Archies

ARCHIES: THE WAY INDIANS GREET

By

M D Aparna

Juhi Kapoor

Neha Tyagi

Natasha Vashisht

Ashwin Nanyam

Varun Gupta

Flow of the presentation

Introduction Corporate Clients Retail channels Question 1 Question 2 Question 3 Question 4 References

Introduction

Anil Moolchandani and his brother Jagdish Moolchandani started a partnership firm ‘Archies Gifts and Greetings’.

Theme cards being introduced such as Valentines Day, Friendship Day, Father’s Day, Mother’s Day and so on.

In 1984, They launched the first Archies Outlet in Delhi named ‘Gift Gallery’.

In 1987, they launched first Archies exclusive gallery in Kamla nagar in Delhi.

In 1990, Archies Greetings became Archies Greetings and Gifts Pvt. Ltd. which took over the partnership firm.

By the end of 1990s it operated in 3 businessesGreeting cardsGift itemsStationery products

In 1994, International collaboration with American Greeting CorporationGibson GreetingsPortal PublicationKingsley of UK and Kel Geddes of New Zealand

Corporate clients Reliance Samsung LIC Birla International Dabur

4 dedicated branch offices in Mumbai, Ahmedabad, Ludhiana and Hyderabad

Retail Channels Archies Gallery Archies Card Shop Paper Rose Shoppe Archies Feelings Premium Archies Gallery or Vision 2000 stores Other retail stores

In 1995, Archies became a Public Ltd. Co. with an initial offering of Rs. 74 million and the issues were oversubscribed 4.5 times

In 2000, Archies launched its portal archiesonline.com for Archies cards, gifts, stationery, music and perfumes online purchases.

Meet, greet and gift

STRATEGIES EMPLOYED

FRANCHISEE MODEL

The franchisee model contributed a great deal to success of Archies’.

This model helped Archies’ cut down on real estate costs.

This model also helped Archies’ to share advertising and promotional expenditures with the franchisees.

Franchise owner had the option of exchanging profit making products for less profitable ones.

Franchise operations were divided into three segments-

Top level franchisees ran Archies’ Galleries.

Middle level franchisees ran Card Shops and Paper Rose Shoppes.

Bottom level franchisees ran feelings and other retail outlets.

LOCALISATION STRATEGY

The companies’ localization proved to be one of the most effective strategies.

The smaller players only sold cards for Christmas, new years etc.

Archies’ came out with cards for festivals like Holi, Diwali, Rakhsha bandhan etc.

These initiatives were backed by aggressive promotional campaigns.

TIE UPS

Archies’ tied up with companies like Pepsi and Pidilite to build strong brand equity

Archies’ tied up with HelpAge to build its corporate clientele.

Archies’ entered into arrangements with production houses and released movie specific items like greeting cards, pic frames etc.

E-GREETINGS

In May 2000 Archies’ launched archiesonline.com.

The website had three sections-

Meet section had free services like email, chat, reminder services, scheduler.

Greet section was a customer interaction where they could send free animated e-greeting cards.

Gift section gave the customers an option to purchase gifts and have it delivered.

Arrangements were made with Elbee and Blue Dart for speedy delivery of gifts.

A tie up with Easy net com ensured secure online payments.

In order to secure online penetration, the company tied up with portals like yahoo.com, jaldi.com, Indiagreetings.com Mantraonline.com and Uthplanet.com.

E-kiosks were launched to attract NRIs and bridge a gap between internet and retail outlet models.

In the later stages, free services of E-greeting was proved to be very expensive hence archiesonline.com was made a paid website.

OTHER STRATEGIES

In 1990 Archies’ decided to revamp its distribution network.

A C&F network was introduced to ease up the logistics.

10 C&F agents were appointed who supplied the products to the distributors.

Archies’ could cut down on the inventory costs as a third party company was managing the inventory and logistics.

In 2000 Archies’ began an exclusivity drive where Archies’ Gallery franchisees were asked to keep only Archies’ range of products.

Franchisees were given an option of converting into an Archies’ Paper Rose Shoppe on a ‘non exclusive ‘ basis.

Archies’ also planned to increase the number of ‘vision 2000’ stores which were much bigger and had world class interiors.

Question 1Analyse the circumstances in which Anil Moolchandani started Archies and highlight the reason for the company’s runaway success. Why do you think Archies could not sustain its profitability growth in 2000-01

Archies was the result of innovative mind of Anil Moolchandani. His family business was selling saris but in 1970 he decided to buy & sell good quality posters.

Later when demand increased he started getting posters of film stars, natural sceneries etc printed by local printers.

Later on he decided to enter the Greeting cards business.

In India cards were sold out of dusty shoeboxes.

In 1979, Anil & his brother Jagdish Moolchandani got ‘Archies Gifts & Greetings’ registered as a patnership firm.

On his visit to South East Asia, realized there were exclusive greeting cards shop with good ambience and soft backdrop music.

