Sisters Farah Malik Bhanji (right) and Alisha Malik spent their childhood years at the Metro Shoes Colaba store in Mumbai, which was started by their grandfather Malik Tejani
Image: Farah Malik Bhanji: Mexy Xavier
It has been a year of big changes for Metro Brands as a family business. Not only did the company bring in an external CEO in July 2021, but in December, it also went public. Though both moves had been in the works for a while, the two are not interlinked—it all simply happened to come together around the same time even as the company was recovering from the havoc wreaked by Covid-19 on retail businesses.
The process of going for an IPO actually started three to four years ago and the company had even put the bankers and legal team in place, but then Covid struck and they decided to wait a while. On the other hand, professionalising the business and succession planning have been an ongoing process at the specialty retail footwear brand, and it had always been part of the plan to eventually get in a CEO. When they found the right person in Nissan Joseph, who has about 20 years of experience in the retail industry that includes stints at Payless Shoes, Hickory Brands and Crocs, they decided they did not want to wait.
“There was a lot of debate… do you want to do it so close to an IPO
, what will people think and so on. But the aim is always to do what is right for the company at the right time, and not so much what it will look like,” says Farah Malik Bhanji, third generation and managing director at Metro Brands
In hindsight, it seems to have been good timing. The company had been working toward it by creating structures and building levels under the CEO
—from business heads to HR to IT, and when the top management team was out talking to investors in the run-up to the IPO
, these teams took the lead. “We are in a retail business, [and] that does not stop even for a day,” says Farah, 45, who was earlier CEO and MD. “Despite all of us being so closely involved with the whole IPO process, business as usual could go on and a lot of the teams that we have created under us started taking on a lot more responsibility. So it paid off on that angle.”
It was also a period when customers were coming back to the stores and the operations team stepped up to take advantage of the return in demand—ramping up store experiences and ambience—leading to “one of our strongest quarters in our entire history in terms of store opening as well as in terms of the sales we did. Even online, it was the highest numbers we had ever done,” adds Alisha Malik, the youngest of the five sisters that make the third-generation of the family
, and president, ecommerce and marketing, at the company.
Metro Brands—which counts Relaxo and Bata India as competitors, and includes brands like Metro, Mochi, Walkway and Davinchi as well as third-party brands like Crocs, Skechers, Florsheim and FitFlop (which the brand has been selling in India for the last four years) in its portfolio—operated 629 stores across 140 cities in 30 states and union territories in India, as of December 31, 2021. The company posted a total income from operations of ₹476.05 crore in quarter ending December’21, up from ₹314.34 crore in the previous quarter, as per company filings. Profit after tax stood at ₹100.15 crore in December’21, almost double the ₹50.21 crore in the previous quarter. The contribution of online sales (including omni-channel) to the company’s revenue from operations increased to 9.2 percent in the nine months ended December 31, 2021 as against 7.3 percent in FY21 and 2.5 percent in FY20.
Charting their own path
As with most family businesses
, both sisters spent their childhood years at the Metro Shoes Colaba store in Mumbai started by their grandfather Malik Tejani, sitting at the cash counter counting coins, mingling with customers and even attending purchase meetings with their parents. While their father and chairman Rafique Malik expanded the footprint, going from two stores in 1969 to 50 by 2006, it had to be done in line with their grandfather’s belief that you could not have a store without a family member at the till. On one hand, it led to an entrepreneurial model at the company where till date store managers are on commission and get to choose what they want to keep in the store. On the other hand, though involvement was encouraged, it was never a given that the next generation would join or have it all handed to them on a platter. For instance, when Farah finished her studies in the US she did not want to return. “And I remember my dad telling me, ‘it’s important to come back for at least a year to understand the business. And then you can go back and do what you want’,” she recalls. Once she did, there was no looking back. About 20 years ago, she started out with modernising processes at the firm, barcoding of stock etc., moving to marketing, merchandising, meeting suppliers and working her way up to finally being appointed MD and CEO in 2013.
When Alisha joined the business about 12-13 years ago, she went about creating her niche in social media and ecommerce. “One of the toughest times I went through is when the first ecommerce manager resigned. And I remember during that I said, ‘if you feel like I’m not the best choice or the best qualified person for your business, tell me now and I’ll go and find a job outside’,” she recalls smiling. But for her father, it was all a way of learning and evolving. “The confidence he gave me is that these are all experiences from which you grow,” she adds.
That journey has included, among other things, building warehousing systems for ecommerce, building the finance for selling through outside ecosystems like, say, Amazon, and making the shift from campaigns for offline marketing to the constant content and engagement that digital requires.
