AP Homes - The Tale of Thirus Store

The Context:Nestled in the rustic town in Coimbatore, Tamil Nadu, Thiru and Palani, the two brothers had started their
business of paints trading at a young age. Driven by the strengths and support of their father, the brother had
explored many categories in home improvement, including a long standing partnership with Asian Paints. In the initial
days, Thiru had sacrificed his education for Palanis graduation, and nurtured the business. With Palani joining, they
had jointly worked out a collaborative approach to expand and nurture their investments. Today, they could boast of
more than 30 years of experience in the home improvement trading.
The brothers had always envisaged themselves as best-in-class retailers and wanted to establish an excellent
store for the customers with many home improvement categories. They had tried their luck with Furniture, Electricals
and Kitchen with mixed experiences. Basic electricals had worked well, whereas Kitchen was under their own
manufacturing and Furniture had not kicked off well. Both brothers were always cautious and planned all of their
business in detail, (even if it meant splitting hairs!) before taking a plunge into a category. The brothers were also
known for their commitment and would always stick their neck out once they had dedicated themselves for a cause.
Asian Paints had been a pivotal brand that the brothers had engaged with for their business growth over
years. They had been the first dealers in the town to adopt the Asian Paints Dealer Tinting System in 1998, the first
ones to aggressively take the concept of store decoration in 2000, focussing on in-store retailing plans in 2006. In
2010, Palani had encouraged his son Kumar to get into the Apply-Supply business model for Paints. This meant not
only selling the paint (supply) but also working with contractors to offer painting service to the end consumer (apply).
Kumar had done well for himself and built a team of 180+ painters at his disposal. In this way, they had evolved every
few years to take care of market needs and consumer requirements.
Palani was keenly interested in how Asian Paints was venturing into Kitchen business with the acquisition of
Sleek in 2013. Asian Paints also bought over Ess Ess; a bath fittings firm to enter the business of Bath spaces. He knew
that Asian Paints had unmatched retail experiences with its Signature Stores at Mumbai and Delhi. The first
consultation service for Colour had also been launched at these stores in 2009. Over the years Asian Paints had
focused on democratizing the offering by launching a Colour Consultation service through at-home services. Further,
the Signature store concept had been expanded in the dealer network with the Colour Idea stores.

The Dream:With the new ventures of Bath and Kitchen; Amit Syngle, President Sales, Marketing and Technology at
Asian Paints was toying with the idea of leveraging the retailing strengths into creating a multi category store. The
Indian market in Paints and home renovation categories is unlike western countries; with customers more dependent
on the execution capabilities of local contractors and not keen on DIY (Do-It-Yourself). The market had also evolved
with more consumer segments gathering interest on home dcor. This brought a clear opportunity for Asian Paints to
establish itself not just as a paint major but a leading home dcor brand.

There were a few offerings in the market with stores like Home Town, Home Stop and @Home directed at
selling soft accessories and home renovation. However, Amits strategy was different. His dream was to be the single
largest source of inspiration in home renovation, unmatched by any other store in the country. These new age home
improvement stores would build comprehensive solutions for customers in the following areas:
A.

Inspiring consumers on key Home Improvement Category

B.

Providing unmatched retail experience and consultation

C.

Delivering a clear Apply-Supply promise to the consumer

The first step in this journey meant that the store envisaged would have a complete set of home renovation
categories to be present at the store apart from the categories of Paints, Bath and Kitchen that Asian Paints already
had a presence in. To make this possible, a partnership with a strong dealer was needed who already possessed
some expertise in various Home Improvement categories was needed. Asian Paints would bring expertise in Paint,
Bath and Kitchen and the dealer would bring the expertise on other categories based on the dealers existing brand
alignments.
To cut a long story short Thiru and Palani were thrilled to pursue the direction that Asian Paints had chosen.
It integrated well with their business and a new partnership was forged. In less than 6 months of the initial talks, a
sprawling 8000 sq.ft store at Coimbatore welcomed consumers into a space which gave ideas on Living, Bath and
Kitchen spaces and presented possibilities for each space as Looks. Interior Designers welcomed the consumers to
aid their world class digital journey and take them through Paints, Furniture, Decorative lights, Soft Dcor (Curtains &
Upholstery), Kitchen, Bath Fittings and Sanitary along with Tiles. Thus, a new era in the realm of home dcor was born
in March 2016.

The Journey:

Thiru and Palani knew that they had taken a huge leap with this new store. They were the first in the country
to do so and were proud of the same. However, the challenge of running such a store was daunting. They had to
ensure consumer satisfaction and also manage to build their business in the new categories like Kitchen (with Sleek),
Bath Fittings, Furniture, Tiles, Decorative Lights and Soft Dcor. This brought a unique set of challenges, quite
different from what they had encountered in the past. Each category needed expertise, needed focus and needed
range to be showcased.
The new categories (Kitchens, Soft Dcor, Furniture and Lighting) were a welcome change with high gross
margins; each category offered at least 25% margins unlike the earlier category which offered margins ranging from
6% to 10% (paint and tiles). Even bath fittings had decent margins (10-15%) with potential of up-selling a branded
product. The store had added infrastructure which meant additional overheads and a pressure to break even quickly.
The apply aspect to the business generated additional margins (15%) but also involved more manpower.
The first month was a positive start. Mr. Ranganathan, a leading business man in the town with a big jewelry
business venture visited Palani. When Mr. Ranganathan got to know of his friends store; he realised that it was a
good place to start as he was renovating his house. He was mesmerized by the range of wallpapers and designer
finishes at the store to the wood finishes options was unending. Further the digital journey at the store thrilled him.
He could select from a range and visualize his selections quickly, after which he could shortlist items for his final
consultation with the in store designer. Kitchens, Soft dcor, Bath Fittings he loved them all! His interior designer
had completed the concept on Bath and was now looking at a beautiful kitchen to complement the home. Within a
week of his visit, Palani had bagged the first order of Kitchens for the store. At a whopping Rs. 9 lakhs, this was an eye
opener for Palani; he had always believed that consumers were likely to select only budget kitchens from his store. He
also knew that this was a large order and he would need get kitchens valued at 2-3 lakhs as well.
Palani quickly realized that kitchens were a business worthy of investment, as long as he sustained the
momentum. The largest retail chain for the town had a turnover of 1 crore and he wanted to beat that figure for the
year. This was one of critical categories to drive return on Investment for him and his brother. With Thirus knowledge
of construction the store could offer an unmatched renovation as no brand could offer demolition as an add-on
service. This would address an important pain point of the customer the civil work associated before a kitchen. It
was good start for the store.
Thiru and Palani had invested a Rs.2 crores in the store renovation to bring AP Homes to life. They now had
to deal with overheads which included additional manpower, additional expense on electricity on account of an
entirely air-conditioned store. The investment and the monthly outflow
had to be matched with the new revenues and profits that the store would have to generate. They also knew that
making the store relevant to architects and interior designers was important to generate business. They were
confronted with the following key challenges: -

A. A right mix of product sales across category along with Apply Supply service delivery which would drive their
profits. The review of the investment and returns had to be done every quarter, with a clear plan to measure and take
corrective steps.
B. A plan for the validation of the space allocated to a category based on returns, based on specific metrics. If
enough returns were not realized, ensuring corrective action to utilize the space effectively.
C. Balancing rising overheads with higher gross margins from new categories to ensure that their net profits were
taken care of.

Thiru and Palani are intent on revolutionizing the world of dcor. Would you like to join their journey?