February 2005
PERSONALITY

How Binod Reared the Bluebird

Binod Tuladhar
Owner & MD: Bluebird Department Store

Turnover: Rs. 100 million

He holds a Diploma in hotel management from a prestigious European institute and his family owns a good hotel property, Hotel Blue Star. But Binod Tuladhar (48) is more a retailer as the owner of Bluebird Department Store than an hotelier.

In fact Tuladhar is credited as the pioneer of the department store concept in the country. There were no self-service retail outlets in Nepal before he set up Bluebird in 1985 by renting a portion of the property that his father had developed at Tripureswor of Kathmandu.

The idea to start the department store cropped up in his mind while undergoing the hotel management course in the Institute of Tourism and Hotel Management, Klessheim, Austria. Upon returning home, he found that the time was ripe for him to start implementing his idea. His elder brother was already managing the hotel quite well, so he could take time off from the hotel. Moreover, the people, particularly the expatriates and upper class of the society were feeling the need for self-service retail shops. When he shared his idea with his father, he supported it wholeheartedly.

Recalling the sentiment of the shoppers that time, Tuladhar says: “Particularly the expatriates were complaining that they felt cheated by the shops as they could not select the goods on their own and also the prices charged used to be different for the locals and the expatriates.”

The beginning was, however, done in a modest and precautionary manner. The goods he stored in his supermarket that had 5,000 sq. ft. as shop area were food and toiletries. The selection of the items was based on two considerations. First, a supermarket by definition was a store for the food items and second, if the business could not succeed as expected, such stocks could be liquidated quite easily. Also the decor of the supermarket was kept simple. “We used only simple slotted angle racks to display the goods. There was no lavish decoration,” he recalls.

However, the new store was highly appreciated by people. The expatriates were particularly happy that they could buy the goods for the same price that the locals were paying and the locals were happy that they need not haggle about the price.

Thus was hatched Bluebird, Nepal’s first truly European style self-service supermarket employing 20 people and he was able to repay his father within two years the Rs. 500,000 loan that he had taken from him to start the business. Another source of the fund for the business was a loan of around Rs. 800,000 taken from Nepal Arab Bank (now Nabil).

Now Bluebird has two outlets with a combined shop area of 55,000 sq. ft. It now employs 150 staff and is clocking an annual turnover of about Rs. 100 million. While 30% of its customers were expiates in the beginning, the ratio has changed substantially. Now the locals account for 100% of the customers.

Rearing of Bluebird

The story of how Bluebird spread its wings after it was hatched represents the history of how the entire concept of retailing business changed in Nepal.

After about two years of the beginning of Bluebird, Tuladhar added one more floor to the Tripureswor outlet and dedicated the space for toys, stationary, luggage and crystal items. In 1991, another outlet was opened at Lazimpat, which again started with provisions and within two years was expanded by adding one more floor for apparel, toys, cosmetics etc. About three years ago, Lazimpat outlet expanded one more floor making it a full-fledged department store dealing in all kinds of items.

Further expansion was implemented in the Tripureswor outlet recently by renting three floors from the Blue Star Hotel. As the room occupancy in all the hotels in Kathmandu was going down in the last couple of years due to dwindling tourism business, some hotel companies including Blue Star went on a restructuring mode to face the new challenge, thus making this space available. Bluebird used the space for high class brand items such as Nike, Adidas, Reebok and John Player. It also has space allotted for electronic goods under reputed brands like Samsung, Philips and IFB.

Problems…..

As a beginner, Tuladhar too faced the same problems that any fresh entrant in a business faces. For example, there was the problem of getting credit line from the suppliers. But that was overcome soon by strictly following a discipline of paying the suppliers on time.

Another problem in the beginning was the reluctance of the local buyers to come to Bluebird as it looked a premium outlet and they thought the goods would be expensive. “But we are not expensive, because we buy in bulk and can negotiate better price and get cash discounts,” he says. Though the inhibition of the people was gradually removed and now almost 100% of the customers who shop at Bluebird are locals, Tuladhar concedes that his store has deliberately tried to maintain that image of premiumness. “For example, we deal only in premium quality goods. People have a perception that Chinese goods are of lower quality, but we sell only those Chinese goods which we are sure as being produced by keeping the European customers in mind.” We ensure this by sourcing them from authentic supplies.”

In the initial days of Bluebird, Tuladhar had to go abroad regularly to buy the goods, but gradually local distributors started being appointed by a number of major international brands, which made it easier to source the goods locally. However, he still travels a lot for business. “I go abroad particularly for those brands for which there are no local distributors, such as garment items, toys and other novelties,” he says. “Therefore, Bluebird is always ahead of its competitors.”

How is the ongoing economic turmoil affecting his business? “It has definitely affected us,” he accepts and says he has managed to remain afloat by importing directly so that the margins are higher. Another competitive edge of Bluebird is that unique items are available there as compared to the competitors.

Now the country has over 50 supermarkets, most of them in Kathmandu, and the competition has really become intense. That is coupled with the reduced budget of the buyers. As a result, many supermarkets have been undercutting the prices. To address the problem, the Association of the Supermarkets and Department Stores has now decided to ask the suppliers to provide the recommended retail price, which will help the association to monitor undercutting, informs Tuladhar.

Other business interests

Besides being the owner of the department store chain, Tuladhar has also opened a store for retailing imported complete knock-down (CKD) furniture – Furniture Land. Being an avid music lover, he is one of the directors in radio station Hits FM. He is also a director in the Board of Himalayan General Insurance Company and Ace Finance Company.

Plans

Being a retailer, his business expansion is going to be in the retailing business itself, he says. His outlets are already open 365 days a year. But what about keeping them open 24 hours? “Not in the near future,” he replies. He tried to keep the outlets open from 8 in the morning to 8 in the evening. But the sales during the 8-10 am period was found very, very low which did not make business sense to keep it open during that period. However, to make the shop hours compatible with the market standards, he has been opening it at 9 am.

The expansion plan that Tuladhar has is to open a mega mall somewhere near the ring road. The project is to have a couple of shops, a sports centre, a cinema complex and few theme restaurants. “But looking at the existing environment I have to postpone implementing this plan for the time being,” he adds.

Managing people

Binod prefers to hire people for the retail business from the Kathmandu valley itself. “People from outside the valley need frequent holidays and this hampers the business of a 365 days retail outlet. Such people may not be available during Dashain, Tihar or other festivals as they need to go home to celebrate them and that is when there will be a pressing need for the manpower to handle the festival sales.”

He regards the Nepalis as sincere, hard working and loyal. “But they are not working as hard within the country as when they go abroad,” he points out. He accepts that they have the qualities needed in hospitality business, such as a smiling face and polite nature, but these qualities need a lot of brushing up. Bluebird started providing its people various trainings to brush up their qualities, and the people also showed improvement in their behaviour, but it was felt that they need on-the-job, practical training rather than simple theoretical training in the classroom of the training institute. Therefore, Tuladhar says, Bluebird has now started providing on-the-job training to its employees.