Biyani Sees No Fu­ture in Spe­cial­ity Re­tail For­mats

Plans to sell HomeTown, shut Planet Sports and merge Ezone chain with BigBazaar

The Economic Times - - Brands: Creating Desire -

Kala Vi­jayragha­van & Sa­gar Malviya

Mum­bai: The Fu­ture Group is ex­it­ing spe­cial­ity re­tail for­mats as part of a larger strat­egy to fo­cus on its core fash­ion and food busi­nesses.

It plans to sell home fur­nish­ings busi­ness HomeTown, shut sports­wear arm Planet Sports and merge stores of elec­tron­ics chain Ezone within su­per­mar­ket BigBazaar. The move is ex­pected to af­fect 180-200 of the about 1,200 out­lets that the na­tion’s largest re­tailer runs across su­per­mar­ket, de­part­ment store and sin­gle-brand for­mats. The Fu­ture Group ex­pects the fash­ion and fast mov­ing con­sumer goods busi­nesses, along with its fo­cus on young con­sumers, to drive growth and mar­gins as it seeks to achieve its stated goal of ex­pand­ing rev­enue by three to four times to ₹ 75,000 crore to ₹ 1 lakh crore by 2021.

The group is re­lent­lessly cut­ting down on costs and fo­cus­ing on the back­end to build scale in ap­parel and con­sumer goods to help it com­pete on price, chief ex­ec­u­tive Kishore Biyani told ET. As much as 70% of the group’s busi­ness de­ci­sions are driven by data and tech­nol­ogy, he said, help­ing it quickly tweak strate­gies based on chang­ing con­sumer de­mand and be­hav­iour. “We have cracked the food busi­ness backed by a plat­form of brands, prod­uct dis­tri­bu­tion, con­sumer in­sight and sup­ply chain. We are go­ing to con­sis­tently drop prices in ap­parel and FMCG prod­ucts by build­ing scale.” For a man known as the father of mod­ern re­tail in In­dia, the lat­est move is a ma­jor de­par­ture from his orig­i­nal strat­egy. The group he founded for long ran var­i­ous for­mats across con­sumer seg­ments, in­clud­ing in some low-mar­gin and cash-guz­zling busi­nesses. He even dab­bled with the idea of en­ter­ing the on­line space. About a year ago, the group ac­quired home fur­ni­ture por­tal FabFur­nish and said it would merge it with HomeTown to cre­ate a sep­a­rate listed en- Fu­ture Group aims to ex­pand rev­enue to tity, with a tar­get rev­enue of ₹ 1,000 crore a year. But with com­pe­ti­tion get­ting tougher in the ecom­merce mar­ket, where at least half a dozen firms such as Pep­perFry and Ur­ban Lad­der made their en­try in the past few years, Biyani has de­cided to stay off the space where most com­pa­nies still burn cash to keep their busi­nesses run­ning.

The Fu­ture Group said it has shut down the om­nichan­nel busi­ness it launched some time ago. “That is an un­vi­able busi­ness. The cost of do­ing busi­ness in ecom­merce is too high,” Biyani said. He ex­pects the HomeTown sale to fetch more than ₹ 400 crore for the group.

In­creas­ing com­pe­ti­tion and the re­sul­tant price war are also the key rea­sons to con­sider merg­ing Ezone with BigBazaar. In elec­tron­ics, its fo­cus will now be on in-house brand Ko­ryo.

Con­sumer elec­tron­ics and large ap­pli­ances re­tail­ing is the largest busi­ness for on­line spe­cial­ists such as Ama­zon and Flip­kart. Most on­line firms have been us­ing these cat­e­gories as a crowd puller by re­duc­ing prices and part­ner­ing com­pa­nies for ex­clu­sive launches.

For a year now, the Fu­ture Group has been in­creas­ing its ag­gres­sion in fash­ion and food by bring­ing pre­mium brands and for­mats to drive mar­gins.

Fu­ture Life­style Fash­ion posted sales of ₹ 1,064 crore and an op­er­at­ing mar­gin of 10% in the quar­ter ended De­cem­ber 2016 — both higher than Shop­pers Stop — with same-store sales grow­ing more than 20%. For its FMCG busi­ness, the com­pany aims to post ₹ 20,000 crore in sales from in-house brands by 2021 and push higher-mar­gin prod­ucts out­side its own stores. The group has 27 brands un­der 65 cat­e­gories, in­clud­ing food brands like Golden Har­vest, Pre­mium Har­vest and Tasty Treat. It also has a host of in­ter­na­tional part­ner­ships, with Sunkist and Hain Ce­les­tial of the US and Swiss firm Mi­belle AG.

Fu­ture Group has been ag­gres­sive in fash­ion and food and has brought in pre­mium brands and for­mats to drive mar­gins

ex­pects fash­ion & FMCG to drive growth

plans of merg­ing FabFur­nish with HomeTown to cre­ate a sep­a­rate listed en­tity also shut down sports­wear arm Planet Sports

costs and fo­cus­ing on back­end to build scale

pre­mium brands and for­mats to drive mar­gins Ezone with BigBazaar due to in­creas­ing com­pe­ti­tion and price war

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.