Kishore Biyani, once India's answer to Sam Walton, bows out of retail biz

Mismatch between ambition and resources; debt does him apart, say experts

On Saturday, Future Group Founder and Chief Executive Kishore Biyani made an impassioned plea over a Zoom call to nearly 300 senior leaders to look ahead and forget the past. Through the call, made a few hours before the announcement of the sale of his retail, logistics, warehousing, and wholesale assets to Reliance Retail in a nearly Rs 25,000-crore transaction, Biyani, 59, was composed, persons privy to the conversation said.

But Biyani — India’s answer to Walmart founder Sam Walton — was aware that a big part of his life would come to an end after the call and stock exchange announcement. He would no longer be involved in organised retail, a journey that began over 30 years ago, after transferring the mandate to Reliance Retail, the acquirer of his retail business.

Biyani instead would just be involved in the manufacturing, distribution, and sourcing of fast-moving consumer goods and fashion brands, which is part of the residual business sitting within Future Enterprises.

The pandemic spiral

Till March this year, there was no indication that Biyani, regarded as India’s retail king, would cede ground the way he did on Saturday. The stunning reversal of fortunes was triggered in part by mounting debt and operational challenges due to the Covid-19 pandemic and lockdown.

While debt was something that Biyani had been grappling with for years, forcing him to redraw his strategy from time to time, and sell core businesses such as the Pantaloons retail chain to rivals such as Aditya Birla Group, his complete exit from the retail scene has left the Indian marketplace with one intrepid entrepreneur less.

“Legacies have to be examined dispassionately,” a senior retail leader, who declined to be quoted for this story, said. “There was a mismatch between Biyani’s ambitions and resources. He used debt to finance his plans and the crisis simply exploded beyond proportion, prompting him to seek a white knight,” the person said. The data compiled by BS Research shows total debt in Future Group’s listed companies is nearly Rs 12,000 crore. Another Rs 12,000 crore is estimated to be sitting in promoter group entities, though informed sources say it is half of that.

Shouting to be heard

In the crowded market of readymades in the early 1990s, Biyani, then 31, learnt his first retail lesson: To be heard, you need to shout even louder. As a result, despite a turnover of Rs 7 lakh for his Bare denim brand in the first year of its operation, Biyani spent Rs 60 lakh advertising it.

Having quit the family business, which supplied denim to Arvind Mills, in 1987, Biyani, then 26, collected Rs 7 lakh and set up a small plant that produced 200 trousers a day under the brand name WBB. He subsequently set up a new firm called Manz Wear and launched a new trouser brand called Pantaloons. Manz Wear was taken public in 1992, which later became Future Retail, the flagship entity of Future Group. The shift from manufacturing to retail was the critical point in Biyani’s career. Distribution costs were the reason brands were snuffed out of life in the retail market, so Biyani decided to rewrite the rules of the game. This meant thinking big and fast. In 1993, Biyani experimented with a small-store format, and Pantaloon Shoppe was launched in Panjim, Goa, where mistakes could be made without getting noticed, he said. This was a precursor of what was to come.

The Kolkata connect

From a Pantaloon Shoppe to a large-format store in 1998 in Kolkata, Biyani took a few bold bets. “If you can conquer Calcutta, you can conquer other markets too. Calcuttans, contrary to perception, have money and are loyal customers. They get emotionally attached to a brand,” he said of the rationale to launch a megastore in the City of Joy rather than the financial capital of the country, where he had spent his initial years — growing up and studying commerce at the city’s HR College. Known for his sixth sense, Biyani was proved right. The Kolkata Pantaloons store took off, setting the Marwari businessman on his journey as a big-box retailer. A voracious reader, who ironically does not play golf like most other businessmen, launched Big Bazaar chain in 2001. By 2008, Biyani had some 1,000 stores, including apparel outlets under Pantaloons, Food Bazaar supermarkets, and Big Bazaar hypermarkets.

Parting with his jewel

By 2012, Biyani’s retail play had begun unravelling, pushing him to sell the Pantaloons retail chain to Aditya Birla Group for Rs 1,600 crore. Total debt at that time was estimated at Rs 8,000 crore.

While offloading Pantaloons was one way out, there were other exits too, such as of Future Capital. He exited formats such as electronics retailing and home furnishings, choosing to keep attention on grocery, fashion, and lifestyle.

In recent years, Biyani pushed for an omnichannel retail presence (which didn’t take off as planned), and stitched up a number of private equity and other investment deals (including one with Amazon last year to help manage his retail and other businesses and pare debt). But nothing helped. With time slipping, the only way out of this bind of poor operational abilities and debt issues was to part with what he had passionately created. As he famously said in his 2007 book It Happened in India, “Preserving the status quo has never been my cup of tea. I consider myself to be both creator and destroyer.” The retail king has moved on.