GROUP 8 SECTION 3

Introduction:
Future group is an Indian private conglomerate which is headquartered in Mumbai. Group enjoys
a significant presence in Indian retail and fashion stores with popular hypermarket, supermarket
chains like Big Bazaar and Food Bazaar, lifestyle stores like Brand Factory, Central etc. and also
has footprints in integrated foods and FMCG manufacturing sectors. Through more than over 22
million square feet of retail space, group serves customers in more than 250 cities across the
country.
Diversified businesses of the group are organized by its various operating companies based on
the target sector For e.g., retail supermarket/hypermarket chains Big Bazaar, FBB, Food Bazaar,
Food Hall, Hometown etc. are operated by its retail hand, Future Retail Ltd, while its fashion
outlets Brand Factory, Central, Planet Sports etc. are operated via another of its subsidiaries,
Future Lifestyle Fashions. Group also manages some in-house fashion brands like Indigo Nation,
Spalding, Lombard, Bare etc., and FMCGs like Tasty Treat, Fresh & Pure, Clean Mate, Ektaa,
Premium Harvest, Sach. It has separate operating companies to cater specifically to internal
financial matters and consulting within its group of companies1. [Exhibit 1A and 1B]
History:
Kishore Biyani is the founder and the Group CEO. The company started under the name of Manz
Wear Private Ltd and Mr. Biyani launched Inida’s first formal trouser brand- Pantaloons. In
1992, company become listed with IPO. From 1994 to 2000 company launched several fashion
brands and also opened supermarket chain like Food Bazar, Big Bazar. In 2004, Future Group
launched India’s first seamless mall. Central, in Banglore. From 2004-2014 group has launched
several fashion stores, supermarkets and have involved in several partnerships, collaborations,
mergers and acquisitions. In 2014, it partnered with Fortune 500 Company and one of the largest
shopping destination Amazon2.
With the emerging trend of E-commerce, future group made its first step in market by acquiring
e-commerce home furnishing store Fab Furnish. In 2017, group launched New Retail 3.0, a
digital strategy aimed at making the group Asia's largest leading integrated consumer company
with a trillion dollars in revenue by 2047.
Industry Structure:
Future Group’ business revolves around retail and fashion and lifestyle industry. We are focusing
on the Retail arm of the future group. Indian retail industry is considered to be the most dynamic
and fast paced industry. Industry accounts for 10% of the country’s GDP. India is the world’s
fifth-largest global destination in the retail space3.
Indian retail market is divided into Organized Retail Market contributes 93 per cent of the total
sector and Unorganized Retail Market contributes the rest 7 per cent of the sector. India’s retail
market is expected to increase by 60 % by 2020. Exhibit 2

BCG Matrix Analysis of Industry:

Retail Industry of India is highly attractive as it has so much potential to grow due to advent of e-
commerce. But to sustain in this industry high capex is required. Currently there are 15 major
players in retail industry and Future group is the largest retailer. Future Group has posted a
3.56% rise in net profit at ₹153.12 crore YOY for quarter ended 30 June 2018 Exhibit 3. Hence,
Retail sector is the star product for Future group.
 BCG Matrix for Future Retail Ltd.

Star
Question Mark
- High Growth
-High Growth
-High Market Share
-Low Market Share

Future Retail Ltd

Cow Dog
-Low Growth -Low Growth
-High Market Share -Low Market Share

Company’s position in the industry setting:

