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It Happened In India
by Kishore Biyani List Price Our Price You Save Rs 99.00 Rs 89.10 Rs 9.90(10%) *USD 2.37 *USD 2.13 *USD 0.24(10%)
Usually ships within 48 hours Bind : PaperBack Date of Publication : 2007 Publisher : Rupa ISBN : 81-291-1137-3
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Description: Blue-blooded entrepreneurs could not stand his cheek, conventional managers were baffled by his business logic, and his own colleagues were aghast at his recklessness. A maverick of the industry, Kishore Biyani followed his nose, cashed in on the latent opportunities of the booming Indian consumer market, and transformed the retailing business in India with the 'bania-company' that even hardcore punters at Dalal Street had been afraid to touch! One of the most versatile entrepreneurs, Kishore Biyani has played many roles - a trader, a failed film maker, a dance festival organizer and an innovative retailer - on his way from being an iconoclast to being a leader in the pre-defined game of bulls and bears. "It Happened in India" tracks the story of this irreverent entrepreneur, who wrote his very own success story based on the firm belief in exploring the Indian way of business, an uncanny insight into the mind of Indian consumer and a simple philosophy - Rewrite Rules, Retain Values.
Author Profile: Born in a middle class trading family, Kishore Biyani started his career selling stonewash fabric to small shops in Mumbai. Years later, with the launch of Pantaloons, Big Bazaar, Food Bazaar, Central and many more retail formats, he redefined the retailing business in India.
'2009 will define India's retail biz'
In an interview with Chief Correspondent Syed Firdaus Ashraf. We will see lifestyle retails. when I met then film producer Kishore Biyani (inset) for an interview about an upcoming production of his. Cut to the present. has redefined the shopping for Indian consumers. Touted as the king of Indian retail. As I go up to request an interview. Every retailer will be in the market. was the most sought after person throughout the three-day event. it was only because of the persuasive powers of the public relations firm that was promoting the film. journalists are jostling for his quotes and sound bytes. Why did you say in your speech that 2009 will be the defining moment for Indian retailing industry? All the new malls that are in the anvil will be ready by then. the founder of the modern retail group Big Bazaar. Then too. We will also have a retail policy in place and consumers too will be ready by then. Biyani. . Everyone in the audience were in rapt attention. so we are ready for interesting times. Biyani. Kishore Biyani is no more an itinerant film producer. high-end retail.Years ago. not many journalists were present. Biyani has just finished a speech at the India Retail Forum. The change was evident even during his speech. He was like Moses spelling out the Ten Commandment to the other retail honchos. gives his vision for the retail industry and his company's plans in the coming years. the CEO of the Future Group.
The period to watch out for will be 2009 and it will be a testing time for retailers. We are learning it. He spends less when things are expensive. It is one of the future ways of the retail market and a learning business for us. What has the learning so far? (Laughs) The first applications are always those of fraudsters. Can you explain the rationale? The consumer always saves money when there is inflation. . We will all know by then what the real demand is and what the real supply is in the market. We are learning while we are doing our business. the challenge will be to find the right kind of people and trained people for the industry. Why have you started credit card banking and how is the response? It is only 45 days old and the response has been good. It has been observed that when real estate prices keep going up people tend to save and the consumption drops automatically. 2009 will be deciding factor for the retail market in India. We have given loans to 500 customers so far. You mentioned in your speech at the India Retail Forum that the rising realty rates in India will be a challenge to the retail industry. Will the bubble burst? We have too many retail forums and too many malls have come up. In the meantime. 'Rising realty rates a big challenge' The three-day India Retail Forum held in Mumbai recently saw a healthy crowd gathering everyday to gauge the state of India's retail business.So. Inflation affects the consumer's psychology and people now tend to save money in such scenario and not spend. I feel.
The people who have aspirations and brains. India's social security system is a family security system. 'There are two Indias -. only one India is growing. We are creating our checks and balances. The first one are those people who have power to spend and the second one are those who are dependant on them like drivers. I call that group as the second India.. One option is that those who have a good income will have to create an income for the India that is left out. They have to be protected in a network and we need to give them a chance to grow and become one of the consumers. Lot of people have to do a lot of things to change the scenario. Can you explain this? Today. cleaners and housemaids..only one is growing' A big bazar outlet in Mumbai. In the last 45 days we have learnt a lot on who is a trade-worthy customer and that is a business secret. You once said that social security system is bad in India and that needs to be improved. Today.What kind of potential do you foresee? There is a huge potential and we have just begun. People save money for bad days but if you compare that with developed countries people spend money because they know that their government will look after them in bad days. They are not afraid of spending money in the developed countries. You mentioned that there are two Indias today. This class is not making the other India grow. they are the big consumers of retail market. In the same way we need to create a system in India where people should not fear to spend money and not bother about their .
What can private players do in such situation? The only solution to this problem would be to raise income levels. I would however say that this is a game of supply and demand. Can you explain? Every retail shop has domestic finance scheme in some cities of Brazil and Mexico. 'We keep women in mind' Recently. Do you think the real estate market has reached its peak and will crash? I cannot comment on it. If you study their trend then you will find that there is 6 percent default and I feel it is okay because 7 percent default is the norm in credit cards too. Price correction will always be there in such situation. then everybody will have spending power.insecurities. Mumbai hosted India Retail Forum wherein business houses from across the . You said that you are approaching the Brazilian and Mexican ways to develop retailing business. If we do that. We are also looking at that model.
The board has approved IPO and it will take its own process.000 stores by March 2007). Reliance has achieved just 20-25 per cent of its target of setting up nearly 1. this was before the really big opposition even kicked in. they hugely underestimated the problems in getting large enough tracts of land close to residential areas to set up their shops . they've achieved just a fraction of their targets (while Bharti Wal-Mart is already talking of opening its stores with a year's delay.Wednesday will see the biggest ever rally (between 50. Second. I feel that these days.October 9th. Any plans for an IPO? We have announced Future Capital Business and that will come up for IPO. and the unsuspecting. and will bring together all the disaffected. He will only come to you if you give him value. . Do you believe in customer brand loyalty? I believe there is something called emotional attachment to a brand. Advertisement Big retail's big blunders .000 and 100. the middlemen. I personally believe that the customer is like a nomad. He will go from one store to another store. 2007 Reliance Retail chief Mukesh Ambani and others who've bet big on organised retail taking off must be cursing themselves for getting the equation wrong. maintaining brand loyalty comes with a cost. People do switch over their loyalty at times. in the form of UP Chief Minister Mayawati and the protests in West Bengal and so on . How did you crack the shopping woman's psyche so that they eventually end up spending in Big Bazaar shops? (Laughs) We keep women in mind. We have started with some products initially but eventually the idea is to fund consumption as much as we can. First.000 persons are expected to attend) against big retail in Mumbai's Azad Maidan.as a result. We work with them. We understand their emotions and therefore they end up spending in Big Bazaar. What are the products that can be funded? Lot of products can be funded. the small kirana shops.country showcased their products.
it is when jobs are growing fast that those getting displaced by big retailers should complain the least. the story went. just as they've underestimated the power of those who don't wish to give up their land for SEZs. what's the point of having them. Kishore Biyani. and I suspect equally largely.so.the model is adapted from Subhiksha. most big retailers talked of an aggressive private label strategy. The country's First Retailer. as part of the strategy to get the stock markets/investors charged up. the more excited investors got. most are changing their models to set up more small neighbourhood stores as opposed to the earlier big-box formats. So what were Big Retail's big blunders? Great expectations Trap: The way the story went. and may not either. it would appear. for instance. customers would get dramatically lower prices for everyday groceries (something that takes up 45 per cent of the household budget) and farmers would earn at least a third or more as big retailers began procuring from them directly. which would have been located too far away from most customers to offer anything more than limited value. Big retailers. their incomes should go up substantially. While firms like Reliance are not talking of the discounts they're offering. But the problem with this strategy is that it's only after you've got . big retailers do manage to eliminate the middlemen and procure directly from them. The Shivam/Garg stores in my neighbourhood offer 8-10 per cent discounts off MRP on national brands anyway . but would get them custom-manufactured and thereby cut consumer prices by 20-25 per cent. says he plans to set up 1. jobs grew at 2.000-square-foot fair price shops (KB's Fair Price Shops) in city neighbourhoods over the next two years. would no longer just buy consumables/durables from a Hindustan Unilever or a Voltas. If. or three times the rate they did between 1993-94 and 1999-00) makes it even worse. The greater the private label share. many of whom could lose their jobs once big retailers come in. That all this should happen when the economy's growing at the fastest pace ever and is creating more jobs than ever before (between 1999-00 and 2004-05. on the other hand.93 per cent per annum.500 no-frills 2.The country's farmers fall in the last category since they don't really get affected. Reliance and others did not estimate the strength of this opposition. especially given that small kiranas provide employment to around 40 million people. But the middlemen who could get hurt are putting up the farmers and. After all. As part of the strategy to reduce consumer prices. what's the big deal? And if a Reliance/Bharti/Biyani is going to do just the same. which will give customers 10 per cent off MRP on national brands and 20 per cent off on local brands . Wrong private label strategy: This is related to the expectations trap. which has 800-900 such stores. But none of this has really happened.
