Hanif Bilwani, CEO, Bonanza Satrangi, speaks to Aurora about the resilience of his brand.
AURORA: When was Bonanza established?
HANIF BILWANI: We started in 1975 by manufacturing sweaters for women and clothes for children. In 1980, we went into men’s shirting and trousers and shalwar suits. Then in 2013, we launched Satrangi.
A: Bonanza I understand is part of a family run business. Was Bonanza the first venture?
HB: My grandfather started a company in Karachi in 1946 called Ghani & Tayyab. My phupa’s name was Ghani and my dada’s was Tayyab. I am from the third generation. About 20 family members are looking after various businesses.
A: What were Ghani & Tayyab involved in?
HB: Trading, mainly food items. My grandparents came from Batwa, a small town in Gujrat. They and two of my uncles came to Karachi in 1946 and opened a shop in Jodia Bazaar. Later, they started a cigarette business, but after two to three years they decided that they would not engage in products injurious to health. So in 1967, we went into textiles and opened a factory in East Pakistan and one in Karachi to make fabrics for women. We also had an agency for polyester yarn. By the grace of Allah, the business saw stable growth and in 1975, we launched Bonanza; my uncle realised that the future was in ready-made garments. We opened our first retail shop in Rawalpindi, although we had many dealers to whom we gave our stock to retail.
A: In Karachi you were selling through dealers?
HB: Yes. In those days Saddar was the shopping hub and we had three dealers there. Then in 1998, we established two dealers in Bahadurabad, which had by then become a popular shopping centre.
A: How did growth evolve?
HB: People, especially men, started to switch to ready-made clothes, which is why we developed a men’s line. However, by 2010, we realised that men’s clothing was a relatively limited market; we saw the success of Khaadi, Gul Ahmed and other brands. So in 2013, to drive further growth, we launched Satrangi. We started with designer Kamiar Rokni, with 25,000 pieces which sold out in a month. In 2014, we increased our production and as sales grew we opened more stores, and today Mash’Allah we have over 100 across Pakistan. Our stores are not as large as Khaadi’s and Gul Ahmed’s; they average 2,000 to 3,000 square feet. Today, the women’s line accounts for about 80% of our portfolio, the men’s segment for 14% and perfumes and cosmetics five to six percent.
A: From where did the drive to innovate come?
HB: As a family, we meet at least once every two months. My elder cousin would keep on repeating “look at Khaadi.” I had been looking after Bonanza since 1982 and I thought I should take the initiative. Initially we hired four young women from the Textile Institute of Pakistan (TIP) and then we added more. In the beginning there were teething problems but we eventually overcame them. Today, we have five design studios, each with a separate head. I sit with each studio to review new designs but decisions are made collectively; if most team members like a design, it is approved. The same goes for the men’s line. We have a studio in Lahore which caters to local tastes because the market is different there.
A: Is it easy to source good designers?
HB: It is today, although it was not five years ago. Now that we have made a name for ourselves, and we receive many résumés from experienced designers; even designers who left us earlier for whatever reason want to come back.
A: Earlier, as a brand, Bonanza was seen as a middle of the road one rather than high-end. How did you change this perception?
HB: When we started off in menswear we did not have designers and our approach was rather ad-hoc, and when we tried to design the product ourselves, it did not work out well. It was when we decided to employ lead designers from reputable institutes and let them get on with it and produce good work that the change came about. We started by improving our product line because we thought it pointless to upgrade our shops or make efforts in marketing without the right product line. At the end of the day the product is everything. Once the product was in the market, we started upgrading the shops. Our current shops have gone through two or three transformations in the past five to eight years. Our aim is to ensure that when our customers enter, they get the complete experience in terms of the products and the ambiance. We did not want our resources to go to waste because of customer disappointment. The marketing came last. Khaadi were the first brand to open customer pleasing shops and they reaped the benefits. Then we did it and so did Sapphire and then others. We improved the shops and started to train our retail staff. There is a big difference between our shops as they are today and what they were 10 years ago. Every month, I sit with the retail staff, listen to them and give them whatever customer feedback I have. It is about teamwork. I am a good listener and easy to access. If our team members say four things, one of those will be something very useful; I listen to everyone. People say that I am too modest about my abilities, but in my experience remaining humble has a lot of benefits.