We can assess the position of Future Retail Ltd. using the Porte’s five model.
1. Rivalry among Competitors: There are 15 major players competing in the retail market
of India. Reliance Retail, Aditya Birla Group, Vishal Retail are some of the biggest
competitors are on neck to neck price war. Threat of the competitors is very high that it
forced Future group to mimic the everyday low pricing model of Walmart.
2. Threat of new entrants: Industry is highly attractive and with a huge potential of advent
of e-commerce threat of new entrant is high. Favorable FDI policies of government has
opened the route of Single Brand Retail Trade for international player. With heavy
pockets, international retailers like Wallmart and Amazon will now try to set-up brick
and mortar retail facilities in India equipped with advance technologies like IOT.
3. Bargaining power of Supply: Retail supermarkets contains products like patanjali which
also has its own standalone retail store. Such suppliers have high bargaining power. But
not many suppliers own such stores and also in India there are large number of potential
suppliers in the market. Thus, overall bargaining power of supplier is low.
4. Bargaining power of customer: Switching cost is very low for a customer with the
availability of number of players in the market. Consumers are price sensitive and hence
they are attracted to EDLP strategy of Future Retail Ltd. Even though bargaining power
of the customer is high for the retail industry Future Group is able to attract a mass of
consumers with its pricing strategy.
5. Threat of Substitute: Number of internet users are increasing on a daily basis in rural
and urban areas. Ecommerce sites like BigBasket and Grofers are providing ease of
 shopping with fast home delivery. Urban youth is swaying towards online shopping due
to time crunch and easy accessibility. Walmart has also acquired Flipkart to set footprint
in Indian retail e-commerce market. Substitute is already present in the market but future
group has also launched its first ecommerce site EasyDay to survive in the Market.

Threat of
new entrant
(High)

Bargaining Bargaining
Competitive
power of power of
Rivalry
supplier customer
(High)
(Low) (High)

Threat of
Substitute
(High)

Analysis of Porter’s 5 forces model concludes that future retail ltd has to continuously invest in
innovation and technology to keep its business strength in the retail market of India. Currently
company does have a strong position in the industry setting but to continue to enjoy its position it
has to adapt the new technologies and has to come with more strategies like EDLP. Company is
expecting Rs 400 billion revenue from its retail business in 2018-19. As per the sources,
Expansion of the store network under various formats and product launches would fuel the
growth from around Rs 300 billion in this financial year.

Business Strength of Group:

1. Company is very adaptive and it responds to the customer behavior and changes
accordingly. It reorganizes its structure every three-four months. Thus, one of the
business strengths of this company is that it re shifts and aligns its capabilities with the
changing market.
2. Kishore Biyani, CEO of the Future Group had a remarkable comeback after selling
Pantaloons to Aditya Birla to pare down the debt. It has strategy to divest the loss making
units to survive in the growing market.
3. Even after selling Pantaloons, the company used a differentiated strategy, focussed on
inventory, fresh designs, exploited its resources and capabilities and recreated FBB.
Thus, it came back strongly in the fashion category in such a short span of time which is
remarkable.
 4. Future Group has changed beyond recognition through various Mergers and Acquisitions
and restructuring.
5. One of the moves of Future Group was to focus on the smaller stores in the urban areas.
It started this by opening small stores such as Easyday stores, Heritage Fresh and Nilgiris.
He wanted this to be technology driven and used data analytics to monitor the consumer
behaviour. “Future Group is heavily relying on data science and data analytics to get its
28 million loyalty club customers to increase their spend to at least 100,000 rupees
($1,600) a year at his stores.”
6. The company divested its sectors as and when required, thus it was able to sell off the
businesses if it is unable to get profits and get out its investments in less time.
7. Big Bazaar’s competitor, D-Mart also relies on the image of “cheap and best” which is a
deep discounting model. But Kishore Biyani changed Big Bazaar towards a lifestyle,
departmental store chain.
8. One of the smartest moves of the Future Group was to focus on the urban areas only.
Shares of Future Retail soared as urban customers spend more. Future Retail’s stock price
rose 309.61% in calendar year 2017 till date. Stocks of other group companies Future
Consumer and FLFL also rose 199% and 162.9%, respectively, until September,
primarily because of the overall rise in urban discretionary expenditure, as per analysts
tracking the stocks.
9. In response to disruptive emerging technologies, Future Group launched retail 3.0,
business model is called Tathasthu that allows customer to place orders on whatsapp.
Under this model, it plans to become Asia’s largest integrated consumer retailer by 2047
with revenue in excess of $1 Tn.
Even though company faces a huge competition from HUL, ITC and P&G in terms of revenue,
the strategic moves of the group has kept it in a strong position in terms of Business Strength.
Exhibit 4.
Strategic Gap:
Kishore Biyani tried to implement each and every idea that came in his way starting from
mergers and acquisitions, divesting the businesses, not focusing on his primary and essential
businesses and many more. He should concentrate on the food and daily essentials giving the
maximum return and not investing in the non-essential businesses. Though company is very
adaptive in terms of consumer behavior changes but it is not as fast in adapting technology
changes in the industry.
At one time Kishore Biyani had stated “It’s stupid to be in the online space. In lifestyle, the
ecommerce industry revenue in India will be around $387.14 Mn (INR 2,500 Cr) and losses
too will be of an equivalent amount. Mobile and electronics, too, do not make money online.
Having burnt our fingers, we have decided to take a break of at least two years before even
thinking anything remotely about online.”
Company has to be proactive and should try to leverage first mover advantage in the industry by
roping in new technologies like IOT. It should not turn its face around the new development in
the market.
The Road Ahead:
Future Group is eying on strategic alliance with Amazon India to bolster its presence in grocery
market and organized food. The founder and CEO of Future Group also visited China recently to
meet Alibaba officials. As per reports, the trip allowed Kishore Biyani to study and evaluate
Alibaba’s business model to determine if it can be replicated in India.5
Given the strong position of the group it will be beneficial for the company to make moves in
strategic alliances that give it footprint in e-commerce sector. It will be interesting to see a
hidden war between Amazon spearheaded by Future group and Walmart spearheaded by Flipkart
in the retail and grocery market.

