The first-mover of modern retail in India, Kishore Biyani, has finally put an end to his debt woes (in the region of Rs 13,000 crore) by selling his retail empire to Reliance Retail for Rs 24,713 crore, but it also marks the end of his stint in the retail world. Biyani had to get rid of all his key businesses (Future Retail, Future Fashion & Lifestyle and Future Supply Chain) to save himself from bankruptcy. All that remains with him is his FMCG business, the Rs 4,000-odd crore Future Consumer, the integrated fashion sourcing and manufacturing business as well as its joint ventures with Future Generali and NTC Mills. Since his daughter, Ashni (Ashni Biyani, MD, Future Consumer), is on the driver's seat at Future Consumer, will Biyani hang up his boots?
"He already has a plan in place," says a close associate of Biyani, who says that he can't divulge much at this stage. Biyani's friends and colleagues also agree that he doesn't know how to press the pause button. "He looks tired and fatigued. He may relax for a while, but that won't be for too long," says family friend and fellow retailer, Lalit Agrawal, CMD, V-Mart. Agrawal is quite sure that Biyani would have already planned his next move. "He is always full of ideas." Former Dabur COO (currently Venture Partner, Fireside Ventures), Kannan Sitaram, agrees with Agrawal, and says, "He will start something entrepreneurial. Within the next 2-3 years something will happen and he will find an investor for it too."
Retail industry experts have always considered Biyani as a person who has never feared to experiment. "I have always looked at him as a person wanting to try out new things. Big Bazaar was the first nationally successful hyper-markert. I know him since 1987. When I joined Arvind and we were doing denim, he was one of our distributors. He then launched John Miller in response to Peter England, then came Pantaloon. I remember him signing up cricketers to endorse Pantaloon, at a time when no retailer thought about celebrity endorsements," remembers, Former MD of Shoppers Stop, Govind Shrikhande.
While Biyani's risk appetite is unquestionable, his critics say that it is his habit of doing too many things at one go that landed him in a crisis. "Between 2008-10, when he first landed into trouble, his contention was that retail will never be profitable and everything around it would be profitable. He said malls will make money, supply chain will make money but pure retail will not make money. He got into all those businesses. He thought he had a great consumer base so he can sell loans and mobile time," points out a senior retail expert.
These misadventures landed him in a debt crisis and to get out of it he had to sell his cash cow, Pantaloon Retail to Aditya Birla in 2012. Biyani's obsession for scale continued and he went about aggressively expanding his retail business, opening new formats and also acquiring new businesses. He had hoped that he would turn his FMCG business, Future Consumer into a Rs 20,000 (currently Rs 4,000-odd crore) by 2021. But none of that worked, it instead pushed him to the brink of bankruptcy.
"Whatever Biyani did was defying common sense. There is no format left in the world which he hasn't tried. Most successful retail businesses in the world largely have one format. Ikea doesn't have multiple formats, they keep on adding categories within the Ikea stores, Aldi, Zara and Uniglow, all of them have just one format. Walmart has one variant, Sam's Club, which is cash and carry. Biyani went pan India without building competence in any business," explains the head of a leading consulting company.
After selling out Reliance Retail, Biyani's major businesses now is Future Consumer and apparel sourcing and manufacturing. While Reliance is going to be its major customer for both the businesses, Biyani in the last few years has been especially passionate about the FMCG business. Apart from his own stores, Biyani was also eyeing the market at large. However, his FMCG business hasn't been particularly successful. Though close to 40 per cent of the merchandise available in Big Bazaar or EasyDay stores are Future Consumer brands such as Tasty Treat, retail experts believe that the over dependence on its private brands actually pushed consumers away. "There are lot of issues around the quality of the private brands. On top of that, they didn't have enough stock of the national brands which put off the consumers," says a retail expert. Biyani's aggressive private brand strategy, according to many senior retail experts is one of the reasons for his downfall.
Future Consumer's strategy has been not just to come up with more competitively priced products in the categories that the national brands already have a presence, but identify gaps and launch products where the national brands don't have a presence. Therefore, in a category such as atta, Future Consumer's atta brand, Desi Atta, has a host of other varieties such as jowar atta, ragi atta and so on. In soaps, the company launched liquid body wash at the price of a regular cake of soap. Though these ideas looked great on paper, there weren't too many takers.
Biyani had also started distributing these brands outside of his stores through Aadhar Wholesale. His idea was to get kirana stores enrolled as members of Aadhar Wholesale and push his own brands. Biyani never wanted to go through the traditional distribution channel, as the idea was to build a low-cost business model. The lion's share of the Future Consumer products sale came from its own stores and the idea of distributing to the country at large has been a non-starter.
However, Biyani in the past few years had preferred to refer to Future Group as a consumer brands company and not a retail company. He has always been passionate about the great Indian consumption story, and many of his former colleagues believe that nobody understands Indian consumers as well as Kishore Biyani does. "The only problem is his habit of getting into too many things at one go. Even in Future Consumer he has followed a strategy of carpet bombing. That doesn't work in the FMCG space. One needs to focus on limited categories and do them well," says a former Future Group senior executive.
Will Biyani now try to carve a big story in the FMCG space and give stiff competition to legacy companies such as HUL or Nestle? But FMCG is an extremely capital-intensive business and will Biyani have the resources to do it? A section of the industry believes that he may go back to where he began from, and that is apparels. After all, both Pantaloon and FBB have been successful ventures, and Biyani after selling out to Reliance still has the apparel sourcing and manufacturing business under the Future Enterprises umbrella.
All eyes are on what will be Biyani's next move!
Also read: Future Uncertain
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