Mr. Deepak Babani, CEO of Eros Group, believes creating lasting partnerships – with both suppliers and staff – is the key to a successful business
What’s the backstory behind Eros, and what brought you to the company?
We have a lot of history at Eros Group. We started this business in 1967, and then got the distribution of Hitachi products in 1969. Not much progress was made until around 1981, but that’s because the market itself was tiny.
I joined the company the same year, just at the start of the video recorder boom. I came from an electronics background at Jumbo Electronics, and the first thing I attacked was the video market.
Of course, Hitachi was an important player on the video front – the brand wasn’t that strong, but the technology was. We used it to build our brand on the back of video.
It took some time, of course, our name was not that recognised, but seven or eight months after our first big push people started to remember us. We also leveraged video cassettes to promote Eros; we would see people buying Panasonic video cameras and come in and sell them a Hitachi video cassette.
You owe a lot to Hitachi.
Yes. When we reached a certain level, we started promoting other products because we realized there was a gap in the market. Panasonic and Sanyo – other Japanese electronics brands – were picked up first.
But, we had a lot of product lines from Hitachi in those days, everything from TV and VCRs to refrigerators and washing machines – we had everything you might need or want.
We grew Hitachi to something like 25 percent market share. We were not number one, but the brand was not popular worldwide. But we made it popular here.
When did Eros Group branch out properly?
In 1994, we saw that the business was stagnating. We were growing at about 20 percent every year, but we saw less growth overall. Technology was evolving, mobile was growing rapidly, and we saw that Hitachi was not investing in its own phones – it supplied chipsets to Nokia.
So we went after Samsung, and in 1996, it started producing mobiles. It was a big struggle at the time because Nokia was far stronger in that space. But we grew it to about 20 percent market share at the time.
In 2002, Samsung flat screens came to market. Because it realized what a good job we were doing, Samsung decided to partner with us again on that. I think all the way up to 2010, the TV business grew 50-60 percent some years. This really helped us establish the business, and become an important player.
What happened when sales in flat screens slumped?
By that time, we had four or five big brands that could sustain a retail model, so we started opening up stores. We went into malls.
One segment we deliberately stayed away from was IT. At the time, it was very competitive. Everyone started selling laptops, but there was no money there – all the money was being paid on patents to Qualcomm and Microsoft.
Fortunately, that meant we got into the tablet business early, which gave us excellent growth. This brings us up to recent years when we added a lot of lifestyle brands.
We thought Sonos – which does wireless speakers and streaming services – would have a bright future in the region. We also tied up with Cisco for routers.
Is building your brand portfolio still a priority?
Now we’re looking at building the brand online. But it is going slow.
I think the entire region was a little slow getting behind online retail. The demand wasn’t there.
It’s catching up. For example, we allowed customers to pre-book the Samsung Galaxy S7 last month, and we got almost two-and-a-half thousand people who bought one instantly.
We’re concentrating on online retail now, but it’s tough because the internet is so big.
At first, we tried giving customers fantastic deals, but we didn’t see a significant pickup. We noticed that price was secondary to getting a product fast, and providing excellent service. That and having a truly unique product, people don’t mind paying for something no one else has.
More so than any other retailer out here, I think the partnership with Samsung has always defined Eros. How important has that relationship been?
Very important. After we had brought Samsung on board, we became market leaders in some segments. But we have always been very responsible from our side of the relationship.
Obviously, when brands come from Japan or Korea to the Middle East, they don’t understand the markets. We help them do that. But we don’t just built distribution capabilities with these companies either; we also give them suggestions on how to market a product. Even what design fits best in the Middle East.
A good example is the Samsung Galaxy S5. When it launched, it didn’t do very well. Samsung got a little jittery, they had a crisis meeting and invited a few distributors to the table.
The CEO was there, Mr. Shin, and he asked us what could be done to push sales. He asked a very spontaneous question, and I gave him a very blunt answer. I said he should make a dual-SIM version.
He thought no operators would support it, but I reminded him of the dynamics of Dubai; every second or third person travels out of the country once a month. They don’t use roaming; they buy a second SIM card.
He thought it over, and two months later we received the first dual-SIM versions of the Galaxy S5. They sold like hot cakes. Now, whenever Samsung introduce a flagship product, from the day of launch they also introduce a dual-SIM version in this region.
What sort of people do you like to employ at Eros? What do you look for in a team?
We believe in training. We hire for attitude and train them up for the skills.
If it’s the other way around, you can bring in some incredibly skilled people, but if a problem comes up with a customer, then you might not be the best person to deal with it.
What type of leader are you? Do you make decisions and people follow? Or is it about collaborating with your team and getting the best out of them?
A combination. There are times when I receive a lot of information from the team, and sometimes you need to make a decision. Of course, then I take the responsibility for whatever happens on the back of that.
On the other side, Eros was considering getting into the pre-paid SIM card business as the pricing was very competitive. The team had very strong opinions that we get into the market because the market was growing quickly. I was not so sure, but I let them run with it. Obviously, we were ultimately very successful.
The decision-making process is quite demographic. It has to be; people need to be able to express an opinion without fear. The other way around almost always fails, where the decision-making comes only from the top: I decide what to do, then you figure out how to make it happen.
You can’t force someone to have a good idea.
Exactly. That’s why it’s important our staff feel they can say what they think. Even if they disagree with me.
That comes from hiring the right people, also.
We incentivize our staff to care about the organization. We realized that at one point only a few people were making decisions. Only they were taking responsibility for the company, and so there were layers and layers of management.
Of course, the more managers you have the slower the decision process gets. We wanted everyone to start thinking like an owner.
In 2000, when the organization was growing rapidly, we realized this had to change. So we introduced something called a management bonus. We already had sales and logistics bonuses based around hitting a target, but this was something different.
For example, it’s very easy for a manager to demand two extra staff to get work done, but if you have a stake in the company, you are more inclined to make do with one. This also empowers our staff to start making decisions in the best interests of the company.
By saving the company money, an employee benefits directly?
There is another element to that. It’s not just about how much you have contributed to the bottom line of the company, 15 percent of the bonus comes down to qualitative decision making.
If someone has a better attitude, if an employee focuses less on numbers performance but has shown to be a great leader. Then he still gets rewarded. As a by-product of that, we learn which members of the team should be groomed for leadership positions. It’s a win-win.