Yet.perhaps by building up customer loyalty through offering bigger discounts. Opening too many fronts: Despite what the Icrier study says on how kiranas will not lose out to big retailers. was always a better idea. So you'd expect big retailers to try not to open up more fronts. A very small part of the turnover of Biyani's Big Bazaar. It remains to be seen what they do now. so a low-key approach with model farms. accounting for around 50 percent of the total Rs 25. comes from fruit and vegetables. nothing seems to have changed. Retailers like Reliance have already changed their model dramatically once before. setting up a cold chain and getting farmers to supply produce of a uniform quality takes years. the industry seems to be gearing up for another battle. fruit and vegetables are a lucrative segment.000-crore consumer electronics industry in India had been fought and won. when customers walk in to a big retail store today. nor the players and not even the prize. what do big retailers like Reliance go and do? They open up another front by talking of procuring directly from farmers. by the way.000-crore industry and the other Indian as well as multinational players like Videocon. Indian firms such as Onida. Whirlpool.enough stores and sales that making your own products. they still find most goods are those manufactured by well-known firms (the discounts on which are low) and the quality of store labels is far from uniform. using a well-oiled supply chain and superior logistics (to use the Subhiksha ad-line. .August 14th. Advertisement Rs 25. and concentrate on taking care of this one . On the face of it. like Bharti has done. In any case. not the game. it was always obvious that if big retail made big enough inroads. an 8 percent compounded average growth rate (CAGR) between 2000 and 2004 (China grew 14 percent CAGR during this period. So. Morcha against Kharcha). maybe even importing cheaper substitutes from places like China. considering they add up to around a tenth of the family consumption basket.000-Crore Market in Play . BPL. Sure. LG and Samsung continue to rule the market. and of a certain quality. 2006 Korean firms LG and Samsung haven’t won the battle for the consumer durables market. The industry continues to grow sluggishly. kiranas would oppose them. can work. Videocon and BPL are making a comeback and retailers like Future’s Kishore Biyani are launching store-brands. Mirc Electronics. but this was asking for trouble since it allowed the opposition (the middlemen in the mandis) to conjure up the possibility of retailers taking over farmers' land. Just about when everybody thought that the war for durability in the Rs 25.
Whirlpool India is another company. and of manufacturing facilities such as French Electronics major Thomson’s color picture tube. The group’s oil business contributes significantly to this. is committed to India. when GDP grew by around 8. BPL Ltd.” gushes Gulu Mirchandani. there are others like Godrej Appliances. He claims to have sold between 100. “It is not for nothing that the Devil (a character that represents brand Onida) is back. Hyundai. things are stirring. it is Videocon. grew at between 15 and 30 per cent.” says Dhoot. In terms of value. Sanyo BPL. All This And No Growth These ambitions plans and strategies would not seem misplaced if the consumer electronics industry were growing the way other industries are. even those that had been in dire straits. The JV has launched CTVs. which ruled the CTV market in India till early 2000 and then slipped into heavy losses (the net loss stood at Rs 214 crore in 2003 and Rs 214 crore in 2003 and Rs 74 crore in 2005) . Apart from televisions. air conditioners. Chairman Venugopal Dhoot identified a different route to growth: Allwyn. Chairman and Chief Executive Officer.000 crore venture by 2009 with a considerable market share in all segments. For one.1 percent. Sharp. actually saw a decline.and Sony continue to play catch-up. and hopes to translate this into a competitive advantage in the Indian market. another leading Indian player that go battered during the late 90s and early 2000s. the stock markets boomed and most industries. washing machines and DVDs. Under the surface though. Haier. the also rans are refusing to play their part and are making a strong comeback bid. Sony. besides the Korean majors. fast moving consumer goods. consumer electronics was one sector that grew only 5 percent. The latter has committed $100 million (Rs 450 crore) to its Indian operations. but the consumer electronics business is thriving. Kelvinator. which after a long cold winter. where it has historically held its own against competition. “He is here to rule the market again”. globally. Toshiba and Electrolux in the domestic market. Mirc Electronics. Then. Then says Mirchandani . “ We intend to be a 2.000 color televisions each in Ukraine and Russia last year. its Managing Director. Videocon Industries. “If there is one player that will thrive in Indian market. Chairman and Managing Director (MD). Mirc is making an aggressive play in categories such as washing machines. Hitachi and various other smaller companies that are aiming to corner some share in the industry. LCDs and plasma screens under the Sanyo and BPL brand names and is also foraying into refrigerators. The company. too. has formed a 50:50 joint venture with Japans Sanyo Electric. there are exports. says Ajit Nambiar. the biggest constituent of the segment. The company says Arvind Uppal. boasts revenues of Rs 4. CTVs. recently announced a $20-million (Rs 90 crore) investment for 2006 and 2007 and launched several new products. is getting back into shape.500 crore today. Nor are growth . Last year. microwave ovens and DVDs. which recorded a net loss of Rs 38 crore in 2005-06.000 and 150.
