Radha Exports on expansion trail

VERY few people shopping at the popular Valu$ and ABC Bargain Centre discount store chains would know that the group is owned by a low-profile family with big ambitions. Radha Exports group, which is behind the chains, now counts 46 stores and is on an expansion trail which could see the addition of another 80 outlets in Singapore over the next five years. The group is also a wholesaler and importer-exporter of consumer goods.

Its chairman, Naraindas Gangaram, told The Business Times that his company could also invest strategically in the manufacturing sector. "We are interested in investing in companies or factories in Asia that manufacture our core products such as snacks, confectionery and beverages, tissue paper, household supplies, cleaning materials, and other fast moving consumer goods," he said. "So, in the future we would like to manufacture direct and sell direct to the end-customer. This way, we save costs and the consumer benefits even more."

Radha Exports was set up in 1987 as a partnership, and became a private limited company in 1995.

"We started off with buying and selling goods locally. Initially we bought garments from local suppliers and sold them to the vendors at the night markets," recounted Mr Gangaram. He gradually expanded his range of garments. "The night-market vendors gave me a feel of what the local customers wanted."

Then, wholesale customers started coming in from India and Sri Lanka. Later, Radha Exports ventured into importing and exporting clothing items.

Eventually, his company expanded its product range and started importing garments and sundry goods directly from Indonesia, Malaysia, Thailand, the Philippines and China, and sold these to local wholesalers, who would in turn supply them to retail stores in Singapore.

Radha Exports' move into the retail business happened in 1995 when the group opened its first ABC Bargain Centre outlet on the ground floor of Peninsula Plaza. That store remains in operation today.

A decade later, the group bought over the Valu$ brand.

Currently the group's retail business comprises a mix of self-operated and franchised outlets. It operates 21 stores under the Valu$ banner and 14 stores under ABC Bargain Centre. In addition, franchisees run nine Valu$ and two ABC Bargain Centre outlets.

Radha Exports' franchise arrangement is somewhat unique: it does not take a cut of franchisees' sales or profits, but franchisees are required to buy all their stocks from the company.

The goal is to set up another 80 stores between 2017 and 2021 - of which about 20 would be franchise operations. And the low-price strategy will remain unchanged: "buy direct, sell direct". "We minimise the role of middlemen, so the savings go directly to the customers," said Mr Gangaram.

Prices at Valu$ and ABC Bargain Centre shops can range from S$1 for three cans of soft drinks to S$10.50 for a box of 24 Ferrero Roche chocolates - depending on the promotions for the day.

Mr Gangaram said his company imports merchandise - including parallel imports - directly from the cheapest places in the world. "Countries with weaker economies or unstable currencies usually have the best and cheapest deals."

Housebrand items

Besides selling the merchandise at its stores, Radha Exports supplies to other wholesalers and retailers. It also re-exports some of the goods. Radha Exports also has its own housebrand items which are manufactured exclusively for the group.

The group's vertical integration strategy includes being on the lookout for an opportunity to buy into manufacturers - to reduce costs and boost efficiency.

Mr Gangaram declined to give any indication of the group's sales or profit numbers, citing competitive reasons. No financial records of the group were shown in searches with the Accounting and Corporate Regulatory Authority.

Radha Exports Pte Ltd, or the mothership of the whole operation, is equally owned by Mr Gangaram and his wife, Dinisha.

As vice-chairman, she oversees the accounts and administration side of the business while Mr Gangaram sniffs out the business opportunities. The day-to-day operations are managed by a team headed by Deepak Anandani, a nephew who joined the company 15 years ago. The 40-year-old is the group's president. "He (Deepak) has grown and expanded the company to what it is today," said Mr Gangaram.

ABC Bargain Centre Pte Ltd, which operates the namesake discount store chain, is equally owned by Mr and Mrs Gangaram.

The couple together own 90 per cent of DD Pte Ltd, which operates the Valu$ stores, with Mr Anandani holding the remaining 10 per cent. The three are part of the 10 family members in the group's management team, which also includes 16 professionals who are outside the family. The total headcount of the group is about 650, with some having worked at the company for several decades.

Mr and Mrs Gangaram's 18-year-old son, Nikhil, has also joined the business while he waits to begin his National Service stint. Thereafter, he will pursue university studies before returning to the group. Said his father: "He was practically raised in our stores, helping to tag goods and doing some cashiering in his younger days. He's interested in further growing the company."

"This is a family-owned company and I am hoping that this is the way it will stay for generations to come," said Mr Gangaram, adding that Radha Exports was named after his late mother. "I hope that I have made my parents proud. They've both passed away but it is their values and teachings that have brought Radha Exports to where it is today."

In keeping with the times, there are plans to build an online presence to reach out to more consumers. "Over time, we shall add more bigger-ticket items to our merchandise range, which would make online sales viable."

He lists technology and globalisation as the sea changes affecting the group's business. To stay ahead of competitors, he monitors market trends closely. Instead of using market research reports, he uses gut-feel and instinct to suss out opportunities. He is known for gathering information from the ground, spending hours at a stretch at his stores, watching what customers are buying, gauging their satisfaction level - while keeping an eye on the neighbourhood competition at the same time.

For the moment, online retailing does not seem to have affected business at ABC Bargain Centre and Valu$ outlets as the price-points of the merchandise are generally too low to make online delivery feasible.

But one thing will not change, he stressed: the group will continue to offer low-priced items as well.

Brick and mortar assets

Meanwhile the brick and mortar assets owned by Mr and Mrs Gangaram include some of the HDB shophouses where the ABC Bargain Centre and Valu$ stores are located.

In addition, Radha Exports owns two warehouses - in Pandan Road and Pioneer Road North, totalling about 200,000 sq ft in built-up area. It intends to develop a 425,000 sq ft distribution centre on a site at 118 Pioneer Road which it bought recently. The total development cost (including land) is estimated at S$80 million and the project is slated for completion in two years, following which the group will divest the Pandan Road property.

Gaining the trust of both suppliers and customers has been vital in growing the business. "When we opened our first ABC Bargain Centre, we offered our customers a money-back guarantee if they found any of our items cheaper anywhere else in Singapore. We offered cheap goods, but we also had to ensure good quality, so that the customers would trust us and keep coming back," said Mr Gangaram.

As passionate as he is about his business, the 54-year-old said he has no sentimental attachments when it comes to doing business. "If a business is losing money, we close it down. We can lose face, but we cannot lose money."

One of the things that has given Mr Gangaram great satisfaction is "the man on the street coming up to us and thanking us for being around, for giving them good products at very affordable prices".