THE BAZAAR AND ITS MOODS

If you need any insight about Indian consumers, Biyani is your man. In conversation with this magazine, he gives a few fast facts about changing the name of the retail game

Kishore Biyani is beaming from ear to ear. At a time when even heavyweight rivals in India’s organised retail jamboree have been browbeaten by the economic turmoil, the smart and savvy retail czar has done it again. Pantaloon Retail (PRIL) from his stable has grown more than 30% in the last fiscal. Ask Biyani the key to this good fortune and he reiterates his tried and tested mantra about delivering value to customers.

“Even during a slowdown we continued to add value. In Pantaloons, we streamlined the product offering and actually maintained prices at 2007 levels,” Biyani explains. Not a hollow boast! Thanks to their long term relationship with local suppliers across the country, Pantaloon was even able to roll out two collections last year (when rival Westside could only manage one) and also keep a check on input costs. “We also strengthened our sourcing and quality control,” adds Biyani. Besides, Big Bazaar went on a spree of innovative schemes and offerings to entice consumers to open their purses, enabling Biyani’s hypermart format to contribute roughly 60% to Future Group’s turnover for FY09.

What’s more, Biyani sure knows which side his bread is buttered. Taking stock of the changing global economic situation early last year, he decided to continue focus on the two cash cows of the retail industry – food and apparel, instead of spreading his tentacles in specialised retail formats (like white-goods). Incidentally, food and apparel together contribute more than 50% of Pantaloon’s value chain business thanks to higher margins (prêt-a-porter has an average 35% margin, while there’s an average 12% margin in food retailing). Small surprise, irrespective of low volume growth, Pantaloon stood tall as the golden goose for Future Group.

No wonder Biyani is easily talking of investing a cool Rs.350 crore in Big Bazaar, a part of which will go toward adding 45-50 new Big Bazaar stores during the current fiscal. At a time when lack of funds is putting a stymie on expansion plans of players like Shoppers Stop, Biyani is exploring multiple options for raising more funds for expansion. “Internal cash accruals would also play a part,” he explains.

So far so good. Biyani’s retail ride is progressing almost without any bumps. But the road ahead may not be smooth. A key concern is that the group is bidding adieu to its existing JVs with several companies. Problem is the threat to outside brands from PRIL’s in-house labels. For starters, PRIL’s JV with Planet Retail Holdings and Blue Foods has already been terminated. But Biyani denies being bogged down by such issues, instead reveling in his future expansion plans: “We will be consolidating our businesses and large formats like Big Bazaar, Food Bazaar, Central, Pantaloons, Home Town, eZone, etc by June 2010.” We are waiting, Mr. King of Indian Retail!

Angshuman Paul

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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