We launched our perfumes two years ago and cosmetics last month. We hired a different team familiar with this sort of thing. We analysed the formulas of imported merchandise and we went to some of the world’s leading fragrance companies including CPL Aromas, Firmenich and International Flavours & Fragrances (IFF). We looked into bottle trends; all in all it took us about six months to set this up. About 8,000 to 10,000 women pass through our shops every day and stocking perfumes and cosmetics is an added convenience for them.
A: What is your take on the introduction of the sales tax?
HB: The decision by the government to bring everyone into the tax net is good for us. The unorganised sector has long been copying products made by the organised sector and selling them for half the price. Now they will either have to come into the tax net or close down. However, had the government imposed the sales tax at nine percent and then gradually taken it to 14%, the market would have grown further, but ultimately this will be good for brands. In about six months, many businesses in the unorganised sector will be out of the market; I am hopeful we will benefit and grow. Exporters have issues with the sales tax because their capital engagement has increased; costs have gone up due to the rupee depreciation and overall the price index across multiple products has gone up too. However, I don’t think there will be much impact on our sales because people need clothes. We are a population of 200 million and the benefits of the government acting against the unorganised sector will go to the brands. Sales of high end products, such as Rs 8,000 to Rs 10,000 silk suits have declined, but sales in the Rs 3,000 category are growing.
A: Do you have stores in the second- and third-tier cities?
HB: We have stores across Pakistan including Abbotabad, Bahawalpur, Faisalabad, Gujrat, Mirpur, Multan, Peshawar, Rahim Yar Khan, Sargodha, Sialkot and Swat.
A: Which of these cities are the most thriving?
HB: The ones where family members receive remittances from overseas. People who were receiving $1,000 a year ago, used to get Rs 104,000; now they are getting Rs 160,000. Furthermore, some of these cities produce their own milk, vegetables and meat and overall prices have only really increased in terms of utilities and petrol; consequently, economic activity is picking up.
A: When did you go into perfumes and cosmetics?
HB: We launched our perfumes two years ago and cosmetics last month.
A: Although many other fashion brands are doing this as well, isn’t this an entirely different ball game from creating good fabric design?
HB: We hired a different team familiar with this sort of thing. We analysed the formulas of imported merchandise and we went to some of the world’s leading fragrance companies including CPL Aromas, Firmenich and International Flavours & Fragrances (IFF). We looked into bottle trends; all in all it took us about six months to set this up. About 8,000 to 10,000 women pass through our shops every day and stocking perfumes and cosmetics is an added convenience for them. Also, as far as imports are concerned, there is always the question mark of whether they are genuine or fake.
A: Against which brands are you competing?
HB: Eighty percent of the cosmetics and perfume business is in the unorganised sector, importing from China and other places. Bonanza on the other hand is a name women trust. In fact, at the beginning of every month women come just to buy their perfumes and cosmetics without even going further into the store. The other factor is they realised that whereas before they were spending Rs 15,000 on buying perfumes in Dubai, they could spend just Rs 3,000 and yet get the same quality because the fragrances are sourced from the same manufacturers.
A: Is this is a growing segment?
HB: It is growing faster than clothing.
HB: There are so many clothing brands in the market. When we entered perfumes and cosmetics, there was only J., and they were focusing mainly on Middle Eastern fragrances for men, our main focus is women.
A: Coming back to clothing, is there any such thing as brand loyalty?
HB: There is no loyalty anymore.
A: Given the proliferation of fashion brands for women, how do you differentiate Satrangi from the rest?
HB: A combination of factors. The design, the selection, the store environment, the price and the service; it all adds up.
A: Does quality play a role or do customers not care or see any difference?
HB: Quality is important and customers who wear an outfit more than two or three times will see the difference, especially in the small cities where they wear the same outfit several times.
A: How much business do you generate from e-commerce?
HB: About four to five percent. E-commerce is growing, although not as fast as it is in other countries. Women in our society have time; abroad more women work – and 80% of our sales come from the women’s segment.
A: How does it distribute across big cities versus smaller cities?
HB: It is about equal. We have stores in smaller cities so product availability is there, but the growth is coming from second-tier cities.
A: Do you have any further innovations in the pipeline?
HB: We introduced bridal this year and opened a studio in our shop on Tipu Sultan Road; we are planning to open in Lahore and Islamabad in the next two months.
A: To what do you attribute the success of Bonanza?
HB: Hard work, quality and good intentions.
Hanif Bilwani was in conversation with Mariam Ali Baig. For feedback: firstname.lastname@example.org