Sour Experiences Make Waji Boutique Look for Better Ways to Run the Business

Reference No. : TC 050 (ICSC)

Case: Sour Experiences Make Waji Boutique Look for Better Ways to Run the Business

Usman Nazir

The case is written by Asst Professor Usman Nazir (usmannazir@iba.edu.pk) solely for the purpose of class discussion. It is not intended to indicate any effective/ineffective handling of managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality.

It had only been a few months since Mr Bashir Ahmed, a retired IT Consultant, opened a boutique. He had done a good job in setting up the boutique and sourcing the necessary products for it. His business was slowly nudging towards break-even and everything was running smoothly, so he thought. After seven months of work, his salesperson and the only employee, Khawar, left work without prior notice. Mr Bashir decided to sit at the boutique himself until he found a suitable replacement. He was shocked to find all the fraudulent activities and deceptive tactics Khawar had been using right under his nose. There was inventory mismanagement, accounts manipulation and hidden loans on company’s accounts. Mr Bashir is sitting at the boutique and thinking how to fix the issues and the best way to move forward.

Setting up the Boutique

Mr Bashir had been an IT expert all his life. He joined a multi-national IT company right after graduation and stayed with it for the next forty plus years until his retirement as a senior executive of the company. Life after retirement was what every person would wish for -  all his dues were paid off; the daughters and sons were married and independent; the retirement policies had matured and started paying off; hefty pension from the company was coming into his account every month. All was good except one thing; he didn’t know what to do with his time. After working for over forty years he found it difficult to not work.

There was a new mall opening near Mr Bashir’s house in Malir Karachi. A friend suggested him to run a shop in it so to put his time to good use. He applied and won himself a place in the lucky draw to setup a shop at a very good location in the mall for the rent of Rs 19000 per month. This included all the overhead expenses like management fee, electricity bills and maintenance charges. Initially, he wanted to use the allotted space for IT related products or services, but the management of the mall decided against it and asked him to sell something related to ladies products, per the mall plan, or leave the shop for someone else to use. Mr Bashir didn’t want to leave the shop. He decided to turn the shop into a boutique selling ready-made ladies clothes.

Mr Bashir had no one in his family or friends who owned a boutique. He didn’t have any idea on how to go about things.  He started searching online for information and interviewed several boutique owners in different malls. One of the boutique owners gave him an idea to just copy whatever he likes about a boutique into his business. Armed with the idea, Mr Bashir started taking pictures of boutiques he visited and made a layout for his shop. Soon enough, Mr Bashir hired an interior decorator and shared with him the layout of the boutique he wanted.  Within the next five weeks the boutique was ready for display.

Now came the part of getting the inventory for the boutique. Mr Bashir knew nothing about ladies clothes and asked his wife to help. His wife was well versed in current designs and trends. She went to Tariq road and bought around three hundred dresses she liked. Even though there was plenty of room for more clothes but this provided Mr Bashir enough display material to open the shop for customers.

Pricing and Sourcing the Products

Mrs Bashir got the dresses within the range of two thousand to three thousand rupees. Mr Bashir simply doubled the price of each outfit and put it up for sale. Many customers would come and look at the clothes but almost all of them walked away without making a purchase. Only one dress was sold the first month that too was bought by a family friend. Mr Bashir acted quickly and changed the price of clothes. This time he added half the cost of an outfit as profit margin. He was expecting a much better response as a result but second month was worse than the first. There was no sale the second month. The customer traffic was there but there was no sale.

Customers who walked in the boutique did like the clothes but usually left because they found them too expensive. One of the neighboring shop owners suggested Mr Bashir to buy clothes from a wholesaler in Sadar and sell them in the range of Rs 1500 to Rs 2000 for these were the rates most of the people in the mall were using. Mr Bashir did exactly this. He bought two hundred additional clothes from wholesalers at the cost of Rs 700 to Rs 1200 each and sold them for less than Rs 2000.

The third month did show improvement in sales. Twelve outfits were sold with the gross profit of Rs 9000.

Hiring the Employee

Just before opening Mr Bashir put up an advert on local shopping malls and grocery shops looking for a sales assistant who could take care of his boutique. He had also asked his relatives, friends and house servants to suggest a suitable person. Many suggestions came but the referral from the gardener for Mr Khawar Iftikhar stood out from the rest.

Khawar was matriculated and had worked in a jewelry shop for about 7 years as a sales person. He had sharp sales instincts and had some ideas on how to manage accounts. He had a non-threatening personality and was presentable enough to be talking to the customers. Khawar came to settle in Karachi from Mansehra with his wife and a 3 years old son.