Metro Brands: Big shoes to fill

 
Retail was probably the last thing Farah Malik Bhanji, a math major from University of Texas, Austin, envisioned herself doing. But when she worked at her family-owned multi-brand footwear retail firm Metro Shoes (now Metro Brands) for a couple of months in 1999, she got hooked and stayed. Farah, who started in the marketing department and moved on to product and concept development, was eventually appointed CEO and MD in 2013.

The second daughter of Rafique Malik, chairman of Metro Brands, like her four sisters, grew up listening to shop talk at the lunch table, sitting behind the cash counter of the Metro Shoes store in Colaba in Mumbai with their grandfather Malik Tejani, and later interning at the company. But it was never a given that any of them would join the company or, in case they did, that they would not have to work their way up like everyone else, says Malik, 68, who himself began working at his father’s store at 15 during his holidays.

Starting out in the ‘malia’ or loft, he worked his way up—or, perhaps in this case it should be that he worked his way ‘down’.  And when he finally wanted to start his own store in 1969, Malik switched to morning college to keep in line with Tejani’s diktat that you could not have a store that was not owner-managed; and that you could not do retail if you were not in the shop 12 hours a day.

Today, the practice is routine at the company with processes put in place to train and promote people from the inside rather than hiring from outside; and to not have franchisees but store managers who are almost like owners—they are paid a variable pay based on the performance of the store. People are introduced as stock boys and make their way up even as Metro has grown from the two stores in 1969 to 208 stores in 117 cities in India today, sourcing from 180 vendors, both national and international, from Dharavi to Brazil. The company had gross sales of ₹1,216 crore in 2017-18, a growth of 18 per cent over the previous year.

Band, Baajaa, Bollywood
Tejani worked as a salesman at a shop in Grant Road in Mumbai before taking over a small laundry in Colaba to start out on his own. He had views on how a business should be run, all of which led to plenty of debates and arguments at the lunch table.

When his son wanted to open more stores and move to a fixed price model, his father was appalled. “’You want to remove the fun of bargaining? It’s why people buy, it’s the fun of shopping,’ he told me,” says Malik. Along with his initial salesman training, he’s also had to learn about saris and cars. “I had asked why do I need to know?” The answer lay in the fact that there were no fixed rates. “So if a person came in a nylon sari, then you had to quote ₹9, if she came in a chiffon sari you quoted ₹12, if she got out of a Dodge car you quoted ₹15,” Malik grins.

When he suggested air-conditioning the store so that people could touch and feel the shoes that were till then kept in glass cases, Tejani was horrified. “You want people to have to push a door to come in?” The solution: They sourced automatic doors which continue to remain till this day at the Colaba store where Tejani sat at the cash counter until he passed away in 2000.

Of late, the company has had several Bollywood stars, like Katrina Kaif and Siddharth Malhotra, as brand ambassadors. But right from the beginning, from location to product to service, Tejani knew he wanted to create an aspirational brand. “All the shoe retailers at that time named their stores after cinemas: Liberty, Eros, Empire… because in those days the most luxurious thing in the city was the cinema. It was a status symbol,” says Malik, adding that his father also used the influencers of the time to promote and create aspirational appeal for the brand.

“In those days, there were two or three influencing groups. One was film stars, another was Parsis, and airhostesses were also looked up to. Parsis were our regular customers and at Parsi weddings the bands were sponsored by Metro Shoes, which was written on the drum,” says Malik. They worked with two famous Bollywood designers of the time, Mani Rabadi and Jeanne Naoroji. “We would make any shoe of any size, any colour, any heel height for their film shoots. The only problem in that business was there were bad debts; almost 30 per cent of the films didn’t do well and we didn’t get paid, but he still wanted those people because they were influencers,” says Malik. “And we also used to provide uniform shoes for Air India. Besides, we would tell the airhostesses to bring designs from outside.”

Forbes India

Learning, Unlearning
While Malik led the expansion of the company, going from two stores in 1969 to 50 by 2006, the third generation has helped in diversifying into other brands and verticals, including online. Mochi, started in 2000 by Farah, has a younger vibe, and Walkway, started in 2009, caters to the value customer. Mochi and Walkway account for 133 and 59 stores respectively of Metro Brands' 488 stores across the country today.

“It (Walkway) was an uphill task because understanding the value customer needed us to relearn the business,” says Malik. While Metro Shoes stores stock other brands besides their own (in a ratio of 30:70), with Walkway they started shop-in-shops in DMart hypermarkets. “We have 19 Walkway shop-in-shops in DMart because we needed to understand the value customer. We also spent a lot of time with Titan, understanding what is different between Sonata and Titan, and how you cater to the value customer,” says Malik.

