The managing director of India’s largest listed retailer, Pantaloon Retail India Ltd, Kishore Biyani is one of the early leaders of organized retailing in the country. He pushed for stores in malls, popularized the concept of discount buying and has now expanded into finance for consumers in order to keep pace with changing consumer needs in a growing economy. Biyani, who is said to be launching a new format of small, no-frills discount stores soon, spoke to Mint late last week on how he plans to tackle global competition. Edited excerpts:
Big international retailers are eyeing this market or planning to enter it. How steep do you think is their learning curve? The companies themselves will likely argue that they have done this before in China, Morocco or elsewhere.
They have to start all over again. India is a land of surprises. I remember when Star TV came to India, it was an English channel. Now, there are no traces of English on it. McDonalds has a 60-70% India menu now. I think they will also discover. There is no teacher here. You have to be a good student.
When you are bigger in stature you may feel that you know it all and your tendency to learn reduces. The ability to learn could be a challenge for them. It is a learning business and nobody can say they know this?business. I can’t ever claim that I know this business.
When you look at Carrefour, Tesco and Wal-Mart and say I am Kishore Biyani and I’ve been here for so long, what sort of retailer do you think they will see?
I am my own retailer. We are learning and discovering every day because the customer is also changing. For instance, the Food Bazaar in Lower Parel had completely changed and become swanky. So, we have to change with the consumer. The consumer keeps on giving messages about what they want. You have to read that. You have to keep your eyes and ears on the ground.
Do you feel that you need to be everywhere in all retail spaces and conversely, do you feel that you are spreading yourself too thin?
That is a management theory. Who says you cannot spread thin? We are in the consumer space. Everything we do has to do with delivering to the consumer.
With all this expansion planned and with retailers announcing thousands of crores of investment in this sector, where are you going to get funding from?
I think money is not an issue for a good idea. We have always shown our ability to raise money. We have various subsidiaries and we have looked at raising money within the company through debt, equity and accruals.
I don’t see a problem with funding. We have laid out a plan for 2010 and we are moving towards those targets and we not concerned about money at this stage.
To what extent do you have money in place for your expansion?
We are always ready for a year or so.
Your group has diversified into several areas. How do you define yourself today?
If you see Pantaloon, which is the group company—the holding company—we have moved away from retail into the consumer space. We are not only into retail now. We are into logistics, media, e-commerce, property, capital business and insurance. We are wherever the consumer is there. So, we are not a retail company alone. Even in retail, we are ready for any problem that can come into the market. We are in lifestyle and we are in value. We have hedged ourselves quite well.
So, you don’t look at yourself as a value retailer anymore?
I don’t look at myself as a retailer at all. We are in the consumer space. We are looking for the consumer’s wallet. If you have money to spend, you should spend at our stores; if you have less money, we can give you a loan; if you have more money, please invest with us.
If you had the power to decide on the policy on foreign direct investment in retail, what would your decision be?
My decision would be very simple. First, I would bring in a law that nobody can sell below cost price. Second, I would put in a rider that everyone should come in with $400-500 million at least. (And third)... they should not go into property (ownership).
Going back to the corporatization of retail. Pantaloon existed quite happily with unorganized retail. With newer players entering, that is changing. What do you make of the opposition to organized retail?
I think you should not do something disruptive. We never sold below cost price and we still have that policy. Unless you are doing something disruptive, there should not be an issue. That is why we were accepted with open arms everywhere. We believed that we were part of them and were never seen as an outsider wherever we went.
So, you don’t see this (opposition to organized retail) ballooning into a threat for you?
I don’t know. I don’t see a threat for us or me. But I am part of a whole. So, I can’t be outside anything. We have a good emotional connect with consumers. India is a country of microentrepreneurs and retail is a business of consolidation. So, in this business you could be replacing a lot of people. I think there will be some confrontation but there will also be answers. I think everyone will coexist.
As you expand, do you feel the need to strengthen the back end of your business and get into contract farming, logistics etc., the way other retailers have?
Nowhere will you see in the history of the first 20 years of a retailer a supply chain and logistics in place. I think our job is to create a front end first. If you get that right, everything will follow. If you get the back end right, not the front end, what use is it? Because the customer does not see it. And what is back end? India has the most efficient supply chain. We feed one billion people every day with little wastage.
So, what do you make of this oft-heard comment in the retail business that more than one-third of all food in India goes waste?
Who says that? No government agency says that. In terms of volume our wastage can compare with any country in the world. It would be more in the range of 12-18% than 33%. Nobody knows the exact numbers. If 40% of our food was wasted, then our streets would be littered with waste. But that is not the case. Nothing goes waste in this country. I still have clothes that are 15- 20 years old. There is space for efficiency in this system. But the cost of creating that is also quite high.
Is luxury retail a space you want to enter into?
No. We don’t understand that market. I don’t think we are made for that space. We may become landlords for anything, including luxury brands. We can be an operator of a mall with these brands.