which.” Mukesh Ambani’s Reliance Retail is also said to be exploring such opportunities. There are many reasons for sluggishness in the industry. Shorter replacement cycles. whereas the corresponding tariffs in other Asian countries are between 7 and 17 percent. Deputy Managing Director. the emergence of organized retail. Director (Client Service).” says Ravinder Zutchi. But the fact remains that these problems are not going to be resolved in the near future. That. especially in urban areas. that of organized retailers launching their store brands. “World over consumer electronics is used as a loss-leader category to woo consumers. In fact. “Initial response to these products has been encouraging. “We intend to import other products like TV and washing machines soon. also give companies cause for hope. . as rural markets evolve and companies create specific products for them. “Regular power supply is imperative for any consumer electronics product. Over the next few years. intriguing correlation between stock markets and consumer durables industry. over 80 percent of the rural market in India remains irrelevant for the industry because of these reasons. Which they have now done. Singh. the industry is likely to grow around 7.estimates for the future any more sanguine. in fact. According to market research agency Datamonitor. the topography of the industry will likely change. When the government opened up the sector. consumers tend to postpone their consumer durable purchases and invest their money in these assets. McKinsey. “It has been observed that whatever stock markets or real estate sectors are booming.” says Ireena Vittal.” Says Bhuwan B. incumbent players “were not ready for competition and most of them died or are still bleeding. is already happening.” says K. mean squeeze on margins. in turn. Eventually.” he says. ORG – Gfk Then. the market itself will grow. Principal. under the brand name Koryo. The Threat of Retail There is another imminent threat for the industry.” Vittal points to another trend that is sure to hit the players.R.” says MD Kishore Biyani. there are historical reasons. Most people attribute last year’s slow growth to two factors-confusion regarding value-added tax (VAT) and a surge in stock markets. And the companies will have to factor them in when they draw new growth plans. “Total tax incidence in India even now stands at around 25-30 per cent. historical. at prices that are over 40 per cent cheaper than those of competing products. Poor infrastructure is another reason that seems to have held back the industry. some immediate and others.7 percent CAGR for five years ending 2009.Kim. Samsung. “Retailers give consumers huge discounts on these products to win over consumers. with some companies gaining at the expense of others. however. But that remains a major hiccup in India. Indeed. “Confusion regarding VAT in the first quarter last year took a heavy toll on sales. Electronic bazaar has started importing air conditioners and microwave ovens from China and is selling them.” Videocons Dhoot holds heavy taxation responsible for industries’ woes. recalls Mirchandani.
” Only two or three players will survive in each category. “The Indian market remains heavily under-penetrated.000 to 18. which is a big opportunity for all players. manpower. The buzz in the market is that Samsung incurred losses (around Rs 80100 crore) for the first time in 2005. LCD and plasma screen business. “There are companies that can take advantage of the free trade agreement (FTA) route and import their products to India and then. To be sure. “We are looking at increasing our market share in CTV.” says Prasun Banerjee. companies like Hitachi. Players admit that the increasing competition and new challenges will lead to another phase of consolidation with some losing and others winning. Companies not only have to set up the basic infrastructure in terms of office space.October 25th. but are keen on a presence here. is the chorus ndia in 2010: The Making of a Blockbuster . .” And who are the players who will survive? Only those who are resilient. foraying into rural markets has a considerable cost component attached to it. “We would largely be importing these products. With India hurtling down the growth superhighway.” Whirlpool India. but also spend on transportation for moving inventory. aren’t out of woods yet. Sharp and TCL Holdings are already looking at exploiting the FTA route.” says Zutshi.000 retail outlets (for consumer durables) in the country. have a direct presence only in 15. refutes to this. however. committed to the industry and Indian market and at the same time. they have no opinion but to look at the brighter side of the picture. companies making a comeback.” says a senior executive at the Reliance Retail. 2006 Very interesting article i took from the cover story of Business World. are looking at being globally relevant. sell them through us without making any ground-level investments. “Our profits did take a hit last year. but there were no losses. which in India’s case is its potential. Zutshi. Then. which are touted as having the largest distribution network in the country .the group is said to be in talks with some companies that neither have any manufacturing facility nor a strong distribution network in the country.” It is not that the players are oblivious to these challenges. LG’s Kim says that in the next two to three years “half the players will be pushed to fringes again. Early indications of that are already visible. Even LG and Samsung.000 of around 40. Godrej appliances and BPL Ltd. Vice President (Sales and Marketing) Sharp India. here’s what things could look like just three years from now. making use of the FTA route.
