I’m a con­sumer goods firm, and not a re­tailer any more

Mint Asia ST - - News - BSY OUMYA G UPTA

Kishore Biyani, the man peo­ple credit for giv­ing form to mod­ern re­tail in In­dia, is tak­ing his Fu­ture Group through a ma­jor trans­for­ma­tive phase—from re­tail to FMCG (fast-mov­ing con­sumer goods), and from large su­per­mar­kets to small stores. In an in­ter­view, he lists his ex­pan­sion plans and strat­egy to pare debt. Edited ex­cerpts: You have been on a long re­or­ga­niz­ing ex­er­cise. Ev­ery three-five years we keep re­or­ga­niz­ing. Cus­tomers are chang­ing, we have to change. You have Nil­giris’ store net­work in the south that gives you a gate­way to that re­gion. How does that for­mat fit in with the ex­ist­ing Big Bazaar and Easy­day for­mats? How do you build 4,000 small stores? We think we have cracked the tech­nol­ogy for a dig­i­tal way to do small stores. That is get­ting ex­per­i­mented with as we speak. This is in the Nil­giris busi­ness? Small stores. For us, a small store is a small store. What­ever ban­ner we put (on it). Small stores are some­thing we are very gung-ho about and we ex­pect them to grow phe­nom­e­nally for us. Our next round of growth will come from small stores. There are two growth ar­eas for us—one is FBB on the fash­ion side. We want to open 500 more FBB stores. And we want to open maybe 10,000 small stores. Would it be fair to say that the small store is a for­mat meant for a per­son who goes to a ki­rana store now, one she can up­grade to? We are vi­su­al­iz­ing the small store from a very dif­fer­ent an­gle. We are call­ing it Pa­dos ki Dukaan— your neigh­bour­hood store. It will be like your Dubeyji— you can get ev­ery­thing that you want. We will touch 1,000 small stores this year. Given this strat­egy on the small store, where does your mother brand, Big Bazaar, fit in? Big Bazaar is go­ing to grow at 25-30 stores a year. It’s in a great po­si­tion. Apart from Patan­jali Ayurved Ltd, you’re the big new en­trant ev­ery­one is talk­ing about. We are one year be­hind the top line of Patan­jali. What­ever their num­bers will be (for FY16-17), I will be one year be­hind. That is my num­bers for next year. You said in an in­ter­view that multi­na­tional com­pa­nies (MNCS) don’t un­der­stand In­dia well. We have the abil­ity to build brands, build prod­ucts and to un­der­stand In­dian con­sumers on their terms. We care about con­sumers. Other com­pa­nies care more about their brand. MNCS would like to bring in the prod­ucts that they have done else­where in the world. I think there is no cul­prit as such. They are de­signed that way. You can’t ex­pect Col­gate to build some­thing in In­dia, which is very dif­fer­ent from what they have been do­ing glob­ally. Among your food re­tail busi­nesses right now, Food­hall will have the high­est mar­gins clearly be­cause they’re do­ing the gourmet sort of busi­ness. But your en­tire food port­fo­lio is also there. So do you think Food­hall might po­ten­tially play a larger role? We do not want to do Food­hall in large num­bers be­cause 30% of our Food­hall cus­tomers are ex­pats. We don’t look at any lo­ca­tion which can’t get us 30% ex­pats. What are your over­all store ex­pan­sion plans? Cen­tral will be the largest ex­pan­sion for us this year, with 16 Cen­trals com­ing up. Twenty new Brand Fac­to­ries are com­ing up. How are you plan­ning to fi­nance it? We don’t need to raise any money for ex­pan­sion. And at any rate you will be ex­pect­ing some cash in­flow with the Home­town and Fabfur­nish.com sales. A lot of peo­ple have writ­ten on Home­town. We are work­ing on how to look at spe­cial­ity re­tail out­side our sys­tem. So is it just a case of let­ting go of a non-per­form­ing busi­nesses?

No, we might look at de­merg­ing it; we might look at sell­ing it. It de­pends. In a re­cent in­ter­view you spoke about how the debt sit­u­a­tion is bet­ter. You also spoke about the group be­ing debt free in four-five years. It will be­come (debt-free) au­to­mat­i­cally. I don’t need to do much.

So how will that hap­pen ex­actly?

We don’t have too much debt in any case. We are halv­ing our debt within the next month, two months (This was said in March, and is about debt at group level). There has been a lot of talk of how D-mart com­pares with Big Bazaar. Peo­ple say they have been steady with their busi­ness model, whereas you have had a lot of it­er­a­tions with yours. What do you make of that sort of thought in the mar­ket right now? I think the In­dian mar­ket can take a lot of other mod­els. D-mart is a dis­count-led re­tail chain. We are mov­ing more to­wards a lifestyle, de­part­men­tal store chain. In­dia can have a real hy­per­mar­ket also, which is not there cur­rently, where you do monthly shop­ping. For ex­am­ple—walmart, Car­refour, a reg­u­lar hy­per­mar­ket. We are not like that, nor is D-mart like that. D-mart is a deep dis­count­ing model. They have been very fo­cused and very con­sis­tent. We are a kind of a va­ri­ety de­part­men­tal value store. I think there is lot of scope for a lot of mod­els to emerge. Have you re­duced your pace of growth? I have not re­duced the pace of growth. We have be­come quite fo­cused now be­cause we have bro­ken down the busi­ness into two— food and fash­ion. We are de­liv­er­ing these in var­i­ous for­mats. You’re con­sid­ered the fa­ther of mod­ern re­tail in In­dia. Now you have a bur­geon­ing con­sumer busi­ness. Do you think it’s fair to say you’re shift­ing fo­cus from re­tail as a core busi­ness to con­sumer as your core busi­ness? I’m a con­sumer goods com­pany. I’m not a re­tailer any more. Re­tail is the dis­tri­bu­tion part of my con­sumer busi­ness. We are a brands com­pany, hav­ing our own brands in food and fash­ion, and we are de­liv­er­ing it through our own re­tail chain which we con­trol. In that sense, we are a con­sumer com­pany.

AB­HI­JIT BHATLEKAR/MINT

Trans­for­ma­tion phase: Kishore Biyani, chief ex­ec­u­tive of­fi­cer of Fu­ture Group.

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