Success they say often breeds success, so coming from a wealthy business family and succeeding as an entrepreneur, one might assume Nilesh Ved got all the breaks he needed. Not so, his story in fact is one of breaking away to be on his own, and taking the kind of risks that has brought him to the forefront of the Gulf’s highly competitive retail business.
“In a journey of just over ten years we have grown from one store to 575 stores, and we represent about fifty of the most recognized brands in the world, like Kenneth Cole, Bally, Tommy Hilfiger, Nine West, Aldo, Mango, La Senza, Charles & Keith, etc., to name just a few. Our vision is to expand our portfolio to 1,000 stores by the end of 2012,” says Nilesh Ved, Chairman of the Apparel Group.
Nilesh’s successful track record points to his main business acumen - an uncanny ability to spot a great business opportunity, combined with a talent for rapidly closing a deal. Sima his intuitive wife who first launched into the retail business on her own, shared his early crucial decisions to enter the field, forging a unique partnership which has catapulted the Ved’s Apparel Group to the top five spot among retailers in the Gulf, with rapid expansion in India, the Far East and Eastern Europe.
With major expansion plans targeted for 2012 you can sense the energy that is fuelling Nilesh when you meet the 39 year old Omani-Indian entrepreneur who believes speed is of the essence in the retail business. Seasoned by the success of his first 575 stores Nilesh is clearly determined to achieve his target. “It will happen one way or the other, probably more through acquisitions” he says, “I’m not desperate, it will come.” The Apparel Group now represents 50 international brands, employs over 4,500 staff, and its 575 stores are spread across the Gulf, India, Poland, Russia, and the Far East. New stores will shortly open in Bahrain, Kuwait, Jeddah, Riyadh, Abu Dhabi, Calcutta, Ahmedabad, Mumbai, and Moscow, with plans to expand in North Africa and Eastern Europe. Headquartered in Dubai, Apparel has been operating in the UAE since 1997 when it opened Nine West, its first retail shoe store.
Success they say often breeds success, so coming from a wealthy business family and succeeding as an entrepreneur, one might assume Nilesh got all the breaks he needed. Not so, his story in fact is one of breaking away to be on his own, and taking the kind of risks that has brought him to the forefront of the Gulf’s highly competitive retail business. An Omani citizen now, he was born in Bombay and raised in Oman and UAE, where he studied at the Indian High School, Dubai, before heading off to Boston University for a business degree in finance and international business.
Business families of Indian origin like the Veds, have been in the Middle East for generations, thriving in the most unlikely places where they are now firmly established. Most are located in the six Gulf Cooperation Council states of Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and Oman. Estimates of the NRI population in these GCC countries range from 6-7 million, of which about three million live in the UAE and Saudi Arabia. The majority of Indians in the Gulf originate from Kerala, Andhra Pradesh, Karnataka and Tamil Nadu, but the Indian entrepreneurial community in the Gulf is comprised mainly of Sindhis, Gujaratis, Malayalees and Tamilians. Among them is a small but flourishing community of Kutchis, to which the Veds belong.
Despite political hurdles in the Middle East, economic relations are the backbone of India-GCC ties, which explains why Gulf-Indian entrepreneurs thrive in a region that has a reputation for extending its hospitality to foreigners. The GCC is India’s major source of petroleum energy and the second largest trading partner after the United States. India’s total trade with GCC countries could top US $40 billion by 2010, according to the Institute for Defence Studies and Analyses (IDSA).
While the macro picture of trade between India and the Gulf is impressive, it’s the situation on the ground that is more interesting with fascinating stories of Gulf-Indian entrepreneurs in the fray in an area fraught with political and social challenges. Long before the massive influx of expatriate Indians in the region, generations of Indian entrepreneurial families had established themselves in all the GCC countries. The Ved family planted its roots in Oman and are now naturalised Omani citizens. This is not a widespread phenomenon, and citizenship of these countries has probably been granted to only about 50 Indian business families spread across Oman, Bahrain, and UAE.
“In the old days people from Gujarat just boarded a ship from the port and left India to work outside; wherever they landed was their place to earn a livelihood,” says Nilesh, recounting his family history. The Veds came from Kutch in Gujarat and the family expanded in Muscat, with most of them still living in Oman. The first to arrive in 1904 was his great grandfather who opened a shop, ‘Laxmidas Tharia Ved & Co’ (Lakhoo’s) in Muscat’s Souk Matrah selling mainly food items and basic essentials. He first came alone without his family and he would sit in his shop just like shopkeepers do even today in small villages in India. Nilesh’s great grandfather had one son and his grandfather had four sons, that’s how the family started multiplying. The Ved family’s businesses today in Oman and UAE are in textiles, gold, bullion, money exchange, and food distribution, and they are all run as one family business. “I am the only one who has struck out independently on my own,” Nilesh hesitatingly reveals. A rare event in a business family, it was the turning point in Nilesh’s life and the beginning of many achievements that would steadily come his way.
