S. Ravindranath CEO (Food Business)
Rewrite rules, retain value— that’s Kishore Biyani’s way of summing up his thrust in the branded space. He’s done that once with retailing 7-8 years ago. Now this serial entrepreneur of sorts is aiming to build a $2-billion (Rs 10,000-crore) business of brands by 2012. The strategy revolves around creating in-house brands in various segments like electronics, fast-moving consumer goods, sports, household items and apparel. In the process, he will be taking on established multinational players like Unilever, LG, PepsiCo and Reebok.
“Whilst we are not aiming to dethrone the leaders in these businesses, we would like to be amongst the top three selling brands in the respective categories within our stores,” says Biyani, who’s clearly focussed on margins rather than market share. “Most of the brands in India are created by MNCs for global markets and tend to address a small part of the Indian market,” says Santosh Desai, CEO, Future Brands, the firm that will own the brands.
Damodar Mall CEO (Innovation)
Pantaloon Retail is already selling some of these own brands. These include John Miller and Bare in apparels, Koryo in electronics, Dreamline for kitchen items and furniture, and Tasty Bite for food items. Biyani is relying on cricketers like Sachin Tendulkar and Mahendra Singh Dhoni, and film star Hema Malini to promote some brands. There’s a brand called “Sach” being developed specifically with Sachin for sports gear and health drink; and there’s Dreamline with Hema Malini in the kitchen and furniture segment. To promote these brands, the group will spend Rs 200 crore annually by 2012.
To build these brands, Biyani has been hiring top guns from the biggest marketing firms. From Hindustan Unilever alone, he’s roped in S. Ravindranath, Sadashiv Nayak and Damodar Mall. Desai is a former honcho from advertising agency McCann Erickson, and Shashi Kalathi is a former head of marketing from PepsiCo.
Santosh Desai CEO, Future Brands
Future Group is hoping this marketing blitzkrieg will improve the profitability of the group. “Our margins will be 10 per cent (on an average) higher from the in-house brands,” says Biyani. By 2012, he expects private labels to account for 30 per cent of Future Group revenues. The group will negotiate directly with various manufacturers to further improve the margins and initially sell them directly in its stores. Moreover, it will invest in its vendors through Future Ventures and provide financial stability to them.
Future Group’s strategy looks great on paper, but will brand-conscious consumers shift from Lux, Pepsi and Ponds to the Biyani labels? The Rajah of Retail has been successful in creating an environment for consumers to enjoy the retailing experience. Now he’s got to convince those who enter his stores that the products he sells will improve their life in some significant manner.