Constantly learning, adapting, reacting and seizing opportunities are qualities that seem to be ingrained in the Malik gene. It is as if they live by the mantra, ‘Ten percent in life is what happens to you, and 90 percent is how you react’. Actually, it’s something that’s written on a little card that they carry around in their wallets. “It’s one of the things my father has been telling us from the time I’ve been a kid, and it’s titled Attitude… like everything in life, it doesn’t matter what happens to you, it’s how you deal with it,” says Alisha.
It applies rather well to the pandemic when things were beyond anyone’s control and they could control only the way they reacted to it. While the immediate effect of Covid-19 was obviously to pivot to online and streamline supply chains, it also helped them relook at and reorganise the business. “In a way, Covid had a big silver lining for us, it helped us get more efficient and strong, do a lot of cost optimisation, which otherwise you wouldn’t have the time to look at when you’re in a growth phase,” says Farah.Metro Brands operated 629 stores across 140 cities in 30 states and union territories in India, as of December 31, 2021
Now, post the IPO and the third Covid wave, it’s business as usual. The two have been back on the road, enthused to see what changes two years of a pandemic have brought in the market and customers alike, and how they can adapt the business accordingly. While customers have moved towards casualisation and expect instant gratification even offline, stores are not only investing in revamping store facades, but are also a lot more omni-channel enabled, they point out.
And as more customers return to offline spaces, their online strategy continues to be one where it is not just about making your voice heard in the barrage of content, but also ensuring that it adds value to a customer. “Even though we’re creating content, [it’s about] how do you make the process easier, more frictionless. So we’re working, at least in our technology strategy and our roadmap for online commerce, to make it as smooth and easy as possible, leveraging our strengths and pan-India network for quicker delivery,” says Alisha.
The way ahead
In 2007, when the company brought in Rakesh Jhunjhunwala
as an investor, it was about governance and transparency, and ESOPs. “There were two things—one is that we wanted to create wealth for employees. So we came up with an ESOP plan at the time. But also, when we took an outside investor in, it was to ensure that as a family business
, there is no complacency and there’s full transparency. The idea was that family businesses tend to sometimes get complacent, because you’ve got enough, so how to keep that growth mindset churning,” says Farah.
For Jhunjhunwala, says Utpal Sheth, CEO of Jhunjhunwala’s proprietary asset management firm Rare Enterprises, and also a director on the board of Metro Brands
, it was a combination of the company’s leadership and the fact that they were backing a leader in the space. “Mr Jhunjhunwala had known Rafiquebhai for some time, and had full confidence in his capability, integrity, maturity, all those aspects were quite clear. But when we drilled down and looked at their unit economics and their leadership attributes and compared it to their peers we found they were miles ahead,” says Sheth.
It’s a leadership style that Farah and her father have perfected over the years, playing off each other and ensuring that once one has convinced the other to their point of view, they back each other fully. “They complement each other very well. When Covid struck, both of them moved together in a fully-aligned manner in ensuring that Metro
comes out on top and leverages this crisis,” says Sheth, adding that Alisha has played her part, striking the right balance between the new economy rules and offline. “She has found the right blend and is an able wingman to Farah.”
While they all knew and had a rapport with Joseph, it’s another learning curve for Farah. “For me, the bigger change was not so much the IPO, but getting a professional CEO
in; defining what my role will be and his role should be, and being there to back him up and ensure that he can succeed,” she says. “My dad did it for me beautifully, and I think it’s something I’m still learning in terms of doing it for the next.”
Even as going public means having a new outlook of being answerable every quarter, it also frees her up to focus on the long term. The IPO
had a fresh issue of ₹295 crore, which it plans to utilise for opening 260 new stores of the company under the Metro, Mochi, Walkway and Crocs brands by FY25.
The company’s various brands and tie-ups cover an entire range of footwear from casual to formal, and the idea, they say, is to be the largest specialty retailer in the country and dominate the footwear wardrobe of customers. “I am very excited about the team we have on board. It’s given us a lot more capacity to do more things. We were otherwise constantly involved with the operations role. Now you can look at the forest more than the trees, and create a vision for the company,” says Farah.
It’s a combination that also excites Sheth. “The calibre and quality they were able to attract, that itself speaks volumes,” he says, adding that the fact that they brought in a new CEO just before the IPO, had a smooth transition of leadership, and empowered the new CEO, is significant. “With Joseph coming in, this combination of Joseph, Farah and Alisha is a very lethal and potent combination. And they still have access to all the guidance and wisdom of Rafiquebhai.”
He adds: “Very few promoter-driven organisations are able to have such a smooth transition to an empowered, high-quality CEO, who brings global experience to bear on the company. It’s a tribute to the promoters, their openness and consciousness that they’re keeping ownership and management independent of each other in the larger interests of long-term value creation.”
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(This story appears in the 08 April, 2022 issue of Forbes India. To visit our Archives, click here.)