As a child Nilesh remembers shuttling often between Oman and Bombay, he also studied a few years in Oman before finishing school in Dubai. “It was very different in those days, life was simple,” he recalls. “We lived like village folk in Oman and this was the early 1970s. Everybody had farms and the only thing you would do on a weekend was go to the farm, we still have farms there. I clearly remember how instead of a swimming pool we had what was basically a tank on the farm and everybody would jump in and that was the most exciting part of the weekend. I was about seven and those are my memories,” says Nilesh. “Oman’s ruler at the time was His Majesty Sultan Qaboos who started his rule in 1970. When my great grandfather arrived in Oman in 1904 it was Sultan Qaboos’s father who was the ruler, and even he was quite farsighted about allowing foreigners to come and work in Oman. It was a very close knit society where we all intermingled,” Nilesh remembers. “Many Omanis have studied in India in schools like Mayo College, Ajmer or in Poona, which was another favoured location for them, and many did their university studies in India; they would also go to Egypt but India was preferred, being very close to Oman.”
TII interviewed Nilesh Ved at the Apparel Group’s 264,000 sq. ft distribution centre and offices located at Dubai’s Jebel Ali Free Zone. A central distribution facility of 500,000 sq. ft is planned to open next year to support the company’s dynamic growth and expansion plans.
TII: So the family business grew in Oman and your grandfather expanded into UAE?
NV: My uncles decided one of them should be based outside Oman also and my Dad was the one shuttling between Dubai and Muscat. It’s interesting they didn’t think let’s do something back in India, they wanted to grow their business in the Gulf. There was already an office in Dubai where they had started an exchange company so they added textiles, and gold bullion –these were the three things they first started with.
TII: Was it your Dad who moved from Oman to Dubai?
NV: Yes, and I joined Indian High School –that’s how I spent my childhood in Dubai. I came back from Boston University in 1992 to join the family bullion business for four years till 1996 until I realised I wasn’t enjoying it and decided to do something very different. Being a family business everything needed approvals not only from my Dad but also from all my uncles, so I wanted to switch to a completely differently line of business. It wasn’t easy, while the family was considering possibilities the market was picking up and as a young man I couldn’t wait. So I decided to go my own way. I had to cope with being called the black sheep for a few years. But I realized I had to build something from zero and I decided to walk away.
TII: How did you get the funding you needed to start something new?
NV: Well, in fact my wife Sima was the one who first started a store called Bossini in Bur Juman Centre. We got married in 1994 and she decided she wanted to open a store in Dubai, with her Dad’s support. We thought it was a pretty interesting idea, she was the one who kept convincing me, “Retail is good, retail is fun,” she would tell me, and so she is the one who is really the founder of the Apparel Group.”
TII: So how did you start off?
NV: We started with just one store and then Lamcy Plaza opened in 1997 and Sima wanted a jewellery store there, so we opened one, then we looked around and found there was no bookstore so we opened Books Plus and a franchise store from Hong Kong for children called Chickee Duck. But soon we realised retail is not easy, we had to close Chickee Duck and the jewellery business but we kept the bookstore open.
TII: How did the first big breakthrough happen?
NV: We were on a buying trip in Hong Kong and Sima ended up buying a lot of shoes from a place called Nine West. I thought this is interesting, why are you buying so many shoes of this brand? We had never heard of Nine West but she said the shoes were very good, so we said okay let’s look at it and bring them to Dubai.
TII: How did you clinch the franchise?
NV: I asked the shop lady if I could speak to someone in their office. She was reluctant but I wouldn’t take no for an answer. I got the number from her, went back to our hotel and called the American number they gave me - the next week I was in the US talking to Nine West.
TII: Was it that simple?
NV: No, initially they were reluctant to do business in the Middle East saying, “We don’t know where this is and we cannot give you any goods. You have a Middle East billing address and our systems cannot handle it. I said I’ll give you an American address just give me the goods. They said okay, what you do with them is your problem we don’t want to know anything about it. I said just give me your word if you go international and want to open stores in the Middle East, I will have the first right of refusal, I don’t need anything on paper just a gentlemen’s agreement. So they gave me their word. We bought one container load of shoes, sent them to Dubai and had our first test run at Lamcy Plaza. The shoes sold out in a few weeks and we went back and said we want another five container loads, they couldn’t believe it and gladly agreed to open stores in the Gulf!
