Interview with Salman Bashir, CEO, Chase Up.
MAMUN M. ADIL: When was Chase Up established?
SALMAN BASHIR: Chase Up was originally established as Chase in 1984 as a single store in Bahadurabad. At the time, there were only small shops in Karachi and although our outlet was not very large, it was a success from the start because it was one of the first departmental stores in Karachi. Later, we opened branches in Clifton, Gulshan (Nipa Chowrangi) and Shaheed-e-Millat Road. Then, 20 years later, a split took place within the family. Three brothers (including my father, Bashir Abdul Ghaffar, Founder and Chairman, Chase Up) formed one group and the other two brothers formed another group. Two outlets (those on Nipa Chowrangi and Shaheed-e-Millat Road) were now owned by my father’s group and to differentiate between the two groups, we named ours Chase Up. Unfortunately, by this time (April 2005), the business was not doing very well and when the Deewan Group asked to rent our Shaheed-e-Millat branch, we agreed. In order to clear our inventory there (mainly clothing, shoes and homeware), we held a closing sale and brought down the prices drastically. Customers came in droves and within 10 days, the stocks were cleared. The sale was an eye-opener for us.
MMA: How so?
SB: It made us realise that the reason why our outlets were not doing well was because our prices were too high, which was why, from time to time, we would offer discounts. However this approach did not make sense and we realised we were not concentrating enough on our customers and on factors such as quality and affordability. After the sale, we decided our new business model would be based on providing quality merchandise at reasonable prices rather than relying on sporadic discounts. My father rented the Nipa outlet from my uncles and we re-launched in June 2005. We bought items in bulk and cash (to get the lowest rates possible) and sold them at fixed, low prices. The business started doing well and we now have seven branches; five in Karachi, and one each in Faisalabad and Multan.
MMA: When did Chase Up branch into groceries?
SB: In 2009, we bought a large store in Clifton (near Dolmen Mall). On the first floor, we set up our clothing and homeware departments and we used the space on the ground floor to open a small supermarket as an experiment. It worked and when we opened our Shaheed-e-Millat branch a year later, we had a supermarket there as well. However, we still concentrate on clothing and have opened a design studio and introduced brands such as Jalpari (women’s prêt) and In Sole (shoes). In this way, we provide a wide range of shopping options and this differentiates us from our competitors.
MMA: In addition to clothing, what other products do you offer?
SB: We have introduced a range of ‘in-house’ household items such as dishwashing liquid and soap, handwash, multi-purpose cleaners and tissues, as well as foodstuff such as flour, pulses and rice. All are competitively priced and popular.
MMA: Who is your primary target audience?
SB: The major chunk of our customers are from the middle- and lower-middle class, although a significant number are from SEC A. To cater to the latter, we are upgrading our current stores to provide them with a ‘shopping experience’.
MMA: What sort of differences do you see between customers in Karachi and those in Multan and Faisalabad?
SB: Purchasing power in Punjab is relatively high, even among the lower SECs. They do not have any problems when it comes to purchasing commodities such as butter, milk and wheat and this is due to the presence of an agricultural belt. In Karachi, our customers are primarily businessmen and professionals and they are harder to please, because they are more budget-oriented and savvy. Karachi is a tougher market to penetrate. From what we see, in Punjab, people seem to have higher disposable incomes and we will be opening a branch in Gujranwala shortly.
MMA: How has the economic downturn affected retail?
SB: It has affected everyone and sales are down, especially of imported items. However, there is a positive angle to this; as reliance on imported goods decreases, local companies will be forced to come up with viable substitutes. Another way that the downturn has affected us is that when we open a new store, the equipment (chillers and generators) is all imported. This means that setting up a new store is now much more expensive due to the devaluation of the rupee. In fact, retail has become a low-return, high-risk game and in some cases, a high-investment, low-returns game. Earlier, it was much easier and not as expensive to open a retail store. Another contributing factor is that real estate prices continue to rise, so it is even harder to make profits.
MMA: How have profit margins been affected?
SB: They have decreased, although revenues have not been impacted as much. This is because as a large volume player, Chase Up receives benefits from distributor discounts on commodities such as soap or oil. FMCGs' prices have been increasing and several brands have added smaller SKUs because customers want these options now. Although customers are brand loyal to an extent, when prices cross a certain limit, they will look for better options. I expect that customers who purchase high-end brands will switch to cheaper options, although commodities such as butter and milk may not be affected as much.
MMA: In light of the downturn, how do you see the next 12 months unfolding?
SB: For us, there is an opportunity in categories such as clothes; people who earn between five and 55,000 rupees a month will still need them and may shift to our clothes, fabric or accessories because they are cheaper. This means that despite the prevailing economic climate, there is an opportunity to develop new products. We are committed to providing good, value-for-money products to our customers, all the while focusing on quality. We have not experienced any major setbacks in the past year and this has to do with our customers' loyalty because we make an active effort to make our items as affordable as possible. However, in retail, we always run the risk of losing customers if we do not fulfil their expectations. To retain them, we will continue to place the emphasis on pricing, training our salespeople and customer service. Hopefully, this will prove to be a winning combination.
For feedback: email@example.com