new world-class buildings.3 million employees will be at their workstations tackling assignments from around the world. Well. India will make about 11 million television sets this year. By then.5 per cent. At the current speed and with 8 per cent growth becoming the norm. has left Goldman Sachs and is currently chief economist with the Mumbai-based Future Group. It audaciously predicted that India and three others —China. Adds Purushothaman: “These are realistic trend numbers. That is likely to rev up to about 12 million by the turn of the decade.20. and from a corporate planner’s point of view. Is this all a pie in the sky? Castles in the air that will come tumbling down at the first rough brush with reality? Not at all. “There will be more of everything — special economic zones.” says Andrew Holland. Remember that 2010 is barely 39 months away. Merrill Lynch. usually one of the first electronic purchases that every Indian household makes. we have got news for you. corporates can plan along these lines. it is practically upon us. What about hi-tech outsourcing in which India is famously a world-beater? Outsourcing is climbing at a steady 30 per cent annually and exports are slated to hit $60 billion by 2010. a co-author of the BRICs report. The good news: hi-tech outsourcing is currently worth about $23 billion and is moving slightly ahead of schedule to hit its targets. an Indian-American born in the US. managing director. Once again the picture looks good and that is likely to climb to about 20 million by 2010. “The economy is moving much faster than the BRICs level of 6. That will climb to over 2 million by 2010.” says Roopa Purushothaman. India is pelting along the superhighway to growth — at a speed that makes the BRICs report look almost conservative. more supermarkets. it is slated to touch $1 trillion slightly before 2010.Remember the BRICs report? The world sat up and took notice three years ago when Goldman Sachs turned out its path breaking ‘Dreaming With BRICs’ report. more shopping malls. And what about the two-wheeler industry that keeps middle-class India on the roads? India’s two-wheeler industry is the world’s second largest and turned out 7 million gleaming vehicles this year.1 million cars will be racing out of the factories this year.” For all you doubters. The economy is racing along and GDP climbed to about $690 billion (Rs 31. here’s a quiz on the fast-growth Indian economy: How many passenger cars will be produced this year and how much will that rise to in 2010? Answer: 1. Purushothaman. Russia and Brazil — would be giant economic forces in the coming century. Even with a correction. Or let us throw in a question about colour televisions. in Mumbai.200 crore) in 2005 up from about $600 billion in 2003. about 2. Wheels Of Growth .