TII: So your first businesses were jewellery and children’s wear which basically failed.
NV: Yes, Nine West is what clicked and it all started from there.
TII: Upto this time your family was not involved, it was just you and Sima.
NV: That’s right, and that’s how it is till today.
TII: Okay so the shoes obviously led to other things – how did that happen?
NV: It’s a funny story. When we got Nine West, naturally we were looking to expand and the market was picking up, landlords realised shoe retailers were very few so they started giving us shops. One day I was having lunch with a landlord and he told me as a friend and business partner, "you must be careful about your business because you are attracting competition - Aldo has come into the market, they met me and I’m told they do much better than Nine West anywhere in the world." I told him that’s not true, Nine West leads the market but he said let me ask you a question, "Are you also talking to Aldo?"
TII: What did you tell him?
NV: I said it’s confidential I cannot tell you, but the fact was we were not talking to Aldo! We finished our lunch at 3pm, I was back at my desk by 3.30 but on the way I called my office and told them to contact Aldo in Canada and find out the name of their guy who was visiting Dubai. They tracked him down and by 4.15 pm I was talking to him. I said, “Listen, I know you are in Dubai, you can’t come to this town and not see me!” He goes, “I’ve not seen you, but I’ve been to all your Nine West stores so I know everything about you!” I said, “Today is Monday, I can be in your office in Montreal on Wednesday morning, I just need one hour with you.” He said, “For what?” I said, “Just to have coffee.” I went to his office, and we spent the whole day together. They were almost ready to sign with someone else, but after one month we signed with Aldo. After that the sky was the limit.
TII: So how many stores now?
NV: We have 63 Nine West stores and 114 Aldo stores, Aldo is Canadian while Nine West is American. We opened the first Nine West store in Lamcy Plaza and the first Aldo store in Abu Dhabi Mall.
TII: How did you convince them you would do justice to their brand when you already had Nine West?
NV: If you create a Chinese wall between the brands, have a separate team, separate offices, there’s no problem. We are basically acting as investors in their best interest, giving them all the support they need and we take care of their main concerns. Everything is kept separate, they have put a clause in our contract, and as long as we honor that it’s fine.
TII: How many other shoe brands have you acquired after that?
NV: Well we also do Charles & Keith, Dune, Athlete’s Foot, MBT, Skechers, Pedro, Birkenstock, and several more. We just kept on going taking more brands, we figured if we can manage them it’s not an issue. I think in the shoe business we are the leaders in the Gulf states. Shoes used to be 95% of our business but today it’s about 65%, the balance 30 % is fashion and 5% is food.
TII: What are the other brands?
NV: We have Tommy Hilfiger, Kenneth Cole, Garage, Freedom Furniture, we are also in the food business with 25 Cold Stone Creamery units– 20 of them in UAE. It is a fantastic business, we have the rights to the entire region and we plan to open another 35-40 stores in the GCC including Saudi Arabia as soon as we put all the arrangements in place.
TII: Today, looking back what is the greatest satisfaction?
NV: I personally enjoy what we’ve built, so the greatest satisfaction is when I see a customer buying our products. You can’t get better satisfaction than that – it gives you a real kick.
TII: When you get up in the morning what is it you are really looking forward to doing?
NV: Our work is all about speed – how quickly can we open our stores? At this moment we probably have about twenty stores under construction. The key is to get them opened fast and for me that one hour in the morning is to find out when will these stores open for business! We’ve got Bally and Birkenstock in Dubai’s Mall of the Emirates almost ready to open and another twenty in India under construction – I need to know the status constantly.
TII: How many stores in India?
NV: We have forty six stores in India, and a total of 540 stores in the GCC and India. In terms of international brands we have a very good presence in India - with brands like Mango, Aldo, Charles & Keith, Pramod, La Senza Lingerie but India is still small for us, it’s just the beginning, we got in there in 2001, but the market didn’t really open up till recently. Delhi is number one by far, the business there is unbelievable. We are in a mall called Select City in Saket, Ambi in Gurgaon, and DLF Promenade in Vasant Kunj
TII: What it’s like doing business in India?
NV: There’s a huge difference between doing business in India and doing business in the Gulf. In Dubai what we think about all day is how do we increase sales? In India if I go in for a ten hour day, six hours will go with my tax guys, my auditor and my internal guys and only four hours will focus on sales. It’s the bureaucracy, it’s unbelievable. Compare that to Dubai – when was the last time you went to the Economic Department to get something done? You get your driving licence in a shopping mall here. Yes I know the population is small, but it can still be done – the funny part is all the applications and software being used in this part of the world is being designed by Indians! We don’t have an e-card in India yet –why do I need to go fill a form each time I land in India? I don’t change my address everyday!
