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Retailing is all about understanding the consumer. The more you are able to connect yourself with the consumer the chances of success are higher...
They have not only built a successful business from scratch but have also redefined the way the common Indian consumer shops. They wanted to deliver everywhere, every time to every Indian consumer in the most profitable manner and they have done it successfully so far. In fact, with some of their leading retail formats which include Big Bazaar, Pantaloons, Food Bazaar, Central, Planet Sports, eZone, Collection i, Brand Factory and Home Town, the duo seems to be present almost everywhere. Certainly their strategy has paid off in the past and they plan to continue with the same in future too. Future Group’s Kishore Biyani (Founder & CEO, Future Group) and Rakesh Biyani (CEO, Future Retail) share their future strategies with 4Ps B&M Angshuman Paul...
In this fiercely growing retail rodeo, where do you think Future Group stands?
Kishore Biyani (KB): Retailing is all about understanding the consumer. The more you are able to connect yourself with the consumer the chances of your success are higher and that’s what we have been doing in Future Group.
Do you think national players understand Indian consumers in a better way as compared to foreign players?
KB: To some extent yes and I feel there’s no need of foreign direct investment (FDI) in retail. I always encourage domestic competition like from Reliance and Subhiksha, et al.
What are the key challenges for Indian retail industry?
Rakesh Biyani (RB): Infrastructure and real estate, particularly in big cities, are some of the key challenges. The real estate cost in India is not in sync with the productivity. Even the energy cost in India is higher than any other country in the world. Apart for these there’s lack of skilled manpower. Certainly these are some of the challenges that all retail players in India have to face.
Your growth model has always revolved around private labels. Why so and any intention to change such strategy in the near future?
KB: We believe in giving consumers what they want at an affordable price without compromising with the quality. That’s the reason we create brands. So if the demand and the need of the consumers are taken care of, then the brand can become the favourite brand to the consumers. We are also eyeing for 50% stand-alone stores for all our brands in near future.
RB: In the near future our focus would also be on private labels. In fact we are planning to launch about 35 to 40 stores every year and by June 2009, approximately 140 stores will come up. We are also looking forward to experiment with new formats in terms of sizes. However, our formats would be on the basis of need and demand for the consumers, which our team is finding out through intensive research.
As a pioneer and veteran in this industry what changes do you see in today’s retail industry?
KB: I think one should look at expansion in terms of the number of stores to reach more and more people and not in terms of the formats. We in Future Group are looking at opening more and more stores in the near future under any format, depending upon the need of the market. Retailers, of late, have been too much into rolling out new formats but what’s the point in opening such formats if there’s no demand in the market. That’s the reason we believe in doing research before opening a store and if our team finds out there’s a good demand in rural India, then we would definitely go there as well.
Can you elaborate on how you conduct this type of research?
KB: We conduct extended market research and the core focus of our research is to understand the Indian consumers and markets. For the past one year we have done research with McKinsey Group. However, we are now focusing on conducting research on a more innovative way.
Tell us about your future investment plans?
RB: We don’t believe in announcing investment figures, wherever and whenever required we have invested. Our IPOs have been very successful. We know we will have to invest more on the potential areas of retail. We have big plans with hyper-marts and we would be investing there. We even have big plans for fashion retailing, as fashion retailing is comparatively easier than food and grocery retailing.
Why do you say so?
RB: Because in fashion retailing you don’t require a cold store, which you definitely need in food and grocery retailing. Moreover, in fashion retailing you can always be in direct touch with the brand manufacturer, which is not always possible in case of food retailing. Anyway that doesn’t mean fashion retailing doesn’t have any challenges, it has its own bottlenecks particularly in apparel and fashion retailing you definitely have to be more creative.
Over the last decade, how do you think Indian retail industry has changed and what are the more changes we can one expect?
KB: Definitely, the Indian retail industry has been growing much faster in the last three years as compared to the earlier seven years. Retail is becoming more organised with its arm spread across all the corners of the country. In fact there has been a phenomenal change in consumer awareness, today’s consumer are much more educated about brands. Regarding the future, by next year all most all the malls in the country would be operational.
RB: On that even I agree too, you can’t take consumers for granted. There’s certain rise in consumerism in India, it’s good and this will give birth to more and more organised retail. I think we would be able to address all the challenges that we have today for the retail growth by the coming years.
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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