Category: Entrepreneurship

Mind The Gap – Khaadi –

Gap Inc was the formidable US clothing retailer that was always relevant and wildly popular. It literally came from no where and then grew to having Banana Republic on the high end of the spectrum and Old Navy on the lower end. But some where in the middle it lost its own brand identity and it became too vanilla in a category it had created it self. Where others were giving it a run for its money on its own turf, it was a crisis of confidence, leadership and missteps.

We have our own, perhaps even better version of the Gap success story. Khaadi. It is the one brand that has done every thing right, from customer service, to designs, to branding, to placement to creating its own niche and beyond. But the question is what happens next? 2015 is very different from 1998, staying fresh over a 17 year run is not an easy task for any business, let alone fashion retail. Khaadi has to be commended for what it has done so far.

2014 saw it expand to online a few years after its expansion to the Middle East, Malaysia and the UK. Compared to other retailers, Khaadi has had a decent plan every time when it came to expansion but at a global e-tailing or retailing level there are some things that are strikingly familiar to Gap. Lets start with the Malaysian expansion, the target market there cant possibly be Pakistanis or South Asians alone, just by pure numbers it wouldn’t make sense. What would make sense is to target the local Malay population. They frankly don’t know what Khaadi means or represents.

What they do know is social engagement , their love for trendy clothes and bright colors(even the men). No less Khaadi does not have a Bhasa Malay media campaign. Id caution on taking the billboard and tv engagement space. Malays are pretty digitally plugged in, so a social media campaign or two targeting engagement and brand development would have most certainly helped. Khaadi is too big now to not think about these strategic missteps and it puts it in a similar space like Gap should it continue to not address these items.

Then we have the online store, a great leap into international retail without the physical footprint. But to be a serious player and to beat the “aunties” who are buying Khaadi product from Pakistan and stuffing suitcases and taking them to the US to retail or sell to friends or family, Khaadi has to re evaluate its supply chain, production, fulfillment and delivery logistics. Else it will be beat on price on its own goods locally procured and hand carried to the US and beyond.The first thing that has to change is the online experience. It is harrowingly slow, the site needs to be updated to a proper e-commerce portal with multi currency and multi location shipping. The site just doesn’t need a refresh but instead needs the Khaadi touch to make the experience special like the brand it self. The potential of the e-commerce store at some point would outweigh the sales volumes and FX earnings if executed properly.

That has nothing to do with Khaadis core business, which is to manufacture top quality product. Here in lies the problem similar to GAP, reach out and get the help you need as opposed to trying to do every thing in house or based on the advice of people you know.Its time to get professional advice. At a globally competitive level. Not at a mom and pop shop level where by having COD in Pakistan and shipping enabled to USA you start to think you are the best thing since slice bread. The shipping and checkout process is short of horrible. Khaadi needs to emulate its in store service equivalent to remain relevant. Enough said.

You have the potential, but you aren’t there yet. Its easy, you pay for what you get. In Khaadis case it has the cash to fund this growth. The question is, does it have the foresight and willingness to not die in an industry that it created, the signs are there, it needs a product reboot along with an online reboot. It has to innovate to stay relevant and grow. It would be interesting to see its in store year or year growth ratios.

Then we have the Khaadi Home and Khaadi Khas and Khaadi Kids phenomenon? Any one see similarities to GAP yet? Khaadi is a niche player that needs to go wider and deeper in its expansion strategy, just like Max out of the UAE. A home grown “value fashion brand” that has over 1.2bn$ in Sales and eyeing 3bn$ soon. Now that is ambition, fueled by growth, a stellar management team and not an army of one. They are focused, albeit their niche is a little different but they are doing all the things they need to do to stay on track.

Khaadi in its purest form is limited by the ability of its CEO/Entrepreneur/Chairman at large to wear many hats. The same person that brought it this far. That’s where a Senior global management team comes in to play to go beyond the current state. The CEO should have the wherewithal to see the shape of things to come and realize that he has done an exemplary job in building one of the smartest, well managed, high growth brands in the country. But to play at a global level, re-define the niche and build distribution and logistics capabilities along with production uplift, he needs to now move up to the big boys table. Commit financially, mentally and in principle to lead the charge to make Khaadi into Pakistan’s true first Billion-dollar brand. This can be achieved with focus on the brand it self and not diversions and distractions into other ventures just because you are cash rich.

Stay true to the core before diversification in to other lines of business. Khaadi has had an admirable and phenomenal journey; it can go further but only with the right strategic outlook and plan. The mix is good, but the leadership beyond the founder is questionable for a global expansion charge, that fuels growth 50X from where it is today.

