How Victoria Courts heirs handled business transition

Victoria Courts, the Kenyan firm that is synonymous with high-end furniture, nearly fell into the trap that keeps many family businesses from surviving to the third generation.

When it was time to hand over the business to the grandchildren in 2008, some fissures and fractures threatened the transition.

The business that has been in operation for almost as long as Kenya has been an independent state, starting with a single store known as Victoria Furniture on the then Victoria Street, now Tom Mboya Street, faced its defining moment.

“Family succession was a challenge because generationally, there are varying ways of looking at issues like risks in business,” he says Victoria Homestore CEO, Rupen Shah.

The family, however, put aside their differences and decided to recall Mr Shah from the United Kingdom (UK) where he had been pursuing his studies to join the business and guide the transition.

The UK-trained accountant says that businesses have cycles and when he came back from the UK, Victoria Courts was not quite what he expected.

“I had worked in a professional firm with structures, systems, accountability, processes which was the opposite here,” recalls Mr Shah.

Generational differences

He also encountered generational differences in that the older one wanted to control the business and were risk-averse while the next was risk-taker. This, he says, posed challenges not only with the handover but also with accountability.

“You need to appreciate the different generational expectations within the family and that way, the transition becomes easy,” advises Mr Shah.

The first year, when he was trying to professionalise the business, was very frustrating. As the family business leader, he says he had three main considerations to make; the family, the business, and the shareholding structure.

“First, being a family member doesn’t automatically qualify one to join the business. Two, we had to maintain that family bond and thirdly, set up a family council just like a board of directors,” he explains.

Fine-tuning the shareholding structure proved critical for business continuity.

Thinking big

Over the decades, Victoria Furniture has grown into a successful venture. But the third generation hungered for more.

“Our view was that the booming office furniture business created by the second generation should be left intact, so in 2012 I started a new division called Victoria Courts, specialising in home furniture and currently we are rebranding as Victoria Homestore,” says Mr Shah.

The portfolio expansion was especially an important step for the new stewards of the business. He says they wanted to create their own identity and mark within the business.

His idea was to run Victoria Courts on systems, and processes and offer customers a different shopping experience since the market had shifted.

“I wanted to give customers the right retail experience, and convenience, introduce a buy-now-pay-later scheme, bring modern furniture all under one roof and become the number one home furniture retailer in Kenya,” he says.

Moment of doubt

But like any entrepreneurial journey, Mr Shah realised that with sales projection, reality is probably half of it and whatever expenses you estimate, they are probably double that.

He says that as an entrepreneur, many times, you get pulled down and feel alone at the top when cash flow problems start getting bigger.

“By year four, business was quite tough – low profitability, low sales, high expenses and I started doubting our trajectory,” says Mr Shah, adding that he is thankful nonetheless because with these difficulties, he becomes wiser.

Valuable lessons

As an entrepreneur, you are not always right and though you sometimes feel you are the smartest person in the room, Mr Shah cautions against such hubris.

“I had to step back, and do self-reflections. I became vulnerable, and asked people around me for direction and assistance,” he says.

What helped him most was pivoting the business and gauging which segments were making money and which ones were not.

“Electronics, kitchenware, and home décor were not making money, so I made the bold decision to drop them and shifting our focus to the core business of selling furniture,” explains Mr Shah.

Focusing on sweet spot

The CEO adds the other mistake was thinking he could serve all customer segments. Consequently, they ended up with beds as cheap as Sh10,000 and as expensive as Sh1 million.

“You can’t capture and serve the whole market, so I decided to focus on our ‘sweet spot’ which is the middle to high-end customers,” he offers.

Bringing in modern contemporary furniture, though beautiful but difficult to sell, was another misstep as it was not accepted by the Kenyan consumer.

“It is more about listening to the customers, knowing what they like and what they don’t and slowly maneuvering the whole portfolio,” he advises.

This, he says, was a great turnaround for him, adding that being agile, flexible, and pivoting the business will take one to greater heights.

The other error was opening branches that with hindsight, don’t make sense. He needed to take time to understand the market well.

Growth plans

Mr Shah says that pre–Covid–19, growth was "fantastic" at 25 percent year-on-year but with the pandemic, things changed into survival mode.

With six branches in Kenya and one in Uganda and plans to open more in Eldoret, Mombasa, and Nakuru, Mr Shah says that Victoria Courts aims to become a market leader and targets 20 to 30 branches within Kenya by the end of the year even as it eyes expansion in Rwanda, the DRC and Tanzania.

“Our growth is organic but as we scale. We are looking at debt financing and last year was my first time to borrow,” says Mr Shah proudly, adding that he is a firm believer in working within your means when possible.

With expansion, he points out, there are risks of stretching yourself too thin with probable loss of control. When done too fast, pilferages and leakages are always around the corner.

Expense bucket and location

Mr Shah says for a business like Victoria Court, the biggest expense bucket is rent and staff not to mention taxes.

“We look at where our customers are, figure out the catchment area and find a location because, with furniture, the catchment area tends to be bigger. In retail, it is location that matters and you have to get that right,” says Shah.

He says 90 percent of their products are imported because the international market is versatile, innovative and constantly changing the trends and can bring that expertise to Kenya.

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