The erstwhile Pantaloons has a great story to tell. Originating from a meager effort to sell trouser lengths to people working in the Mumbai offices in easy installments to becoming a big corporate conglomerate is not just an easy task. Retailing was second skin to Kishore Biyani (KB) as he took to meeting customers strategically in a Direct—to-Home effort. He opened his store near the Andheri railway station, a small one in a two-tiered floor format that I have visited as a customer. It had the brand name Pantaloons, written as a brand logo in its own unique style. The story goes that Shoppers’ Stop refused to keep KB’s brands as shop-in-shops in their outlets. Outraged by the refusal, KB focused on his retailing efforts and opened his first large department store in Kolkata in 1997. The only competition coming up that time was Shoppers Stop in the department store category. Cautious expansion was the growth mantra of Shoppers Stop. Crossroads supported KB as did the Phoenix Mills by giving space on lease at Haji Ali and Lower Parel respectively in 1999 and since then Pantaloons rolled out their department stores with their own private labels in a big way in India. The expansion spree was hit upon in 1999 with the success of the establishment of Big Bazaar as a mini hypermarket with grocery and staples as core categories of merchandise. The merchandise mix was a fusion of grocery and apparel and the first store in Bangalore was promoted as a common man’s store with down-to-earth pricing. The business strategy was such that one could bring anything for exchange and a certain value per kilogram was given for redemption on the next purchase. Many Big Bazaars opened and the company Pantaloon Retail India Limited (PRIL) was a big success. As it was already a listed company, many eyes were on PRIL and its performance. KB did a good job and expanded the Big Bazaar stores to number more than 100 soon. He was involved in the business first hand.
Strategic sales promotions were key to the success of the business at Big Bazaar. The National Holiday Sales strategies saw near-stampede in stores and it is no exaggeration if we said that these promotions were a big runway success. The January 26 sales or the August 15 sales did go down well with bargain seeking customers and they thronged the store. As the available space in the stores could not often contain the humongous footfalls store vigilance became a great concern.
KB began investing in many brands as a strategy to make money and it paid as an investment strategy. He has been only too good to create wealth for himself. As he was busy doing this, the management of PRIL went to the professionals he had hired. Managers of PRIL perhaps did not bother to work on margins that would ultimately yield gross profits to the company. And stores did not mind to focus on a regional or local merchandise mix. He is the architect of many innovations in retailing and one among them is the the seamless mall that he discovered known as Central. He spotted opportunities to co-invest with brands as a strategy for the group as policies of FDI in single brand retailing changed in the country to favour investments in India. KB was the one who took maximum advantage of brands that took the initiative to grow. As KB distanced himself from active retail operations in the group, it showed in the resulting downtrend of same store sales and the company was forced to sell the Pantaloons department store to Aditya Birla to wriggle itself out of the mounting debts. KB still manages to run his Big Bazaar stores with his managers. For the first time, the sales figures of Reliance Retail pipped Future Group (as it is now known) at the post to emerge a big winner pushing KB’s retail business to the No.2 slot in India. And if any research report shows that modern food retailing has shown a single digit growth for the first time last year, it is consequent on the poor show by modern food retailers like Big Bazaar. I know that medium sized and small retailers in the food category showed a growth of more than 22% like to like growth in the last year – stores like Santhosh in Chennai, Kannan Departmental Stores in Coimbatore, AP Mani in Mumbai, Heritage in Hyderabad, D-Mart in Mumbai, etc…
Have some of the key modern retailers taken modern food retailing for granted? I do hope he does bounce back soon. I have worked closely with him when I was serving the retail community through the Retailers Association of India. Knowing him for his exemplary retailing talents, if only he would personally get involved in the business to turn his companies around, he would come out with flying colours. Wish him all the very best!
Strategic sales promotions were key to the success of the business at Big Bazaar. The National Holiday Sales strategies saw near-stampede in stores and it is no exaggeration if we said that these promotions were a big runway success. The January 26 sales or the August 15 sales did go down well with bargain seeking customers and they thronged the store. As the available space in the stores could not often contain the humongous footfalls store vigilance became a great concern.
