This Madurai founder started with Rs 5 lakh, lost Rs 1 Cr, and is now doing Rs 50 Cr in revenue
Success has a way of giving you an adrenaline rush no matter how you spell it. When Faizal Ahamed CM founded Suxus, a manufacturing and retail brand of men’s apparels, in 2006, the idea was to give the name a spin and make it catchy.
Little did he know that success would come to him only after he went through a full circle himself.
Having started out in 2006 with an initial investment of Rs 5 lakh, Faizal was on the brink of bankruptcy in 2011 when he lost upwards of Rs 1 crore.
The fact that he was able to recover from this huge loss and go on to build a business that clocked a turnover of Rs 50 crore this year says a lot about how success is actually achieved.
From a flop to a hit
Thirty-two-year-old Faizal is a third-generation entrepreneur from Madurai, Tamil Nadu. While he was studying BCom, he was pushed into starting a business to recover a debt that his father had taken for his business.
“In 2006, I started with seven stitching machines, producing 100 shirts daily,” Faizal tells me. It was essentially a B2B model, and Faizal had two dealers across the state in the beginning. Gradually, he increased the number of dealerships, supplying to popular retail chain stores like Pothys.
“It was a slow and organic process for us and we were growing at the rate of 20 to 30 percent,” says Faizal. In 2011, he decided to open his own showrooms, and Suxus opened stores in Madurai, Erode, Salem, Trichy, and Dindigul. “The premise was that if other retail stores can sell our shirts for Rs 150, we can also sell them at that price point instead of Rs 100 that we were originally selling for,” he adds.
As it turned out, that idea turned out to be a big flop.
“We lost more than Rs 1 crore. Out of the five stores, three were franchises and two (Madurai and Erode) were our own stores,” he shares. At that time, the Erode store was in a prime location, and he was paying a monthly rent of Rs 1 lakh, but the store was doing a daily sale of only about Rs 3,000.
“So in 2013, we decided to close the Erode store and retain only the Madurai one. Instead of bringing back all the stock from the Erode store to Madurai, we thought of holding a sale there itself,” says Faizal. On the first day of the sale, they managed to sell only Rs 1,500 worth of stuff.
The store had 5,000 to 6,000 pieces of stock, so Faizal came up with a plan to sell seven shirts for Rs 1,000. He got his store manager to send a WhatsApp message to their customer database of 3,000 informing them about the sale.
And would you believe it, they made a total sale of Rs 3.5 lakh the next day. “We thought since it was a clearance sale, this was expected. And did not hope for much for the next day,” recalls Faizal of those momentous days that would go on to change his destiny forever.
Word of mouth had spread like wildfire, and the following day too they did Rs 3 lakh worth of sales, and the following day Rs 2 lakh worth of sales.
“Our stocks were over and the store manager wanted us to send more stock as the demand continued to rise. I thought, why not do this the whole year round? And that’s how we came up with this new model,” says Faizal.
A lean margin model
The Erode store became their R&D centre and the place where they experimented to develop this business model further. “From the seven shirts deal, we went on to give customers five trousers for Rs 1,000, four jeans for Rs 1,000, and so on.”
After six months of trial-and-error, they applied the same model to their store in Madurai.
Of course, it was not all easy. On the days of the Erode store sale, the company had sold the stocks at a loss. They were selling each shirt at Rs 146, which had cost them Rs 250. Thus, if they had to continue with this model of selling X number of shirts or pants at Rs 1,000 without making a loss, they needed a plan.
“We started doing backward integration -- working on a lean margin model and producing in bulk. From buying the fabric to production cost to making advance payments, we maintained tight control, thereby minimising our expenses,” says Faizal.
The apparel retail industry’s average profit margin is between 40 percent and 50 percent. Suxus played it between five percent and 10 percent. “We had a huge gap, but customers were able to realise the benefits upfront in terms of cost,” Faizal adds.
And that is how they built their strong customer base.
Whenever they opened a new store, their sale per average square foot turned out to be more than the highest average in the industry. For the retail garment industry, the average is Rs 7,000 per square foot per annum, and the industry high is done by DMart at Rs 13,000 per square foot per annum. “We were doing an average sale of Rs 25,000 per square foot. All our stores were fetching ROI in 30 days,” Faizal claims.
Faizal was showing that you can give big discounts and yet make money; something worth noting for the ecommerce brigade.
Today, there are six Suxus stores across Tamil Nadu -- in Madurai, Coimbatore, Erode, Namakkal, Salem, and Kanchipuram. The company does both B2B as well as B2C business, and sticks to a price point between Rs 50 and Rs 500. It deals in only men’s wear, which includes shirts, trousers, T-shirts, and denims.
In Suxus stores, there are very few salesmen. In fact, Faizal has modelled the stores on the departmental store model where self-service is the norm. “We are improvising on easy shopping. That is the future,” he says.
Suxus is a totally debt-free company with a negative working capital and without any external funding.
“In 2013, when we started with this model, our revenue moved up to Rs 1.35 crore. At present, it stands at Rs 50 crore,” says Faizal. His next one year plan is to be present in almost all towns and cities in Tamil Nadu and then expand to Kerala.
“Our vision is to have 420 stores by 2030. We will move to north India once we have consolidated in the South and then, of course, go international,” Faizal lists out his dream plan.
Disrupting the market
Such has been the response to Suxus that whenever they open a new store, they clock walk-ins of 3,000 on the opening day. In fact, in the state where only movie stars and politicians hold the distinction of being crowd pullers, Suxus has mastered the art as well. The police have to be called in to manage the crowds and roads are closed for traffic -- such is the crowd that Suxus draws.
Though most of the marketing done initially was word of mouth and through WhatsApp, Faizal says today they do spend on marketing. But it is not the regular billboards or television ads that they do. “We push out YouTube videos where the idea is to create awareness about what the exact value of the garment is. We let the customer know that the rest of the cost of that garment is mostly for the infrastructure and branding of the product,” says Faizal, sharing their marketing strategy.
“Of course, if the customer wants to go for the branding then it’s another matter, otherwise it makes sense for them to buy only from us,” says Faizal.
Another unique marketing approach that Suxus has adopted is using the often asked questions of the customers and making the responses into short videos. “We have a database of upwards of two lakh customers. We circulate to them and also do social media promotions. Our videos have gone viral like this,” he adds.
Own your word
Today, Faizal ensures that he keeps upgrading his knowledge. He is part of various trade and business organisations and learns from industry experts. “When I started out, the only idea was to make sales happen no matter what. There was no unique strategy,” he says.
For him, the biggest learning came from his failure. “I realised that you cannot do your business based on other people’s model of success. You have to evolve your own model. When I started out, I did not know any better and hence I suffered such a big loss,” he states.
Faizal believes that had they broken even on their sale back then in 2011 in Erode, he would not have seen this kind of success today. He says,
“You as a business have to find your niche. Your differentiation. What are you giving that others are not? Only when we can answer this question do we open in a new city.”
He quotes from Dr A Velumani, Founder, Chairman, and MD of Thyrocare Technologies, “A copied model cannot be perfected and a perfected model cannot be copied.”
In such a scenario, success is inevitable.
When I ask him why he came up with a name like Suxus, he promptly replied that it reads the same both ways. It would seem, for Faizal, there was no running away from success either.