Invaluable Insights on Value Retail
A Report on the IVY league talk by Mr Rakesh Biyani on the Future of Value Retail in India
The 17th IVY League Meeting of the CMAI proved to be an Invaluable Session as Rakesh Biyani, Joint Managing Director - Future Retail Limited and Vice President, CMAI, spoke at length about the Future of Value Retail in India, and his own Retail Chain. Mrugaya Chitnis reports. Photographs: Ashish Phatak The 17th IVY League meeting was held on 19th February, 2018 at The Orchid Hotel in Mumbai. Rakesh Biyani, Joint Managing Director - Future Retail Limited and Vice President of CMAI graced the podium as the key speaker for the topic of the evening - ‘Is Value Retail the future of retail in India?’. Also present were eminent members of the Clothing Manufacturers Association of India, and the clothing fraternity. There was also a significant presence of gen X members, which consists of the youth who have entered their family garment business.
An exchange of pleasantries and informal discourse between the members and the dignitaries over snacks and beverages set the mood for the evening. The session began with Naveen Sainani, head of IVY League, introducing Rakesh Biyani rightly as “The man who needs no introduction.” Following this, Biyani took to the podium to speak about the topic of the evening ‘Is Value Retail the future of retail in India?’
INDIA – A POSTIVE GROUND FOR VALUE RETAIL
Affirming Value Retail to be the future, Rakesh Biyani said,“Consumers all over the world, no matter where they shop, seek affordable prices. Value retailing is more relevant in India because we don’t have a rich economy. This may be the present situation, but a lot is changing in India at the macro level. India is becoming more affluent. The middle class is becoming more affluent. There are 161 million households and 40-50 crore people who are from the middle class. They are people who are aspiring for good products and form the largest consumer base today. In the next 10-12 years, we will have the single largest middle class population in the world. And that is the opportunity that is in front of us.”
BEYOND PER CAPITA MARK Giving examples of countries like China, Russia, Brazil, South Korea and Singapore, that crossed the $2000 per capita mark in the past, Biyani said, “What happens to the market in a decade after a country passes this mark is that there is a growth in the retail, especially apparel retail. Accordingly, things will change once India too crosses the $2000 mark and grows like China. Hence, the overall growth that is likely to happen in the garment business is significantly high.”
THE RETAIL BUSINESS
Speaking about the current and futuristic business of retail he said,“Currently, organised retail is about 70 billion dollars and it’s growing at about 20 per cent per annum. Of this, 46 billion dollars is the consumption of retail in clothing in India. In future, excluding exports, the domestic industry is going to grow up to 115 billion dollars. So as I see, the consumption of apparel is certainly going to grow.”
He added that, “In India, big organised retailers don't have much scope to grow further, so the larger share of market is in the hands of the unorganised sector. Numbers say that 98 per cent of the market is going to be affordable fashion market, of which 46 per cent will be readymade apparels. Also, the ‘mom & pop’ stores are going to survive."
Biyani also said that though the online portals are making strides, instead of being intimidated by the online market, our focused approach in business will take us ahead.
Speaking from his own experiences with the Future Retail limited’s fashion business, Biyani said,“We run FBB (Fashion at Big Bazaar), Central and Brand Factory, which together make our fashion business. Our mantra is to clothe the people. Great fashion, great products, and great prices are our signature strategies.” Today, FBB has 300 stores, a presence in 121 cities, 20 lakh sq ft of retail space, and a revenue of about 500 crore rupees a month.
Explaining FBB’s strategy, Biyani said,“We have preferred to go on a multi-brand strategy route, rather than building everything together as a single brand. We have various brands for different categories in men’s, women and kids’ apparel in our stores. And while we are nurturing these brands, they have become much larger. We don't use the name FBB on any product.”
“Also, in the stores we have designed more trial rooms, because unless there are more trial rooms, people are not going to be able to try more clothes. We have also created more cash counters for the convenience of customers. The stock which is visible sells faster, so you have to strategise your display of stocks and identify what stock sells at which spot in a store.”
Biyani then made a presentation of FBB’s concept to look beyond categories. He showed how they have set themselves on higher sales targets by working on their price points that give value to the customers, their fashion focus and technology based working system.
Speaking about their distribution system, Biyani said, “A good product has to be backed by a great distribution system. We have a warehouse at MIHAN in Nagpur where we have invested in a state-of-the-art distribution facility. Everything that we shift from the factory is now ready for stores. Today, almost 60 per cent of our clothes come with hangers already attached and security tagged from the factory itself. This costs us more
money per garment, but we have seen to it that there is no bottleneck in the distribution of the garments.”
“Also, 99 per cent of our products are sourced in India because we believe in sourcing closer to the end destination,” he added.
SEASONS AND DISCOUNTS
Expounding on the popular concept of fashion seasons and discounts, Biyani said, “The biggest challenge in organised retail is posed by discount. In 2015, FBB also started discounting to increase sales, which failed to work. We realised that we were discounting because we were thinking and preparing too much according to the seasons. But in India, the buying pattern does not change according to the seasons. So, we decided to get rid of seasons and discounts, and it helped the entire manufacturing cycle, the stock turn cycle and it made things simpler. After we moved away from the seasons, we are able to bring in more new stocks, the entire manufacturing cycle and the supply chain works very well and things have become simpler.”
CONSUMPTION AND FESTIVALS
Relating apparel consumption with festivities in India, Biyani said, “It is important to realise that the consumption in India takes place around festivals. So, the more festivals you will celebrate in your stores, the more connections you will be able to foster. Our company has indentified 72 festivals in India which we celebrate. Stores in different parts of the country are decorated according to the festivals in those parts and we have stocks in keeping with the festival. Business certainly gets a boost during the festival period.”
The discourse was followed by a Q&A session with the industry players, and valuable advice in the form of increasing focus, innovation, improving products and giving the customers good value for good price was given by Rakesh Biyani.
The conference ended with the felicitation of Mr Rakesh Biyani at the hands of Mr Rahul Mehta and Mr Naveen Sainani, who presented him a bouquet and a memento respectively. The Vote of Thanks was presented by Mr Naveen Sainani.