through equity sale. Tell us about it…
We have issued preferential shares to Bennett & Coleman Co. Ltd (BCCL) and warrants to Darashaw & Co. Pvt. Ltd and our promoters to raise Rs 20 crores to fund our retail expansion. We are diluting our stake, which is currently at 65 per cent, and would become 61.5 per cent post dilution. To aggressively pursue our retail expansion plans, we decided to infuse fresh capital and hence decided to go the preferential way.
Q. How has the current retail environment affected you? What are the plans for the future?
The current scenario is very positive for the growth prospects. Even the B category towns have upcoming malls planned. There is a retail revolution that is taking place in the country. Consumers are well travelled, aware and quality-conscious. We thought that our only competition was from the unorganised market. With India getting so much organised retail space, we are sure that the growth phenomenon is here to stay. We have booked space in every possible mall that is coming up and hope to touch a figure of 230 stores by 2010. We are also hopeful that with big names like Wal-Mart and Reliance going the retail way, it would be an opportune time for us to grow with them too.