the Ace.500crore plant for its super-hit small transporter. which offers products for the home in a giant space of 150. He is pushing up store space in malls and plazas across India from 4 million sq. Simultaneously.000 in the first year.000 vehicles and will be ready in less than a year. I am setting up this unit just for one product. which are extremely popular with value shoppers. and its bus-making firm in Spain.000 of these ‘last mile’ vehicles at its Pune factory. If he has not. is shopping for space like a shopaholic who thinks there’s no tomorrow. Roopa Purushothaman. Goldman Sachs’ BRICs report Now with Future Group.” You could say that Tata Motors was pleasantly wrong about the Ace. In addition. who has recently renamed his company Future Group. Brand Factory and Star Sitara. Biyani is not neglecting the other top sectors of the shopper’s universe and is moving ahead with a range of chains like Pantaloons (clothing).000 sq. it is driving out of Pune to Uttaranchal where it will build a Rs 2. he has tied up with foreign chains that are hoping to buy their way into India. for instance.” says Biyani. It ended up selling about 60. But he isn’t stopping there and aims to touch about 30 million sq. which has just picked up a giant order in Morocco. co-author. at how Tata Motors is gearing up for the second decade of the new millennium.” . Biyani. he aims to open 80 Big Bazaars. ft by 2010. Shoe Factory (footwear). Gini & Johny (children’s clothing). He is constantly on the move and last week opened the giant warehouse-like Hometown. whether Indian or foreign. ft this year. ft to about 8 million sq. By the year end. step into any mall across the country and check out if high-powered retailer Kishore Biyani has got there. Tata Motors is also making ambitious plans for the Korean unit it brought from Daewoo. The trucks-to-buses-and-passenger car giant is urgently scouting for land in West Bengal so that it can roll out its small car by early 2008. who hopes that his group will grow from its current $1 billion turnover to anywhere between $6 billion and $7 billion by 2010. ft in Noida on the outskirts of Delhi. It began rather modestly in mid-2005 with plans to produce 30. Biyani will certainly be offering shoppers plenty of choice. Says Tata Motors managing director Ravi Kant: “Times have changed. That’s up from only 33 at the beginning of the year. can even write out their shopping lists. like Marks & Spencer and the Next group. he probably will soon. The Uttaranchal factory is now being designed to turn out about 250.Take a look. Says Biyani: “We want to capture the consumption space of the consumer. “We are planning for the India of 2010. He is moving in several directions simultaneously and is filling his supermarket cart before the other biggies.5 per cent Or. she points out that India is moving much faster than the BRICs level of 6.
They are taking place in practically every industry that matters. Advertisement Home > Business > Special Get Rediff headlines in your inbox ! Meet India's king of retail . which has since time immemorial been dominated by tiny hole-in-thewall style mom-and-pop or rather family stores. In fact. Already the giants of Indian industry are limbering up to make their presence felt in the retailing sector. the Retailers Association of India (RAI) expects that organised retail will climb from about 18 million sq. So far. where India is finally catching up with those fast-talking Chinese. But he isn’t the only one by any stretch.000 crore (that’s roughly $5 billion if that helps to bring all those zeroes into perspective) over the next five years and he’ll be out there in the malls quite soon. With all this about to happen. In September alone. the biggies are still at the blueprint stage but their plans will quickly be turned into shop window reality. global giants like Carrefour are getting into a state of high excitement about the Indian market and may tie up with the Dubai-based Landmark Group. But the truth is that the changes that are now happening aren’t taking place in one or two sectors in isolation. The government. Reliance Industries’ Mukesh Ambani has been loudly threatening to spend about Rs 25. for instance. is now talking about having 500 million phones by 2010. RAI. CEO. “It will be a quantum leap and most of retail will become modern. Meanwhile. the shopping revolution is gaining pace at a remarkable speed.Biyani has amazingly grand plans for 2010. ft currently to almost 60 million sq. ft by 2010.” says Gibson Vedamani. Does that sound a mite too ambitious? Remember that we have become world-beaters in this field and now have about 170 million phones ringing. the Tatas have just announced their tie-up with Australia’s Woolworths and the Bharti Group is looking at ways to cement its ties with Tesco. which once tied the entire sector up in messy bureaucratic red tape. we added a hot-to-talk 6.1 million mobile connections. Take a look at telecom. Similarly. according to the Telecom Regulatory Authority of India.
You'll never catch him in a tie and jacket. And now that he's set himself the task of retaining control of the largest retail space in the country. lower than even Biyani's purchase prices in his Big Bazaar and Food Bazaar stores.suppliers or international promoters included . He has the knack of catching rivals off-guard and striking where it hurts most. which opened shop in Mumbai last month through a franchise agreement with local company Nirmal Lifestyle. but will otherwise eat anything that is green. "Shoprite is involved in predatory pricing. he won't let anyone . Unilever and Procter & Gamble at consumer discounts of 20-30 per cent. Says Biyani. asking why the multinationals were offering Shoprite better prices. though he's just as content driving around in a junior manager's Maruti 800. 2005 Pantaloon's Kishore Biyani has become India's largest retailer. In India's chaotic markets. Two days later the Nestle products were back.catch him slacking. Pantaloon Man Unlike most people. and has just graduated from driving a Honda City to a Honda Accord. but not before the company had clarified its stance.Surajeet Das Gupta | January 15." But as a result of his tough stance. he more than makes up through his observation powers. Kishore Biyani makes no bones about his simplicity. He is a strict vegetarian. . even withdrawing Nestle products from his stores when the company did not respond. He isn't a stickler for large cars. he says. Instead of chewing his nails. but still has several aces up his John Miller shirtsleeves. Biyani turned confrontationist. The latest to face the wrath of the 43-year-old is South African hypermarket Shoprite. But make no mistake. The hypermarket began retailing products from big boys Nestle. He's the man you're most likely to ignore at the Pantaloon or Big Bazaar store. Kishore Biyani is the unchallenged king of retail. There are rules against this in every part of the world. and is currently off cheese and fried foods. what he may lack in sartorial style. as he stands in a corner observing the way you shop. the three MNCs have asked Shoprite to roll back the offers or face withdrawal of supplies.