KB began investing in many brands as a strategy to make money and it paid as an investment strategy. He has been only too good to create wealth for himself. As he was busy doing this, the management of PRIL went to the professionals he had hired. Managers of PRIL perhaps did not bother to work on margins that would ultimately yield gross profits to the company. And stores did not mind to focus on a regional or local merchandise mix. He is the architect of many innovations in retailing and one among them is the the seamless mall that he discovered known as Central. He spotted opportunities to co-invest with brands as a strategy for the group as policies of FDI in single brand retailing changed in the country to favour investments in India. KB was the one who took maximum advantage of brands that took the initiative to grow. As KB distanced himself from active retail operations in the group, it showed in the resulting downtrend of same store sales and the company was forced to sell the Pantaloons department store to Aditya Birla to wriggle itself out of the mounting debts. KB still manages to run his Big Bazaar stores with his managers. For the first time, the sales figures of Reliance Retail pipped Future Group (as it is now known) at the post to emerge a big winner pushing KB’s retail business to the No.2 slot in India. And if any research report shows that modern food retailing has shown a single digit growth for the first time last year, it is consequent on the poor show by modern food retailers like Big Bazaar. I know that medium sized and small retailers in the food category showed a growth of more than 22% like to like growth in the last year – stores like Santhosh in Chennai, Kannan Departmental Stores in Coimbatore, AP Mani in Mumbai, Heritage in Hyderabad, D-Mart in Mumbai, etc…
Have some of the key modern retailers taken modern food retailing for granted? I do hope he does bounce back soon. I have worked closely with him when I was serving the retail community through the Retailers Association of India. Knowing him for his exemplary retailing talents, if only he would personally get involved in the business to turn his companies around, he would come out with flying colours. Wish him all the very best!
- Dr. Gibson G. Vedamani
Athan, the PRIL to FVRL story can't be narrated more eloquently that touched upon even key aspect that led upto the current state of affairs. Like u always say, passion is the most important ingredient in a successful retail venture and I guess somewhere that got lost in the transition. The other glaring issue here is the development of unionised work forces with in the organisation that just don't subscribe to the interest of the organisation. In my humble opinion, the turn around plan should definitely include but not only limited to getting the work forces by their side from the clutches of the labour unions by creating a open and transparent working culture at all levels.
ReplyDeleteWhen KB was personally involved in the business, he co-created retail properties with developers to house his formats. Pantaloons, Central & Big Bazaar gained a great deal in such an attempt. He won great occupancy deals when he signed up anchor spaces in malls (One more danger on the cards: When leases may expire in the next few years especially for those properties KB had signed up earlier the company runs the risk of running into trouble again. When long term leases are due for renewal if they are not done with or dealt with caution, same store profitability may become a far fetched dream). I have known the fact that KB directly handles many occupancy lease terms himself and that was one of the principal reasons why KB could gain large spaces to establish stores. The second thing he focussed on personally, was to develop/manufacture private labels - again a co-creation exercise with other entrepreneurs for mutual margin gains. He struck many such deals being involved hands-on in the business. He used his contacts prudently to enter into winning deals, whether they were with real estate developers or manufacturers! As far as dealing with employees is concerned, unions could be used to gain bargaining advantages for wage/productivity terms well if the IR guys in the group do a good job. Or they can do the Bata way of dealing with them hard to break their ill effects. Bata took almost a decade to do this. They closed some stores; they negotiated hard and transferred employees to meet company's new store needs. When the old, erring employees were gone the new ones had a different work arrangement. The company even changed its headquarters from Kolkata to Gurgaon. Bata has now been turned around into a profit making company. There are many ways to deal effectively with unionized workforce in this modern age - be it is manufacturing or retailing! KB knows all his tacts and strategies well too. All that he needs to do is to roll up his sleeves once again and get into the business! I'm sure he has the wherewithal to do it again, open a few hundred stores more and become the largest retailer in India! once again!
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