Retail is being reborn: Kishore Biyani

What is your assessment of how the retail sector has shaped up in India?

A lot of things have developed. Customers know exactly what they want. Technology has become very very important and mall developers have become smarter.

How has the consumer behaviour changed over the last 25 years?

A lot has changed in the past two decades. In fact, our country and our society have possibly seen more change in the past two decades than in any other period in its history.

Even till a few years ago, there was almost a guilt associated with the idea of consumption. Consumption was restrained; these were legacies of the era of socialism and mixed economy. Liberalisation in the ’90s brought in a new idea of not just economy but also opportunity, progress and consumption.

Today, the change is even more. Almost 400 million Indians have been born in the 21st century. They are bereft of the baggage of the past. They are born in a much more prosperous, free and technologically savvy era. They are also the consumers of tomorrow. They will work harder, earn far more and spend far more than any other generation in the past. Studies say that over a lifetime, an Indian born in the 2000s will consume 13 times as much as an Indian born in the 1960s. Today’s consumers are much more aware of global trends, want more choices and convenience, and are willing to explore a lot more different things.

At the same time, there is also a lot of diversity in our country. Every few hundred kilometres, our language, our food habits, our festivals and our consumption patterns change. Such diversity throws up immense challenges and opportunities. At Future Group, we have learnt to thrive amidst this huge diversity and pace of change in India.

The consumer is experimenting more and more; he is willing to spend a little bit more and is exposed to much more than ever. People are getting into workplaces much earlier and the number of double-income households is increasing, So, there are multiple things happening at multiple fronts. We always want more and more, and that is welcome.

But we believe India can enter 10-11 per cent GDP growth, and that will be very interesting in terms of consumption. India has the potential to grow, and is the fastest-growing economy. It would probably also cross 10 per cent, and so many factors have come together to make it possible.

You started with Pantaloons and has built modern retail over the last two decades; now you are focussed on being an FMCG company…

We have always thought of ourselves as a consumer company that has its own distribution, members and data. So that is the way we have conceptualised our business. I believe, going forward, that is going to be the way. Being a consumer goods company with a large player in fashion and significant players in FMCG and home products, we create our own distribution points and haveg your own set of customers; we use data to communicate with them to increase their spending with us. A member consumer spends an average of ₹40,000 per year at our stores. We already have about one crore of such customers and we know about their purchase behaviour and buying patterns. It is going to double by next year.

Even with the presence of big players such as Future and Reliance and global players, small retailers still account for 90 per cent of the market. Were the concerns over the impact of big retail on kirana stores overhyped?

I think we have always maintained that the kirana stores have a role to play. Plus, proximity retail is something that large format retail can’t get into, so they ( kirana stores) will always win in that. So, there was no doubt in our mind that kirana stores will never be impacted by modern retail.

Your deep-discounted business model threatened local grocers and kirana stores a decade ago. E-commerce has a similar strategy and is affecting brick-and-mortar retail chains. How different are the two models?

Our model never threatened the kirana stores. If that was the case, how come they still control about 90 per cent of the market. What we did differently was that we came with much larger packs and promotions; we tied up with manufacturers to plan events. Actually, modern retail has increased the category size and consumption, and more people came into the consumption fold because of us. So, we never disrupted the existing market. Building a category is very different from taking the share away from somebody by the way of predatory pricing. That is very different and we still don’t believe in predatory pricing.

Do you feel the size and scale of India’s retail would be significantly bigger if India didn’t restrict FDI inflows in the sector?

The FDI policy has evolved over time, and the government has some priorities in mind. However, that said, territory and less ambiguity always helps. The Retailer Association is constantly in dialogues with the government in this regard and we keep giving our suggestions to the industry body.

How are small towns faring?

Smaller towns continue to excite and surprise us in a positive way. We operate in 355 towns, so you can imagine.

What do you mean when you say retail is being reborn?

I think, earlier, everyone was shooting in the dark, people were trying out quite of a lot of new things. But I believe now the model has been discovered, at least in physical retail. We know exactly what works and what doesn’t — which category works, what sizes, what items, and what margins we will get. So predictability and forecasting is much stronger. In a way, for us, growth starts from here.

What are the innovations you have got into your group? How soon can we see something like an Amazon Go in India?

I am nobody to comment on someone else’s model. But India will see different kind of innovative models, such as the experience centres we are building. Our hi-definition stores in our fashion and lifestyle format Central, the new Big Bazaar stores and Foodhall stores use a lot of technology. The new experiences will be very different and will focus on curated merchandises.

Future Group started with Pantaloons, but you had to sell it due to high debt. Do you regret it now? In hindsight, would you have done things differently?

The phase of high debt is behind us. All our flagship companies operate with minimal debt. Our fashion business has grown multiple times over the last 5-6 years — especially through fbb, Brand Factory and Central. I never have any regrets.

Globally, local retailers have the biggest market share in their respective countries? Is India any different?

Retail is a very localised business and involves a very close connect with customers. We focus a lot on understanding every small and large community in India — understanding their needs, empathising with their aspirations and customising our offerings. We now have very deep and rich data on our consumers, and have the technology and teams in place to leverage this data. This will help us build stronger relationships with customers and run the business in the most efficient manner.

COMMENT NOW