M.I.T (Millionaires in Training)

I was going through a list of self made millionaires/billionaires in Pakistan and its interesting and perhaps noteworthy that a negligible amount are from this generation. The reality is, “daddy or great grand daddy” earned most of the current money within the coffers of the current generation. So then really, these kids/young adults are realistically Millionaires in Training (MIT). Substantially different from the other MIT that encourages and creates entrepreneurs and creates real and true wealth.

Looking a bit deeper, the entrepreneur syndrome is pervasive no less in the second generation M.I.Ts. I scoured the web for profiles of at least a few dozen-second generation M.I.Ts, without fail every single one of them lists “entrepreneur” as the central theme in their glorified profiles. An other interesting fact is that most of them started their career at twenty some thing with a Director of “something” role. That’s what wealth buys you, a seat at the table. But there is no reason to apologize for a noteworthy lineage of wealth.

My simplistic view is as follows, if you had 10M$ available to you, for arguments sake and you went and licensed a popular casual dining/fast food chain that you’ve seen from your various privileged child hood trips abroad you are not worthy of calling your self an entrepreneur, you can no less call you self an opportunist of the first order and some one who understands business dynamics really well. That, I will give you. You deserve the praise that in a stable of a few dozen similar individuals with equal or more cash than available to you, you were the first to realize an opportunity existed and you beat most if not all to market with bringing established brands to your home country. But that doesn’t make you an entrepreneur or a business wizard. That just makes you some one taking the easy road to glorified business success.

What really should be happening is the deployment of these funds available, into enabling Micro and SME type transactions. Wealth creates more wealth, but the deployment of this wealth(by M.I.Ts) into under served and upcoming segments with local and regionals solutions is what’s needed. Then these M.I.Ts would make a real difference and create true wealth independently and leave a lasting impact.

If they continue to invest in Sugar Mills, Processing Plants, Textiles, Tanneries, Power Companies to name a few, they will never be able to impact areas that need both capital and strategic partners which these M.I.Ts can prove to be, at a concession stand ticket price in most instances.

The focus should be to move away from capital intensive, or industrial businesses to more localized, impactful ideas. Become seed stage investors and help cultivate the entrepreneurs whom they invest along with. This is the only shot these M.I.Ts will have towards true greatness and in redeeming themselves as titans of industry. If they continue down the generational path they have historically they will just be “Mr. X’s Son/Daughter” of “XYZ Fame”. Time to change the rules of the game and re invest in the country (a little differently) that made their father and forefathers wealthy, but slightly adjusting their own outlook. Since the industrial and agriculture space creates a bulk of the jobs, by no means is this an invitation to stop doing that. The idea is for diversification. So you ask how do you seed the thought for this diversification?

It’s a good question, when you as an M.I.T have been classically conditioned to think about one thing since you opened your eyes, its difficult to have an other perspective. The first realization is the fact that you need to diversify and look else where. Like an Alcoholics Anonymous success criteria, the first step is to recognize you have a problem. This can only come from within. What comes after that can be achieved much like AAA meetings with support from others and a network of supporters.

In the corporate world such supporters. more and more coming from the outside. In the form of Chief of Staff roles that work with these M.I.Ts and established CEOs alike. The Chief of Staff generally works behind the scenes to solve problems, mediate disputes, and deal with issues before they are brought to the Chief Executive. Often Chiefs of Staff act as a confidante and advisor to the Chief Executive, acting as a sounding board for ideas. Ultimately the actual duties depend on the actual position and the people involved. Given the inexperience in many ways of the M.I.T breed of CEOs propping up, this could be a saving grace in many ways. But for this to happen, the M.I.Ts need to move past the “saith” ideology of “saith” knows best.

It is some thing the M.I.Ts should look at. Bringing one on board without sacrificing egos, that they are incompetent or working their way up the ladder. This is the buffer that is missing in Pakistan. The smart M.I.Ts will recognize this quickly, the same roles exist in some ways in the form of Board of Directors that their parents have deployed and whose counsel they seek in matters of business. This is the one true shot the M.I.Ts have in creating their own working mechanism and define how they would do business and it really wouldn’t hurt to enlist some smart folks who would help them in the journey.

Its always easy to spot the smart M.I.Ts from the crowd, they are realigning them selves to have smart plays in new business domains relying on expert advisors and Chief of Staff personnel to setup their own family offices and build their own business frontiers. It does help to have a fully funded bank account, to bank roll the ideas, ventures and companies that will help them define their own legacy.