Kishore Biyani makes no bones about his dislike for e-commerce players. But the CEO of Future Group, is going big when it comes to using the discounting model in his offline business.

Biyani is increasing the number and size of his discount format — Brand Factory — in a bid to pull customers back to offline retail. For example, the Future Group is now converting half of the company’s So Bo Central mall in South Mumbai into Brand Factory, with 60,000 sq ft assigned to the discount format, in addition to six new stores in Mumbai. The mall known for housing its Central format is making way for the new Brand Factory store.

While there have been other players like Subhiskha that tried to take the discounting model to offline stores, not many have succeeded. Over head costs related to running shops make the discounting model unviable in this space. Offline discount-led retail chains such as Loot and Grab It have already shut shop while others like Megamart (Arvind) and Max (Lifestyle Group) have moved to a format where they offer affordable products than discounted ones. However, Biyani is confident of making it big by changing the rules of offline retail game.

Brand Factory, for example, shares the burden of its discounts, ranging between 20-70 per cent, with 200-odd apparel companies in exchange for sourcing their unsold goods and creating an inventory of clothes that did not sell in the previous season. Using the same parameters as online companies to measure the size of the business, Biyani is targeting a GMV (gross merchandise value) of ₹4,000 crore for the format this year. “Unlike the e-commerce players, we are an Indian company running on Indian money and giving discounts from that money. Brand Factory should have a GMV of ₹4,000 crore by the end of the year,’’ said Biyani.

Brand Factory, with a turnover of ₹741 crore, is able to make money since it ‘shares’ the cost of discounts with apparel brand partners like Raymonds, Pepe, Lee and Levi’s. The e-commerce players usually bear the discounts from their own marketing budgets.

“It is all about the velocity of merchandise that manufacturers have when it comes to selling their inventory and we make cash of it,’’ added Biyani. “We are a profitable format today as we keep our costs low and plan to reach 55 stores this year. The players who were operating in this space like Loot and Grab It were not doing much brand building,’’ said Suresh Sadhwani, Business Head, Brand Factory.

Plan for Central

On the other hand, Future Group’s flagship format, Central, which was launched two years after Brand Factory, is also being extended and upgraded with a more premium format. “We have an ambitious plan for Central and will soon come up with the Central Gen X format and it will be our most expensive store,’’ said Biyani. Gen X is an upgraded and premium version of the existing format. With sales at ₹1,921 crore, Central has 29 stores and will be adding four new stores in Mumbai.

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