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Capturing opportunities from a hobby
Anil started by advertising good-quality posters through mail-order catalogs in one of the popular magazines in the late 1970s. With increased demand, he expanded his offerings to include posters of film stars, natural scenery and other interests printed by local printers. An avid music lover, he decided to sell songbooks of lyrics of hits from popular groups like ABBA, Beatles and BoneyM that rocked the charts, in those days. He wrote down the lyrics of the songs himself while listening to the music on a gramophone. Elated when a music shop bought the songbooks, he decided to expand by selling songbooks containing hits of a particular year. He was soon selling over 10,000 copies per year of his songbooks, in addition to the posters business.
Anil then set his sights on the greeting card business where he saw opportunities that were untapped. At that time, greeting cards were sold in stationary stores where customers would look through dusty shoe boxes marked "birthday" "anniversary" in the corner of the store. Taking a fancy to his neighbor's dog Archie, Anil chose the name Archies for the business that now included greeting cards in addition to posters and songbooks. In 1979, he and his brother Jagadish Moolchandani registered the business as "Archies Gifts and Greetings".
Inspired by the exclusive greeting card shops that he visited during a trip to South East Asia, he wanted to recreate a similar experience for customers here in India. The first retail outlet opened in Delhi in 1984 and stood out with its lighted decor and music playing in the background. Customers flocked to the store and the company was on its way to becoming the destination for greeting cards.
Archies expanded its presence throughout the country by using a franchisee model well before other business adopted the model and it became common practice in India. Since the franchisees made their own investment in the business and paid royalty for the sale of Archies products, this contributed to the success of the company. The franchisee models helped the company save on real estate costs as well as share the expenditures of promotion and advertising with its partners. Over the next decade and more, Archies became synonymous with greeting cards in India.
Staying relevant when winds change
With the internet boom came the e-card and threw the greeting card business into turmoil. As more people resorted to sending e-cards rather than posting or giving physical greeting cards, it seemed like the end of the physical greeting card era and perhaps, even the business.
Archies tackled the e-commerce threat by opening its own website and offered customers e-cards. The company's e-cards fought to stand out from the crowd with their short animation story and sound effects. By tying up with courier companies and online payment system, the site also gave consumers the options to shop online for gifts. However, online shopping was still in its infancy in India at the time and consumers were wary. E cards became popular in India much before the e-commerce wave hit us in recent years.
The Moolchandani brothers understood one thing very well - the mindset of the consumer who came in looking for greeting cards. When you buy a card, you normally don't just stop that that - very few people hand over only a card - they almost always buy a gift too, to go with the card. The gifts aspect of "Archies Gifts and Greetings" had a lot of unexploited potential. Why not make sure that when a consumer looks for a gift to give someone they love or care for, they turn only to Archies? And, if you get a wide selection of cards as well, so much the better.
The business model became a lot more holistic, with a sharply increased focus on stocking a wide variety of gift items, which led to a major revamp of its franchisees and the stores. All franchisees were asked to keep only Archies range of products and if they did not want to be an exclusive outlet, they were given the option of converting into an Archies Paper Rose Shoppe on a non-exclusive basis. Archies expanded some of its existing outlets into bigger stores and focused on expanding the selection of high-end gift items. The aim was to be the one-stop gift shop for the Indian consumer. With this in focus, the company started to import items such as crystal, soft toys and Feng Shui items from China, Hong Kong and Korea as well as carrying gift items from local vendors. Customers found new reasons to visit Archies for their gifting needs as the collection of gift items kept expanding to cater to different needs. Archies survived the big scare posed by e-cards, which once looked set to decimate a business pioneered and painstakingly built be the Moolchandani brothers.
Lessons for financial advisors
Until 3 years ago, mutual funds were available to investors in largely one format - the physical mode offered by multiple distribution channels - banks, NDs and IFAs. Sure, we have had a few online portals, but they never really made a dent in the established channels.
Suddenly, we have many more online formats that investors have, and some more in the pipeline. Direct plans are available online from fund houses, aggregators like MF Utility provide an added layer of convenience, we have robo advisors and we will shortly have e-commerce platforms like Flipkart and Snapdeal who will also make mutual funds available to investors. For IFAs, it sure must feel like how the Moolchandani brothers felt when e-cards threatened their established greeting card business.
Archies understood the mindset of customers who shopped for cards - cards were only one aspect of what they bought on special occasions. IFAs should imbibe the fact that mutual funds are only one aspect of what investors look for in terms of managing their personal finances. Consider expanding your proposition from only mutual fund distribution to a goal based planning proposition that includes a wide spectrum of products as part of your solutions, including mutual funds, life and health insurance, general insurance, advice on loans, tax planning and tax return preparation. Ensure that you are in a position to help your clients on all aspects of their personal finances, not just mutual funds. Evolve your business model to a more holistic one. You will then find, just as Archies found, that you give more and more reasons for clients to come back to you - despite having many more ways of buying one product - mutual funds.
Content is prepared by Wealth Forum and should not be construed as an opinion of HDFC Mutual Fund.
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Wise Advice: Evolve
There's a lot that we can learn from Anil Moolchandani, promoter of Archies Gifts & Greetings. He followed his passion to set up a new retail vertical in India that we had never experienced before in the country. He scaled this up using a model that was rarely tried in India before. His business got severely impacted when internet based solutions threatened to render his physical model irrelevant. But he bounced back by understanding what clients really wanted and guided the evolution of his Archies stores to deliver to them much more than what the internet based propositions offered.