Creation phase over, Future now looking to become a cost leader: CEO Biyani

We have to become a cost leader in whatever we do. And derive more from less, says Kishore Biyani

The consumption slowdown is forcing businesses to grow cautious and the Kishore Biyani-led Future Group is no exception. The founder and chief executive officer of the retail-to-manufacturing conglomerate, which last week signed a distribution deal with American food major Dole, tells Viveat Susan Pinto what his priorities are and how he sees the retail market evolving over the next few years. Edited excerpts:

Future Retail's tie-up with Amazon, which is going through regulatory approval process, is happening when there is a broader agitation against e-tailers by small traders. Your thoughts…

Online and offline retail, especially small stores, are different models altogether. The corner shop will not vanish because convenience and contingency buying will always be there. But it has limited inventory. If you want a range of products, only an e-commerce platform can help you. So, both have a role to play when it comes to the shopping needs of consumers. Having said that, for small retailers there are challenges when predatory pricing or exclusive launches with e-tailers are undertaken by companies. Some players, especially in consumer electronics, are taking the initiative to bring down the price disparity between the two channels.

How will you use the Amazon platform for your operations?

Amazon has a model of 2-hour delivery for their Prime customers. This 2-hour delivery can now be fulfilled through a Big Bazaar store in that city. A pilot is being run in 18 cities and will be taken to more places. We are also working on multiple other fronts with Amazon. We want to sell our merchandise to their customers, whether it is our fashion brands or home and food products. For us, the Amazon platform is another distribution arm.

Modern trade began with the Future Group in India but the market has changed. You have deep-pocketed players such as Reliance Retail at one end and cost-conscious retailers such as Avenue Supermarts at the other. Where would you bracket Future Group today?

The phase of creation is over at Future Group. The focus now is on operating efficiencies. We have to become a cost leader in whatever we do. And derive more from less. This could be getting more out of our physical spaces, our customers. The focus is there. We are not looking at acquisitions right now. We want to be leaner, sharper, and optimise what we have. So, investments from our end will be lower. To win in the long term, a retailer would have to be nimbler, offer great products at great prices, but at the lowest possible cost. We are building the platforms to achieve this.

While private equity (PE) investors seem excited about Future Group, stock market investors are not. Morgan Stanley recently slashed Future Retail's target price. What could explain for this divergence? 

Nothing is permanent. Stock market investors have their own collective wisdom. We would have to work harder to instill confidence in them. We are in a different environment at present, which requires a different narrative. Stock market investors want to see what you are doing. Action and outcomes are important for them. That is what will excite the market.

Blackstone's Rs 1,750-crore investment in Future Lifestyle Fashion last week was a significant development. Yet the stock price of Future Lifestyle has barely moved since then. Are the debt overhang and promoter pledges of Future Group worrying stock market investors?  

Pledge is not a taboo word. Yes, every promoter would like to reduce their pledges. And our initiative of working with Blackstone was a step in that direction. They have picked up a 6 per cent stake in Future Lifestyle. The money will be utilised to retire debt. There are similar exercises we are working on, which will help us get where we want to as far as debt goes. 2019 has seen a lot of PE and global investors come on board Future Group across retail, fashion, consumer and logistics. That signifies that we are embarking on a journey and we want partners.

You are increasingly taking your private brands outside of Future Group stores. Why?

All of our brands have been conceptualised to sell everywhere. Almost 25-30 per cent of our business already comes from stores outside our system. We do not see a problem with this and our strategy is to make our brands more visible outside our stores. Dreamery is a joint venture with Fonterra. So, the plan to launch Dreamery in general trade was built in from the very start. Some of our other brands such as Kara, Tasty Treat and Desi Atta have a distribution strategy of their own and we see no issue with taking them into stores outside of the Future Group.