Dubai: Launch a retail business in 2018 and then go for an expansion in 2020, when the COVID-19 was intent on disrupting even the best laid out plans? Sanjeev Matharu did just that and, so far, he has had no regrets.
Because for a career retailer, there could be no other consideration other than being in the same industry when he branched out to launch his own business. “I’ve worked 27 years in the retail business, including 12 years with Babyshop and I was a co-founder of Max (the value-for-money) apparel brand,” said Matharu.
“Through these 27 years, Landmark made me think just as an entrepreneur would. So, when I launched my own business, I knew only one job and that was to be in retail. I also knew well enough that I did not want to work for anyone else.”
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That was the point when Matharu set up MSBM, a company that would focus principally on value shopping. Even then, no one would say that 2018 was an exceptionally welcoming year for retail, what with a slowdown evident in Gulf economies and brick-and-mortar facing all sorts of challenges from anything and everything online. The next year too didn’t offer much of a respite and then came the pandemic.
For a brand new entrepreneur and business starting out, those kind of hurdles can be off-putting, especially as Matharu would be dipping into his own funds to make it happen. That’s exactly what he did – introducing a $3 merchandise brand – 100-Yen - themed around a Japanese thrift shop concept.
Championing value retail
“I spent a lot of time doing research. and travelled a couple of times to Japan,” said Matharu, who started his career at a bookstore in Mumbai. “The Japanese are pioneers in this value shopping category. When coronavirus hit, I immediately diversified into online and had the brand registered with every major portal in the region. All the brands that I represent and own – 10 of them – I have registered with eight of the leading ecommerce portals.
“The future of retail is not just going to be online at the expense of brick-and-mortar. The market and consumer preferences are coming along nicely for ‘omni-channel’ experiences.
“I prefer the value retail business. Even after COVID-19 or any other disruption, the luxury brands will have their marketshare, say 5 per cent of a country’s overall retail sector, Someone wanting a Chanel handbag will always go for that brand. I am not here to change that shopper’s mind.
“The mid-market retail is shrinking, because value brands are taking their business and increasing their footprint. There are big populations out there and as your number of stores increase, you have better muscle to negotiate better pricing with your suppliers and landlords. One can be a formidable force in the market.
“This much I can say, brick-and-mortar will never die in the Middle East. We have a constraint – the six months extreme heat will have people visit the malls. That is never going out of fashion.”
A brand comes calling
In 2019, as Matharu was bringing out his own set of brands, he got an opportunity to take on something that was definitely not on the plans. This was an offer to take on the ‘Basicxx’ value-for-money fashion and home accessories brand owned by Kuwait’s Ahmed Y. A. Al Sager.
“The brand, which is registered in Saudi Arabia, was not doing well,” he said. “I had the opportunity to meet the owner and the offer was to take over the business and revive it. I took a 10 per cent stake in 2019 and the growth in the business during the COVID-19 months has been exceptional.
“My intention is to grow the brand aggressively; we have opened Basicxx in Ras Al Khaimah and grow beyond Saudi Arabia. But the main promoter is a little bit cautious, and would prefer the brand to revive in full before taking on major expansion commitments. That’s the conversation we are having now.”
Revenue sharing with landlord
A big break for Basicxx and Matharu came through an association with LuLu Group. “Because the revival process of Basicxx started out well, people from LuLu approached me. They had three malls in the northern emirates and where they wanted a big-box retailer taking up 10,000-12,000 square feet. We have a revenue sharing model on the rent, and they did the entire fit-outs as well, which helped with keeping my capex (capital expenditure) in check.
“This is a model I hope we can recreate elsewhere. If I can get the numbers from the malls I am trading in, they will offer me a model of revenue sharing. In these last few months, people have turned up at the stores, even without us spending much on the marketing.”
Currently, Matharu’s online presence is through other ecommerce platforms. Online sales make up 20 per cent of the MSBM numbers, and which could touch “50-100 per cent” growth in the next five years.
“Once I have deeper pockets than I have today, I will create my own ecommerce portal,” he said. “Sure, I intend to bring in new investors when I can show them the numbers. The reality is all the spending to date has come from my funds. I have had to dig deep into my pockets. To fuel the next round of growth, I will need external help. The coming days, I will be aggressively pursuing, such possibilities - the investor deck is ready.”