Saturday, 7 September 2013

Needles or Pencils (Part 2)

Last week, I promised to give you three more winning business strategies employed by our profiled entrepreneur - Alere. Read on.

Location, location, location
Due to some distractions around me, I momentarily zoned out on Alere as he was talking. By the time I regained concentration, I caught him halfway through a sentence that ended with, “So Lagos is the U.S.A, while Ibadan is Asia”. I immediately knew that this was a point I didn't want to miss, so I asked him to repeat himself which he graciously did. He explained that in Ibadan, labour is readily available and quite cheap but the purchasing power of residents is average. Lagos, on the other hand, even though it has a large pool of manpower, their wages are quite high; but that also meant a higher purchasing power. So he sources for orders in Lagos and manufactures in Ibadan; following the footsteps of giant sportswear companies that produce in labour-cheap Vietnam, Bangladesh, China and so on but have their major markets in Europe and North America.

This simple demographic analysis helps him in shaping his business strategy for optimal performance. He further confided to me that Lagos commands two-thirds of his sales and while some fashion designers are falling over themselves to open shop in Lagos he realizes that it is only its market he needs. Locating his operations in Ibadan, 120 km from Lagos, helps him to slash his rent, taxes and wage bills which are all forbiddingly high in Lagos and invariably cut into profit. (For readers, who don’t know Nigeria so well, Alere's business is located in a high-rent district in Ibadan but his rental is lower than his peers in low-rent Lagos neighbourhoods, for twice their floor space).

Commission or salary
There is a saying in Yoruba that, “Irrespective of the boss’ profit or loss, the employee’s salary must be paid”; so it’s no wonder that some salaried workers are so apathetic to their work. To rid his business of this harmful influence, Alere employs the age-old routine of placing his tailors on a commission. He says that, “Knowing that their take-home pay depends on how many clothes they make, and not on how many days they come to work has made my business a hive of activity”. His workers are so self-motivated that regardless of Alere’s presence or absence, I have never seen them milling about or chatting while at work. The last time I was there, one of his tailors left for the convenience but he was back at his sewing machine in no time, you would have thought someone chased him back, yet Alere was not around.

The disillusion that many people experience at work, regardless of the size of pay package, arises from the disconnect between their work and their sense of fulfillment. Alere's workers hardly feel this loss because for every buba they complete, an item on their personal budget is taken care of; and it’s the same for every pair of trousers or other items they sew. As an entrepreneur, one owes it to his employees to provide work that is motivating and in a manner that makes for their sense of personal satisfaction; this is because of all the four traditional factors of production, personnel is arguably the most important.

Niche marketing
Finally, Trado Clothiers dresses only a specific group of customers; they are the young, trendy and upwardly mobile men. Even though some of these customers might not be classified as wealthy, they at least fall in the middle class and are willing to pay to be outfitted by a creative couturier like Alere. Matter-of-factly, there are tailors on every street that can sew clothes for these customers, but when you don’t want to wear clothes that are just hanging from your shoulders, you approach couturiers who will custom-fit the clothes and be ready to pay for the extra professional touch.

Alere leverages on his education and good taste to cultivate and maintain a clientele that the average tailor-on-the-street finds difficult to break into. He constantly hones his style-making prowess to come up with avant-garde designs and trains and retrains his tailors to reproduce them so as to sate his customers and keep them coming back for more. Last June, I went to get some clothes made for me and I met this young successful importer in Alere's office who had come to pick up his order of nine clothes. The remarkable thing was the fact that none of the designs were the same; they were all so uniquely fabricated and immaculately tailored. This is why he can afford to charge a premium and continue to remain profitable even with several competitors around.

He ended up the interview by saying, "Anyone can do it. I did it. With focus, perseverance, a lot of thinking outside the box and faith in God, you can do it too". I guess you'd want to think on that. Thanks for reading.

1 comment:

  1. I am honestly wowed by Alere's action.
    Nice write up