editorial director of the magazine Retail. Weekly targets are fixed and reviewed every Monday. His presence ensures footfalls and a premium for the mall. India's own Sam Walton (the legendary promoter of Walmart) is quick to seize any advantage. He's booked over 4. He might have over 6. He has never met V Banga of Unilever in his life. Says R S Roy. But even size hasn't made a difference to Biyani's vaulting ambitions and he's on an even faster trajectory of growth. He will invest over Rs 200 crore (Rs 2 billion) to make this dream a reality." But don't let Biyani fool you. Biyani takes time off to cut more deals. Instead he spends time with property developers . Biyani's victory isn't unexpected. His personal preference is films by Guru Dutt. Even when he's in inspection mode. Coleman & Co was done in seven days flat. managers have to rush daily reports for the first 45 days.000 employees and 300 managers. Instead. "We have a store opening virtually every fortnight. and it isn't unusual for Biyani to be fixing any lacunae either over the phone or personally in the store. ." Even Biyani concedes. Yash Chopra and Sanjay Leela Bhansali. but was never part of that industry. I have lost count now of how many I have opened. he says. who are directors in the company. Which is why the denim manufacturer who quit the trade because "it wasn't creative enough" commands over 1. and leaves the task of relationship building to his managers. He used to be a lawn tennis regular but gave it up citing lack of time. he's addicted to a daily half-hour walk and does yoga twice a week. which tracks the industry closely: "Mall developers have him in mind before they start constructing. golf is a waste of time.3 million sq ft of retail space.5 million sq ft of space across the country. and will utilise 3 million sq ft by this year's end in 23 Indian cities.According to him. but the buck stops only with him. The deal with Bennett.Sanjay Chandra of Unitech is a pal merchant bankers and investment bankers. Every time a store opens. He can't understand the fuss about gyms and hasn't visited any. The badshah of the bazaar jets between his stores across the country to "spend at least six or seven hours every week in the stores". Biyani loves films and has even produced some. He believes in taking quick decisions. He keeps a close watch over his empire with the assistance of his two brothers.
The shift from manufacturing to retail was the critical point in Biyani's career. Other professionals have wondered where Biyani picked up the tricks of the retailing trade.Stephen Covey. though the turnover for his Bare brand was only Rs 7 lakh in the first year. He also added John Miller shirts to his portfolio. Having quit the family business. The reason: "By going to a Walmart or a Macy's. which supplied denim to Arvind Mills. From the shoppe to the large store format in 1998 .Last week he snapped up Indus League Clothing. In the crowded market of readymades. Distribution costs were the reason brands were snuffed out in the market. They are emotional people and get emotionally attached to a brand.to be heard. you can conquer other markets too. in 1987. Coleman & Co for Rs 70 crore (Rs 700 million)." he says. a garments company in which he picked up 68 per cent equity for Rs 24 crore (Rs 240 million). The following day. and Pantaloon Shoppe was launched in Panjim. he admits. he also made it a point to stay away from these stores. contrary to perception.98 per cent equity in flagship Pantaloon Retail to Bennett. This year.this time in Kolkata ("If you can conquer Kolkata. you could get overwhelmed into thinking that was the best model and stop learning. "where we could make mistakes without anyone noticing them". he spent Rs 16 lakh advertising it.was a carefully crafted plot. Marks & Spencer and management gurus like Tom Peters whose book 'Reimagine' impressed me. you need to shout louder than the rest. Others he picked up from the big boys of international retail. Calcuttans. so Biyani decided to rewrite the rules of the game. . And he was proved right when the Kolkata Pantaloon store became a raging success and Biyani stepped on to the turf as a super retailer. have money and are loyal customers. Some he learned from his own mistakes.") . In 1993. he experimented with a small store format. Macy's. he sold 4. Pantaloon will spend Rs 85 crore (Rs 850 million) advertising its various store formats. Robert Kaplan or James Collins.a substantial premium on the prevailing price of the shares in the market. Biyani learned his first lesson . he collected Rs 7 lakh and set up a small plant that produced 200 trousers a day. But unusual as it might seem. Goa. "I read every book on Sam Walton." Even now he reads a management book every fortnight . As a result. Biyani hasn't always played in the big league.
