Success has a way of giving you an adrenaline rush no matter how you spell it. When Faizal Ahamed CM founded Suxus, a manufacturing and retail brand of men’s apparels, in 2006, the idea was to give the name a spin and make it catchy.
Little did he know that success would come to him only after he went through a full circle himself.
Having started out in 2006 with an initial investment of Rs 5 lakh, Faizal was on the brink of bankruptcy in 2011 when he lost upwards of Rs 1 crore.
From a flop to a hit
Thirty-two-year-old Faizal is a third-generation entrepreneur from Madurai, Tamil Nadu. While he was studying BCom, he was pushed into starting a business to recover a debt that his father had taken for his business.
“In 2006, I started with seven stitching machines, producing 100 shirts daily,” Faizal tells me. It was essentially a B2B model, and Faizal had two dealers across the state in the beginning. Gradually, he increased the number of dealerships, supplying to popular retail chain stores like Pothys.
“It was a slow and organic process for us and we were growing at the rate of 20 to 30 percent,” says Faizal. In 2011, he decided to open his own showrooms, and Suxus opened stores in Madurai, Erode, Salem, Trichy, and Dindigul. “The premise was that if other retail stores can sell our shirts for Rs 150, we can also sell them at that price point instead of Rs 100 that we were originally selling for,” he adds.
“We lost more than Rs 1 crore. Out of the five stores, three were franchises and two (Madurai and Erode) were our own stores,” he shares. At that time, the Erode store was in a prime location, and he was paying a monthly rent of Rs 1 lakh, but the store was doing a daily sale of only about Rs 3,000.
“So in 2013, we decided to close the Erode store and retain only the Madurai one. Instead of bringing back all the stock from the Erode store to Madurai, we thought of holding a sale there itself,” says Faizal. On the first day of the sale, they managed to sell only Rs 1,500 worth of stuff.
The store had 5,000 to 6,000 pieces of stock, so Faizal came up with a plan to sell seven shirts for Rs 1,000. He got his store manager to send a WhatsApp message to their customer database of 3,000 informing them about the sale.
And would you believe it, they made a total sale of Rs 3.5 lakh the next day. “We thought since it was a clearance sale, this was expected. And did not hope for much for the next day,” recalls Faizal of those momentous days that would go on to change his destiny forever.
Word of mouth had spread like wildfire, and the following day too they did Rs 3 lakh worth of sales, and the following day Rs 2 lakh worth of sales.
“Our stocks were over and the store manager wanted us to send more stock as the demand continued to rise. I thought, why not do this the whole year round? And that’s how we came up with this new model,” says Faizal.
A lean margin model
The Erode store became their R&D centre and the place where they experimented to develop this business model further. “From the seven shirts deal, we went on to give customers five trousers for Rs 1,000, four jeans for Rs 1,000, and so on.”
After six months of trial-and-error, they applied the same model to their store in Madurai.
Of course, it was not all easy. On the days of the Erode store sale, the company had sold the stocks at a loss. They were selling each shirt at Rs 146, which had cost them Rs 250. Thus, if they had to continue with this model of selling X number of shirts or pants at Rs 1,000 without making a loss, they needed a plan.
“We started doing backward integration — working on a lean margin model and producing in bulk. From buying the fabric to production cost to making advance payments, we maintained tight control, thereby minimising our expenses,” says Faizal.
And that is how they built their strong customer base.
Whenever they opened a new store, their sale per average square foot turned out to be more than the highest average in the industry. For the retail garment industry, the average is Rs 7,000 per square foot per annum, and the industry high is done by DMart at Rs 13,000 per square foot per annum. “We were doing an average sale of Rs 25,000 per square foot. All our stores were fetching ROI in 30 days,” Faizal claims.