The Hindu Business Line : Biyani's quest

Pantaloon Retail has a finger in every pie, from fashion and food to home decor and e-tail. Its business scale puts it at risk, but it is confident of taking on rivals.

"Biyani has ambition combined with street smartness, but his business model could choke if there is inadequate funding."

PANTALOONS STORE at Spencer Plaza, Chennai.

Kishore Biyani is a man with a mission. Comparing his achievements in Indian retail to Richard Bach's Jonathan Livingston Seagull, at a recent presentation in a management school, Biyani showed slides of extracts from the book based on the life of the bird which wanted to fly higher and higher, to portray the heights reached by his own retail forays.

The year 2004-05 has been eventful for Pantaloon Retail as it crossed the Rs 1,000-crore target. But there have been other watershed years, such as 1997 when it launched its first departmental store, Pantaloons, in Kolkata and 2002, when it opened its first departmental store, Big Bazaar.

Today, Pantaloon is poised to don a new look with a new corporate identity. From the `Knowledge Group,' it will be now known as the `Future Group' with a new logo (a human palm print) with the message `India tomorrow.'

The Rs 1,100-crore retail company has been moving at a scorching pace straddling almost all possible segments in retail (fashion, food, general merchandising, home, leisure, entertainment, finance, beauty, wellness and e-tailing), exploring new areas and formats.

Future competition

Ramping up operations is what the retail major has been doing all this while to ward off imminent competition from global retailers. But the company needs to tread with caution.

"While Biyani has ambition combined with street smartness, his business model could choke if there is inadequate funding. He has to be careful about cash flows," warns Arvind Singhal, Managing Director, KSA Technopak.

Says Ajay Mehra, Chief Operating Officer, Times Retail, "Biyani has spread himself thin across all formats, so his exposure to risks is higher.

"The retail scenario is changing rapidly and benchmarks are getting dynamic in this industry. Customers' demands and expectations are changing dramatically and in this situation he has to have a format which is robust to withstand competition."

Equity research firm First Global in its report on Pantaloon outlines the competitive threats to the company. In its report, it states that Pantaloon does face significant competition. Players such as Trent and Shoppers' Stop also have expert knowledge and financial muscle and have prepared aggressive expansion plans which may lead to cost pressures. Besides, the entry of global retailers into the Indian retail industry also poses a risk but it may be a couple of years before the multinationals step in.

But Biyani is unfazed by the FDI threat. "We will fight them out and beat them," he says.

Beyond lifestyle

Moving down the population pyramid, he now intends tackling the lower socio-economic strata with his micro-financing schemes to help the masses buy from his stores. Claims Biyani, "We are working on a model to service the bottom of the socio-economic pyramid. This would be based on micro-financing whereby we will be giving money to our lower-end consumers to make them spend at our stores."

Believing that consumption is development, Biyani intends spreading his operations to value seekers and to consumers beyond the lifestyle retail chain . According to Biyani, "Retail is about facilitating consumption and consumption equals development." "We believe that in the times to come, Pantaloon will play an active role in the social and economic development of the country. By creating avenues, formats, brands and spaces, we are raising aspirations, inducing consumption, creating public property and generating employment opportunities — all pointers to a strong, buoyant and emerging India."

His Big Bazaar concept of a discount hypermarket store was a milestone for the company, after which it introduced Food Bazaar. As Biyani says, "Big Bazaar changed the contours of the company since it touched the Indian masses." Currently, Big Bazaar occupies 8 lakh sq. ft. of retail space and is present in 13 cities.

While the format was successful in the metros, Pantaloon decided to become bold and took its value and discount model to Tier 2 and Tier 3 cities such as Nasik, Nagpur, Bhubaneshwar, Durgapur (in West Bengal) and Sangli (in Maharashtra).

Currently, half of the Big Bazaar format constitutes apparel retailing and the balance is divided between household goods and food and groceries (extended as Food Bazaar).

The reason food and groceries were included were footfalls. "Once a customer visited Food Bazaar, she was tempted to also have a look at the discounted general merchandise and fashion sections," says Biyani.

Picture by Bijoy Ghosh

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