He decided to try out the concept in India and launched ‘Gift Gallery’ in 1984 in Delhi.

Initially launched cards for Valentines Day, Mother’s day, Father’s day, Friendship day- to catch the fancy of teenage shoppers.

In 1987, first exclusive Archies Gallery was set up in Kamal Nagar, Delhi University. It became an instant hit with sales touching Rs. 2.2 million in first year itself.

In 1995, Archies was incorporated as a public limited company, with IPO of Rs. 74 million.

By 1990s, Archies was operating in three businesses.

1. Greeting cards: contributed 69% of the total revenue, with sales volume of 85.8 mn cards.

Gift items: contributed 15% of total revenue. Includes items photo albums, frames, clock, stuffed toys, mementoes, sunglasses etc

Stationery products: contributed to 16% of co’s revenue. Includes items such as autograph books, diaries, calenders, posters, gift wraps, designer & fancy sationery.

Its products were marketed through following channels:

1. Archies Gallery- first exclusive store, 500-1000 sq ft in size.

2. Archies-The Card Shop- smaller in size than Archies galleries.

3. Paper Rose Shoppe- shops with an area of 100-150 sq ft with around 85% of Archies merchandise.

4. Archies Feelings- In april 2000, Archies took over the popular 25-store ‘Feelings’ chain of greeting cards.

5. Vision 2000 stores- They were premium Archies Galleries, exclusive Archies showrooms with lot more shelf space than other outlets.

Factors responsible for success of the company The company adopted localization

strategy. They became the first one to come out

with cards for Indian festivals like Holi, Diwali, Rakshabandhan.

Made tie ups with companies like Pepsi- helped in building strong brand equity.

Vision 2000 stores provided perfect ambience for shopping.

Introduced cards in Indian language such as Marathi cards for Sankranthi, Gurumukhi cards for Baisakhi, Hindi cards for Ram Navami, Cards for Easter.

In 2002, announced a tie up with Blaze Flash Couriers to launch ‘Express Wishes’.

The company had alliances with premium brands to establish their shop-in-shop corners within Archies.

It made arrangements with Movie producers and released a host of music specific products.

The company launched cards with new designs every month to keep its portfolio updated.

It has distributors for cards for Indian festivals in U.S, U.K, Middle East, South Africa & South East Asia.

Company also sold cards under the Help Age brand.

Reasons for not performing well in 2000-01

1. The Hindu Fundamentalist Groups- Shiv Sena, Vishwa Hindu Parishad(VHP) & Bajrang Dal- attacked valenties day celebrations.

They claimed that the concept of valentine’s day was against Indian culture and hence companies should not be allowed to use sexually explicit images/words and make money from it.

2. When in 1990s e-card became popular, Archies launched its e-greetings website- archiesonline.com. But the company could not achieve much success in this sector.

In order to increase their revenue, company started charging users. As a result 0.6 million registered users stopped using the service.

3. Also the company’s plan to convert its franchisee outlets into company owned outlets and its distributor setup into a C&F agent, were proved to be major burdens on its finances.

As a result in 2000-01, company experienced a negative growth. Turnover declined from Rs.710 mn to 680mn & net profits from Rs.130mn to Rs.91mn.

Question 2Critically Comment on Archie’s franchising and distribution strategies for expansion. Do you think the company’s strategies in the initial years was right in the light of the rationalization exercises? Give reasons to support your stand.

The Archies’ had a strong and vast distribution network covering every major state in India and even remote towns.

Products sold through around 8000-10000 Multibrand retail stores across the country.

Serviced through 70 dedicated company distributors.

Four branch offices in Mumbai , Ahmadabad,

Ludhiana and Hyderabad to extend its reach and penetration.

Branch offices catered to both Franchisees and retailers inturn managed by company’s representatives as well as its C&F agents

RETAILING CHANNELS

• The first concept store opened by archies, typically 500-1000 sq. ft in sizeArchies

gallery

• Smaller in size than the Archies GalleriesArchies

the card shop

• Shops with an area of 100-150 sq. ft with around 85% of archies merchandise.

Paper Rose Shoppe

• In april 2000,Archies took over popular 25-store ‘Feelings Chain’ og greeting card and gift outlet in the state of Gujarat.

• Following the feelings outlet was renamed as’Archies Feelings’

Archies Feelings

• Exclusive archies showrooms housed at prominent locations, spread over a larger area with a lot more shelf space than other outlets.

Premium archies galleries or vision 2000 stores

Other retail outlets

Franchisee model

Archies’ Franchisee model contributed a lot to its success.

Created a branded Franchise- also first mover advantage.

By franchising- able to save a lot of real estate costs also share advertisning and promotion expenditure with the franchisees.

Franchisees made own investments in the business and paid royalty for Archies turnover generated from sale of Archies products.

Franchising agreement- exchange products which were not sold with more profitable ones.