financing it mostly through a loan (the share price was so low he could not have raised equity)." Others rise to his defence. "He is leveraging his balance sheet to expand. Macy's was useful for understanding the importance of size and large store formats." says Biyani. Coleman & Co was ready to pay a premium on his shares." Biyani remains unperturbed by most comments. Pantaloon also has its own manufacturing facility for garments." says a competitor. the format worked and the rest is history. Marks & Spencer reinforced the importance of building in-house labels and the obsession with quality. But the underlying message in books on retail strategy was the one thing India had been wary of . He picked up the idea of "mind to market" (see box) from Spanish retail giant Zara. . That explains why Bennett. something he wants to up to 20 per cent by end-2005. To India's surprise. which is why he is desperate about getting new brands like Indus League. and his margins are under pressure . To translate theory into practice. a hypermarket in Mumbai as a gamble. Points out another Biyani watcher: "You cannot have two or three Big Bazaars or Pantaloons in one area.big is beautiful.That might sound like stunted logic. using it to leverage rentals that are 60-70 per cent lower than what others pay in the same mall. Detractors now attack him and say he is growing too fast. "We have over 150 product categories and each is looked after by a manager who is responsible for its growth and profit. and 15 per cent of his fashion and garments turnover comes from there. but Biyani already knew from Sam Walton that you needed to be merchandise driven (to concentrate on the product and the price) so operational efficiencies could follow.his net profit as a percentage of sales is only 3 per cent. In-house labels constitute 8 per cent of the turnover of food items in his stores. Biyani wasn't above picking up the gauntlet and launched Big Bazaar. Biyani took a leaf out of Walmart's book and appointed category managers. Says retail equity analyst Sanjay Dam: "He now has a size where some failures of format will not make a difference.000 sq ft of space. He points out that he does not negotiate less than 60. Similarly. and that could be a problem if some formats fail.
In the world of fashion. He will not increase the share of food and groceries to more than 25 per cent of the turnover because "that is the percentage of their salary that families spend on food. He goes personally to people's homes. Explains Biyani: "This will be the key differentiator between the winners and losers because it reduces working capital requirement and improves return on capital. . as in Walmart. The company launched Fashion "F" Trousers based on this tip-off in December. 50 per cent of the store products are bought directly from the manufacturers. Other rules have been learned through a process of trial and error. the company detected a demand for trendier trousers. it takes four-six months for an approved idea to make it to the stores. In October 2004. where customers like loud colours and shop in groups. where customers want subtle shades and shop on their own. talks to local community leaders and spends weeks walking streets of bazaars to get a feel of what products should be stacked in a new store. And margins in food can be as low as 5-8 per cent compared to 40 per cent in fashion wear. Biyani has turned the study of community behaviour into a fine science through a specialised regional diversity tracking system. "Bangalore is modern." he says. he says. Biyani's current project is improving inventory management . and garments six times annually. In such cases stores are stuck with huge unsold inventories. His target: 45 days flat. Kishore Biyani is on to another idea. The goal is simple: to dramatically scrunch the time it takes from when a product is conceived to the time it takes to get to the stores." The larger challenge has been to understand the diversity in customer behaviour where even Hyderabad and Bangalore are as different as chalk and cheese. passing on the middlemen's margins to the customer.though he replenishes entire stocks for grocery 30 times a year. have ensured that. Biyani says that forecasting trends has too many variables and the chances of getting customer needs wrong are high. male dominated. and he isn't letting go of it because it could change the face of the retail business. he is not satisfied. "The aim of 'mind to market' is to respond to the demand of the market rather than try to forecast it months in advance." And if Biyani gets it right." In fact. "Hyderabad is conservative. Pantaloon has already started pilot projects.The volumes." he says. his retail juggernaut could well be unstoppable.
. and the various price points at which the products would be launched.came together on the project plan. production. No wonder Biyani's already on to the next project . The team created a range of fashion styles and jointly agreed upon the fabrics that would be used. Says Biyani: "We were able to put these trousers on the shelves of our stores all over India in 40 days. Only Spanish retailer Zara's 15-day lead time is faster.design (he has hired fresh design graduates to work with him).To cater to the demand. the pick-up offered great returns. all departments . category managers." At margins of 65 per cent. marketing and fabrication .he won't tell us the product though .where the lead time will be a meagre 22 days.