TII: Is your wife Sima involved in the business – how many kids do you have?
NV: We have two daughters, Selina is a 12 year old and Sarisha is four. Sima came back into the business after taking a break and at this moment she looks after marketing, Club Apparel is her baby.
TII: What are the business maxims that have helped you succeed?
NV: One thing that always came to mind was – don’t give credit. I had seen how the textile market worked – to sell you had to beg and to get your money you had to beg. You either got stuck with inventory or with credit – both sides you got stuck. That’s why I figured this does not make sense so that option was eliminated; the only remaining option was to get into cash business. At least the inventory stays with us in retail. That’s why we got into the business - it was the heart of the matter really.
TII: What would you attribute your success to?
NV: I think we were in the right place at the right time, catching the wave with Dubai’s growth. When we opened Bossini in Bur Juman Centre, friends and family would ask us how do you manage to pay the rent? When we asked why, they would say when we walk into the malls your stores look empty! We would also get worried and phone up the shop and ask what’s happening? But we’d carefully analyse the numbers everyday and realised this is definitely working! People think it’s not working but it is working!
TII: When you make a decision for a new store what is the investment?
NV: It depends on the size of the store. A 2,000 sq ft store will require an investment of AED 1.5 million, which is on the higher side. Our range is quite wide - for instance our Freedom Furniture store is 22,000 sq ft whereas a Cold Stone Creamery may be only 500 sq ft. Generally it’s at least a million dirhams.
TII: You've admitted you don’t like to spend money, was it scary making your first million dirham decision?
NV: I clearly remember the rent for our first Nine West store in Bur Juman Centre was 397,000 Dirham’s – it was huge! We thought okay how many shoes do we need to sell? We worked it out and it came to some ridiculous number like 12 – 13 pairs a day. We saw Bossini was doing about 4-5 times that number and it gave us the confidence because we had a benchmark. We realised that 30 percent of Bossini’s sales would give us our breakeven. So the first million dirham investment was made to set up our first Nine West store in Bur Juman Centre, Dubai.
TII: What is your goal in life?
NV: I have some I’d like to keep personal, but I’d like to make an impact on the community and the lives of people who work with us; If we are not building and growing people then we are not doing what we should be doing.
We often send our non-Indian staff to India to train our people there because they are the best people we have. So a Filipino from an Indian company in Dubai trains Indians in India, to me that is special. That sort of cultural openness and trust has also helped us in a big way. So yes we are open in the way we do business, our style is different and we work hard – retail is not an easy game, you have to be committed and put in the hours.
TII: What gave you the greatest pleasure last year?
NV: I went to meet HH Sheikh Mohammed bin Rashid Al Maktoum at his Majlis during Ramadan and he asked me, “How’s business?” I said business is okay. He said, “Is there anything I can do for you?” I said Your Highness please don’t change your shoes because my sales will go down! And he laughed and said, “Don’t worry, I’m not changing my shoes.” That was the greatest pleasure I had last year. I was referring to his MBT shoes – Masai Barefoot Technology, a great brand that we represent.
TII: What are the obstacles for an Indian businessman in the Middle East?
NV: You have to learn how to do business anywhere whether it’s North America or the Middle East. We’ve lived here all our lives and we don’t see situations as obstacles - we’ve seen obstacles in India, Moscow etc., it’s just that the culture is different, the mindset is different. In India – if you are from Delhi and you want to do business in Mumbai, you will face obstacles! It’s about becoming a part of the community - if you make the effort you are treated the same. Sometimes when I meet nationals they tell me you don’t come to see us! It’s a part of the culture here, you must build relationships, visit people during Ramadan and other important events, and we do that to show our respect. A lot of people don’t do that.
TII: What makes you fearful?
NV: War makes me fearful even though we’ve not been impacted by the wars in this region. In the year 2000 if you asked me if there would be more wars I would have said probably not. And then 9/11 happened and the world turned upside down. Now I always wonder when will there be peace in the Middle East?
TII: Who are you?
NV: I am a father, a husband, and an entrepreneur - a retailer, that’s who I am. So family is important, at the same time work is very very important, I wouldn’t miss important dates for family occasions but if I have to work I will work all night.
TII: Where do you get these convictions from?
NV: I’ve never thought of that! I guess from what is important to me - family, honest work and a desire to change a few things. I see a lot of people who don’t believe they can do it, they don’t believe in themselves, they don’t have the energy. I think I can change anything but I can’t change people’s attitudes.
Frank Raj is the Founding Editor of The International Indian