Group Advertising-Franchisee paid a fixed amount to company every month.

Quality control team monitored franchise stores ensuring – AMBIENCE , SPACE ALLOCATION , LIGHTING AND DISPLAY STANDARDS.

Franchisee operations divided into three segments, targetting different franchisee operations.

TOP LEVEL FRANCHISEE-

ran Archies galleries

MIDDLE LEVEL FRANCHISEE- Archies card shop &Paper rose shoppes

BOTTOM LEVEL- Feeling and other retail outlets

Yes the company’s strategy in the initial years was right in the light of the rationalization exercises.

The company decided to revamp the distribution network in 1999-00. replacing it by a C & F agent network.

According to the new distribution system in place of 68 distributors in 21 states, Archies appointed 10 C & F agents in 10 states catering to distributors who in turn catered to retailers.

Biggest Advantage- Company owns the inventory

Consumer is ensured of seeing entire products range that is available.

Distributor’s involment in product placement minimum.

Company could push entire range of products into the reatil channel.

With C&F agents and exclusive outlets company could better revamp its product portfolio.

Cost cutting – Distributor’s margin was 25-30% while C&F margin was 12%

Helped Archies penetrate deeper into the markets because of wider reach.

Potential of enlarging company’s retail network.

Question 3 Do you think the measures taken by Archies to meet the threat of e-greetings were adequate? Was the company’s decision to make its website a paid one, a sound business move? Justify your answer

Tackling the threat of e-greetings

Launches archiesonline.com Three major sections-meet, greet & gift Meet-services like free e-mail, chat, reminder

services & a greetings scheduler Greet-was a consumer interaction area where

registered customers could send & receive animated e-cards, greetings online for free

Over 700 e-cards available(different from the usual e-cards available online)

E-cards..8 sec. long story line with sound effects Gift-purchase gifts & get them delivered at their

doorstep. Free delivery for Delhi customers, Rs.25 for rest Tie ups with courier companies like Elbee & Blue

dart to deliver gifts & cards purchased. Making revenues by selling content on royalty

basis, sell banner advertisements. B2B platform, Created a virtual market place for

retailers & distributors who could have easy access to the company.

This in turn attracted many more retailers & franchisees.

Strategic alliances with various portals, to secure online penetration in various youth-oriented portals by leveraging the Archies brand equity.

Novel concepts for Diwali like e-crackers, can also perform religious rituals online.

No. of registered users reached 0.6 million.

Paid Website- Sound decision or not Yes, definitely it’s a sound move because: No. of e-greetings sent touched 54 million. Company gained no monetary benefit, Venture was proving to be a drain Company invested 20 million in the online

subsidiary but made just 2 million from e-commerce.

CTC for a single card was Rs.6000 Accumulated losses of 13.5 milllion, so can’t

continue with it.

Tie-up with indiatimes.com (50:50 profit sharing agreement)

Archiesonline.com charged Rs.399 per user for 100 e-cards per year.

Users were also given 10 paper cards worth Rs.180 from Archies, a music CD & a cassette & 10% discount coupons for shopping at Archies Gallery & Planet M stores.

No need to have millions of customers accessing the site.

Create an experience to the customers.

Underlying Idea- the site should complement the existing physical business.

Equated e-cards with fun Serious expressing of emotions by physical

cards. Campaign says “when you really mean it, send

an Archies card” E-greetings are not effective as physical

greeting cards. Online ventures were an extension of its

business rather than a thrust area for future growth.

"The unique thing about cards is that they are preserved by the recipients, whereas an e-card or SMS is junked immediately.

Emotions do not tend to emerge as strongly as they do in paper greetings.

Once customers see the product or touch the product, they would be enthused to purchase the same.

Recommendations

Archies Company was going through a rough patch Facing a financial crunch Reconsider moving into new business

avenues (Theme and Amusement park, Cakes and confectionaries, Play schools)

Supplying to the corporate gifts market, which provides a more stable source of revenues.

Question 4Discuss if Archies will be able to maintain its marketshare and leadership in the future with the entry of players such as ITC? Will the company’s current strategies help sustain its competitive position

Survival Strategy• Decided to focus more on gift segment

• Make Archies gallery a ‘one stop gift shop’

• Emphasis on outsourcing high end gift articles

• Focus on corporate sector

• Planned to launch a new range of economy cards (priced around Rs.10) called ‘Heart Warmers’ for small towns

• Plan to have 100 Vision 2000 stores which will contribute at least 40% to sales

Long Term Strategy Offers and promotional schemes undertaken

Tap all the Indian festivals and occasions

Popularize western occasions in India(Halloween, Easter)

Continuous focus on its USP - Innovation

Promoted their props through Bollywood(I hate luv stories)

Basic idea was to sell emotions Re-indulge in its Dotcom

References

ICMR case studies on Cosumer

Behavior

www.archiesonline.com

Archies commercial from

www.youtube.com

Queries?

Thank you