‘Food And Fashion Are The Biggest Growth Areas For Us’
Kishore Biyani is again back at his game of creating mass market brands. Biyani, Group CEO, Future Group, is now adopting technology as the driving force in his quest to scale up businesses in both large- and small-format stores. Biyani (56) has also set an ambitious target to achieve Rs 1 lakh crore turnover by 2021 in his group companies. In a freewheeling conversation with Clifford Alvares, Biyani outlines his mantra for growth.
Edited excerpts:
What are your plans for each of the five group companies?
I don’t talk companies. I can tell you what we are doing as a group. We are into three categories of business — food, fashion and home. We have a plan that by next year, we should be among the top 10 global fashion companies in the world as we will be selling more than 35 crore garments. In a sense, with these volumes we can be clothiers to the nation. In food, we think we can be one company that could provide nutrition to India. We have multiple brands. Quite a lot of our products will be required in tomorrow’s world. In home, too, we are in the process of building products and brands.
What’s the potential of the Indian market?
First, we have 125 crore mouths to feed every year. In fashion, we have many people to clothe, so we can’t get a bigger market than this. Second, India has high aspirations. Third, India is growing. Fourth, India is youthful. Fifth, the competition in the market has reduced, the noise may have increased. We believe many things have come together in this market and the time is good.
How was the business impacted post-demonetisation and -GST?
After demonetisation, we saw business going up significantly in the North and the NCR. After GST, we saw some supply disruption for the first 20-30 days, but things have settled down. Consumers are getting used to the new mode of looking at invoices. We were preparing for the GST transition for some time and, fortunately, we run our own Future Supply Chain. That has built the whole logistics network, which is GST-compliant.
Which categories are you banking on the most?
Food and fashion are the biggest categories for us. Fashion is a huge business for us. 95 per cent of the fashion products that we sell in fashion@big bazaar or Big Bazaar are our own brands. We have worked hard on this. We have built many brands in the fashion category. We have created internal brands, and some are acquired. It’s been a journey.
What are your debt reduction plans?
Our businesses are light on capital and assets. Many things have gone into our businesses, but we have passed that phase 2-3 years ago; now debt levels will keep going down. We have some debt in Future Enterprises, but it has a lot of assets and, among others, lease-rental income. Now, it is all about growth, and how much we can do and how many customers we can acquire.
What are your expansion plans for Future Retail?
On the small store side, we will have 1,000-plus stores. On the big store side, we will have about 275 Big Bazaar stores and 20 of Hypercity, which brings us close to 300 stores in the hypermart format. In Fashion@BigBazaar, we will have nearly 100 stores. We will have about 12-13 stores of Central, and another 18-20 of Brand Factory. This year, we are adding close to 3 million sq. feet, which is the highest in our history.
What are your growth targets for the group?
We plan to grow at least 25-plus per cent in the next 4-5 years.
What do you see as challenges in this business?
Consumer businesses are always challenging. Whatever you do, whatever you create, a consumer has to accept and like it, and he has to come and buy that again. So, it is tough. In a consumer business, nothing is given.
What excites you the most at the Future Group?
Right now, we are more excited about building small stores. Our plan is to build 10,000 small stores like Easyday. We want to build a store for aspirational Indians every 2 km. That business will be driven by data and technology. We will drive membership. It’s the new retail that we are talking about, and I believe, this will be the first data-driven company. We are working on many fronts.
What are the failures that, looking back, you would have liked to do differently?
We have gone through our share of failures. We have seen many, like failure of location, format, products, and many more. It is a phase of life, there always are some failures.
Now, would you say that the jigsaw is in place?
It seems to be. For us, in the beginning there was one element, we added two. Now, all our five elements — businesses are coming together. Consumers are responding. We are seeing growth, a good balance sheet and good returns.
What do you think about e-commerce businesses versus brick-and-mortar businesses?
Physical and digital will be one tomorrow. It will converge. It is a blended experience for a customer. You need to sell your products and brands, through whichever format. It’s all about making money. The cost of doing business on e-commerce is quite high. One has to find a good model for that business.
How do you see the Future Group in the future in terms of size and scale?
This year, we will be close to Rs 30,000 crore. We have a Rs 1 lakh crore target by 2021, let’s see if we can achieve this. Costs can’t grow more than 6-8 per cent. So, if your business grows more than 20 per cent, you are doing fine. We have good scale now, and our size will only go up. We can pass on the benefits to the consumer, and can become more competitive.
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