References:
1. https://en.wikipedia.org/wiki/Future_Group
2. http://www.futuregroup.in/about-us/milestones.aspx
3. https://www.ibef.org/uploads/industry/Infrographics/large/Retail-July-2018.pdf
4. https://www.moneycontrol.com/competition/futureretail/comparison/FR
5. https://inc42.com/buzz/future-group-amazon-kishore-biyani/
6. https://www.livemint.com/Companies/sG5E40fOgjM5f3OS6Z7AEP/The-reorganization-
of-Future-Group.html
7. https://economictimes.indiatimes.com/industry/services/retail/kishore-biyani-makes-
remarkable-comeback-in-after-selling-pantaloons-but-can-he-again-be-no-
1/articleshow/58768876.cms

Exhibit 1 A
Future
Other Lifestyle
Retail Financial Services
Services Fashion
Ltd
 Future Capital
Future
Future Retail Ltd Holdings (for Central
Innoversity
financial services)
Future Lifestyle Future Generali Future Supply Brand
Fashion Ltd Life Insurance Chains Factory
Future Consumer Future Generali Planet
Future Brands
Limited General Insurance Sports
Future Enterprises Future
Future Ventures I AM in
Limited Learning
Swathi Tiffin Shop

Future Group retail services sorted by operating companies

KORYO
(Chinese Re- Foodhall
branding)
Food Bazaar Easyday

Fbb Big Bazaar

Aadhaar
Wholesale Nilgiris 1905
Heritage
HomeTown
Fresh
E Zone HyperCity

Exhibit 1 B

Products brands under Integrated Foods and

Future Group in India FMCG
Fashion and Lifestyle[edit] NILGIRIS
Indigo Nation[15] Tasty Treat
Scullers Fresh & Pure
John Millers Ektaa
All Premium Harvest
Rig Mera Swad
Coverstory[16] Pratha
DJ&C Punya
Buffalo[17] Sach
Hey Kosh
Converse Sunkist
 Bare Kara
Clarks TS
Holii Clean mate
UMM Care mate
Urban Yoga[18] Swiss tempelle
Baker street
Golden Harvest

Exhibit 2:
Future of Retail Industry in India

Exhibit 3
Exhibit 4: