A pan-India presence has given Metro Brands an edge both online and offline: Promoter family

The IPO rush has brought a bunch of new companies into the limelight. Metro Brands is one of them. The pan-Indian brand has a rich heritage dating back to the mid-1950s. And it has deep roots in Mumbai, where it began its journey. Farah Malik Bhanji and Alisha Malik, two members of the promoter-founder family, work closely with the management team that runs Metro Brands. In an exclusive television interview, they talk about the company’s history, the decision to go public, the digital sales bump during the pandemic, and a range of other topics. Edited excerpts follow:

December 2021, when you took the company public, was a big inflection point. What were the changes that you’ve had to deal with as a result?

Farah Malik Bhanji: I’m going to take you back a bit in history. I think we got (Rakesh) Jhunjhunwala on in 2007. And I think the whole idea, even at that time, was that while we didn’t need the funding, it was to set a level of the company where we can be fully transparent, where we are always liable to our shareholders for the decisions we take. I think that entire ecosystem that we created, about always keeping the shareholder in mind in the decisions we take, was already in place.

The difficult part, I think, has been because we’ve been such a transparent company … whether you’re a salesman in the store …or the MD of the company, you had access to information. We’ve always shared our plans for the company and where we want to be in the future, what we want to do, how we want to do it. I think that was something we had to sort of hold ourselves back and say (from now on) it has to go through the right channels.

We’ve always been long-term players. The most important thing is to ensure that the mindset of the management didn’t change to a short term ’oh I have to report this on a quarterly basis’. It’s okay if we go slow on a new concept because we want to ensure that we’re nurturing it in the right way, and not looking at it as ’is it going to hit my quarterly number?’

When you listed, the price was below the offer price. Did that bother you?

Farah Malik Bhanji: Of course, absolutely. Somebody warned us: ’Look, this may happen in the stock market. So make sure that as far as you’re concerned, you’ve taken the right steps for the business and be confident in that.’ And I think that’s really what kept us going. Let the market keep going up and down. We’re doing the right things for the company from a long-term perspective.

But is it so easy?

Farah Malik Bhanji: To be very honest with you, the first day…the children were all on Moneycontrol checking the price. I’m telling you, all the kids now know Moneycontrol. ’Now it’s this mom, now it’s gone up, now it’s gone down. For the first week, everyone in the family was tracking the prices till we calmed, I think we really calmed down after the first-quarter results. And we said, it’s okay. After this, look at it once in a day, rather than every hour on the hour. We’re not here for a quick turnaround. We’re not here to do things in the short term that will harm us in the long term. I think with time, so long as we continue doing the right thing, that’s what’s going to matter. And that’s what the public has to appreciate us for.

So, today, six, seven months later, you feel that you’ve done the right thing.

Farah Malik Bhanji: Absolutely, I think we’ve done the right thing. The CEO and the team under him have been brilliant. The minute you get a professional team in, you get sort of a specialist in an area. So, if you look at our HR team, you look at our IT team today, you look at our marketing team today, we’ve created specialists in those areas to take us to the next level. And we continue to learn from that. You have to have the humility to say, ‘Hey, here’s someone who can think about this part of the business much better than I can.’

Apart from shoes, I can see accessories. And I know that is a new revenue line, isn’t it?

Farah Malik Bhanji: Yes, it now contributes about 10% of our business. It’s got handbags, shoe care, foot care. When you walk in, you don’t necessarily come into our store asking for a handbag, but you will definitely be offered a handbag, a belt, even socks — one of our best sellers.

How many individual products do you have?

Farah Malik Bhanji: Individual products would be — not counting colours and sizes — 2,000 at least in each brand.

Alisha, give me a sense of how important e-commerce, online, digital sales are for Metro Brands? That’s what your attention is on, isn’t it?

Alisha Malik: Yes. So, ever since I actively started working in the company about 10 years ago, we started incubating this business.

I’m guessing the pandemic was a force multiplier…

Alisha Malik: Absolutely. People who were not digitally native became very digitally savvy. The other thing the pandemic did was it taught people how to understand what they really want to live in, in terms of the comfort of their footwear, how they want their lifestyles to be. So, that really changed consumer shopping behavior.

What were some of the changes or trends that you observed?

Alisha Malik: We were always an omni-channel company. So, orders from our website used to be dispatched from our stores. The inventory across all our channels was for our own ecosystem. But what we did during the pandemic is we opened up store inventory to a marketplace. Now, what we’re doing is we’re dispatching (marketplace orders also) from the stores. So, the way these marketplaces work is you come up higher on the results page if you’re closer to the customer.

So that was the advantage of having so many physical stores as well?

Alisha Malik: It was an immense advantage because today, I have a pan-India presence. I’m so much closer to each and every customer than perhaps some of my competitors. And the fact that customers receive it so soon reduces returns significantly. And the other thing is that they get instant gratification.

What about fashion?

Alisha Malik: Fashion is now seeing a massive jump because of COVID. But also because of the higher rate of digital adoption and the lack of access in tier three and tier four markets. So, what we see on most marketplaces is 40% plus of sales comes from tier three, tier four, where they don’t have physical access to these brands they want to buy. That’s one aspect of it. The other aspect is we’ve been working very hard to standardise sizes. But because we work with local artisans, we work with local karigars — more than 85% of our production is now happening fully in India — it becomes a little harder to standardise in a handmade scenario.

Farah, what made you get into the business? In footwear, it’s unusual to have women fronting the business. And here you are; Alisha and you are two of five daughters. I really feel very excited when I meet women leaders.

Farah Malik Bhanji: When I came into the business, a lot had to do with luck, and I wasn’t really given a choice. I had a job in the US, I had just graduated. So, this was not my preferred option. My dad told me to come down for one year, try it out, and then understand the basics of the business because ‘eventually this is going to be part of your legacy, as five girls. And then you can go back and do what you want.' And honestly, I’ve never looked back. I think a large part has to do with the fact that we share a great wavelength. He’s always allowed us to fail, make mistakes, and supported us when we needed it.

And he is very keen that y’all run the business…

Absolutely. Very keen, open with his feedback, and open with the opportunities he gives us. That’s one aspect. The second, I jokingly say, we didn’t have a brother in the business, which is why I think we had the opportunity we did. I have to be honest about it.

If it were to be named like that, it would be Malik & Daughters. How lovely would that be right?

Farah Malik Bhanji: Absolutely. I remember the first time I interacted with one of our vendors. He wouldn't even look at me and talk because he had not interacted with women. And a lot of them come from those kinds of backgrounds where they haven’t had to interact with a woman in the business. Today, you don’t even realise it.

Today, six, seven months after the listing, you’ve become comfortable with the public scrutiny, and every decision being questioned, opinions being put forward. You mentioned how Moneycontrol has become a household name. So, what’s your message to investors? And what is your vision for this company that you want them to understand?

Farah Malik Bhanji: The message is very clear. In terms of the way the business is run, it’s very transparently run with a very high level of ethics. And the message is also to have patience, because we’re not going to do things just to tick off a revenue number. We want to run a sustainable company. That doesn’t mean we’ll be slow. Once a concept clicks, we’ll go all out to expand. We will always have the financial prudence we’ve had in the past. We’ve had a good run post listing. But there may be times when it may not be so good. And that is something that I want them to understand.

The other thing is, I strongly feel this is India’s decade. And I think whether you’re talking about any of our brands, whether you’re looking at Metro, Mochi, Walkway, Crocs or Fitflop, I think there’s a great growth trajectory available. Our largest brand is only 250 stores. So, I think there’s a great potential for growth, the kind of growth we’re seeing in tier three and tier four has been phenomenal, and it continues to be so. So, I think India has a lot of potential. We’re here to play the long game. We definitely see gaps in the market, which we will continue to address with newer formats, and some existing formats.