About the company

Nalli Silk Saris established in 1982 by Dr. Nalli Kuppuswamy Chetty, is a family owned and operated
business. The business has a 22 retail stores footprint over the 83 years and a $95 million turnover,
making it the only store with a national presence. The business was headquartered in Chennai and
its basic tenets included emphasizing innovation, customer centric practices, quality and honesty
across all of the stores.

It was the year 2011 in which the companys chairman announced an expansion plan of $25 million
which included opening 12 new stores over a period of 2 years, this decision was brought in by the
changing dynamics of the Indian apparel market due to the rise in competition from various small
and large Indian foreign retailers, coupled with the increase in complexity of managing large number
of stores and vast product categories which needed to be managed.

The top competitors of Nalli Silks which were identified are:

Kumaran Silk Sares

Pothys
Sundari Silks
Kala Nikethan
Roop Kala
Sheetal Sarees

Business Principles of Nalli group:

Retail pricing Strategy:

o A uniform pricing margin across all the products over the cost of manufacturing
Real Estate Strategy
o Almost all the Nalli Silks stores properties were owned by the group
Shelf Space Mangement
o Effective utilization of shelf space by the stores to bring in more customers and
increase sales
Vendor Management
o The group had built a deep and extensive relationship with Kanchipuram weavers,
helping them capture the Chennai market as well as identifying high quality and
consistent vendors.

Issues the company was facing:

Due to the changing market scenario, their traditional method of pricing needed revision. In the
current method, they followed a fixed price methodology wherein they had a fix margin on all the
products and did not provide any discounts or sales at any time of the year, whereas their
competitors offered heavy discounts.

In addition to that Nalli Silk did not indulge in any type of promotion or marketing campaigns, it only
relied on word of mouth generated due to the quality product they have been providing over the
years, whereas their competitor were using all types of marketing strategies to woo customers
towards them, these were called as gimmicks by the Nalli silks.
The silk prices were rising along with the price of the precious metals. The challenges like shortage of
the material as there vendors were shifting to other location. Now this was the time to rethink about
the pricing, advertising and location.

Thus the dilemma which the case speaks about is whether Nalli Silks should start charging a
premium over their product and change their pricing strategy, which could either make Nalli saris a
hit or a fade away in the wake of the comptetiors.