Expansion also came via a premium brand called DaVinchi, and a subsidiary that does shop-in-shops in department stores like Lifestyle and Shoppers Stop with brands like Lemon and Pepper. And once Metro brands were established in major cities, they were taken to tier 2 and tier 3 cities. 

While Farah, 42, started the company website, youngest sister Alisha, 32, is vice president, ecommerce and marketing, and heads online sales. Her top challenge has been to prevent Metro from becoming a discounted label. The brand has always worked on its variety and curation in a localised manner, with different shoes not just for different cities but also for different suburbs. The challenge now is to bring the same variety and curation online and ensure “that our online presence grows to mimic that”, says Alisha.

The company also tied up with international brand Crocs in 2015: It handles retail and runs 87 stores for them.

“Investment in brands requires time, money and focus and so far they have been successful in not being commoditised. They have been careful with their ecommerce portal strategy to avoid becoming a discounted brand. While that strategy was risky given the tremendous growth of Amazon and Flipkart, recent policy changes may favour those who withstood the discounting craze,” says Jessie Paul, founder and CEO of Paul Writer Strategic Advisory, a market services and advisory company. “Investments in technology to develop an online-offline strategy show that they are progressive and thinking of the future,” she adds.

Opportunity also lies in becoming the brand leader in the mid-priced fast-fashion segment, sort of like a Zara or H&M for footwear, says Paul. Putting systems in place to get onto trends quickly is something the family is working on.


Along the way, there have been mistakes and challenges. Early on, Malik wanted to get into manufacturing and, though his father was dead against it, he lent him the money to start a factory. It was a disaster and he lost money. “I would eat before he came home for lunch, or would eat dinner after he had finished, because at lunch it would mean questions about the factory,” recollects Malik. He then turned it into an export factory, which he says did well. “I realised manufacturing and retailing are conflicts of interest. People talk about backward integration but if I was a shoe factory the only way I could run a very successful shoe factory was by making one style, one colour, one size, in large quantities. And as a retailer I need hundreds of styles, hundreds of colours, ten different sizes. So that’s why we have built a vendor base that is so diverse.”

In 1996, several shoe firms including Metro were named in a ‘cobbler scam’, charged with misappropriating concessionary funds meant for cobbler cooperative societies. The case is yet sub-judice.

When Farah joined the business, the legacy of letting the next-gen learn from their mistakes continued. “She would come with a lot of ideas on marketing, which were new and different from how we were doing things. Some of the ideas would also be ones we had tried and had not worked. So I would say go ahead, try it out. Jalaludin Kamdar (then CEO) would say, but we have done this, it didn’t work, and I said I have learnt everything in my life by making mistakes. If we stop her from making mistakes, how is she going to learn?” says Malik.

Looking Ahead
Founder Tejani was one of seven sons who, after starting Metro Shoes, gradually absorbed his six brothers into the business. But, although they worked for him, he didn’t want to establish a legacy where their children worked for his son, so he helped them set up their own businesses.

Malik had no brothers and five daughters, and with uncertainty about any of them joining the firm, he set about professionalising the business, bringing in a CEO around 1990. In 2007, Metro sold a 15 per cent stake to investor Rakesh Jhunjhunwala. “We were a debt-free company at that time, we didn’t need money to grow. But retail was becoming glamourous, and suddenly everybody was talking retail. As a family I said we also need to be accountable to an outsider. So we brought Jhunjhunwala in.” The objectives, he says, included getting benchmarked against other retailers and bringing in governance and transparency.

Besides, even as they grow aggressively, 30 per cent of the profits have to be given as dividends to the family, who are given investor reports regularly. The company also put in a stock options plan for the management team.

Deviating from the owner-managed model, Malik is now looking at turning Walkway, which is not doing as well as they would like, into a franchisee enterprise. “If this brand is good, we could tell independent shoe retailers that they would earn more money by becoming a franchisee. That would literally organise an unorganised trade because the retailer doesn’t have to worry about sourcing and pricing. We will set up the computer system, give him replenishment of stock, everything,” he says.

They also realise the need for a different mindset for online and are open to taking on a “high-level partner” for it. “We don’t know what we need to do differently, but it’s quite clear that it (ecommerce) has to be done very differently from what we are currently doing if we want to achieve the numbers we have set as targets,” says Farah.

Meanwhile, last year, two teenage granddaughters, one from Kenya and the other from New York, interned at the company during summer. They want to come back next year but they will need to find their own space. “We’re telling the kids it’s not a given, don’t think it’s going to fall into your lap,” says Farah.

And though the family continues to meet for lunch and debate and discuss the business, the daughters draw the line at times.

“I continue to have my list in front of me to discuss, but on weekends and holidays they don’t let me,” says Malik.