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It Happened In India
by Kishore Biyani List Price Our Price You Save Rs 99.00 Rs 89.10 Rs 9.90(10%) *USD 2.37 *USD 2.13 *USD 0.24(10%)

Usually ships within 48 hours Bind : PaperBack Date of Publication : 2007 Publisher : Rupa ISBN : 81-291-1137-3
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Description: Blue-blooded entrepreneurs could not stand his cheek, conventional managers were baffled by his business logic, and his own colleagues were aghast at his recklessness. A maverick of the industry, Kishore Biyani followed his nose, cashed in on the latent opportunities of the booming Indian consumer market, and transformed the retailing business in India with the 'bania-company' that even hardcore punters at Dalal Street had been afraid to touch! One of the most versatile entrepreneurs, Kishore Biyani has played many roles - a trader, a failed film maker, a dance festival organizer and an innovative retailer - on his way from being an iconoclast to being a leader in the pre-defined game of bulls and bears. "It Happened in India" tracks the story of this irreverent entrepreneur, who wrote his very own success story based on the firm belief in exploring the Indian way of business, an uncanny insight into the mind of Indian consumer and a simple philosophy - Rewrite Rules, Retain Values.

Author Profile: Born in a middle class trading family, Kishore Biyani started his career selling stonewash fabric to small shops in Mumbai. Years later, with the launch of Pantaloons, Big Bazaar, Food Bazaar, Central and many more retail formats, he redefined the retailing business in India.

'2009 will define India's retail biz'

Years ago, when I met then film producer Kishore Biyani (inset) for an interview about an upcoming production of his, it was only because of the persuasive powers of the public relations firm that was promoting the film. Then too, not many journalists were present. Cut to the present. Kishore Biyani is no more an itinerant film producer. Touted as the king of Indian retail, Biyani has just finished a speech at the India Retail Forum. As I go up to request an interview, journalists are jostling for his quotes and sound bytes. The change was evident even during his speech. Everyone in the audience were in rapt attention. Biyani, the CEO of the Future Group, was the most sought after person throughout the three-day event. He was like Moses spelling out the Ten Commandment to the other retail honchos. In an interview with Chief Correspondent Syed Firdaus Ashraf, Biyani, the founder of the modern retail group Big Bazaar, has redefined the shopping for Indian consumers, gives his vision for the retail industry and his company's plans in the coming years. Why did you say in your speech that 2009 will be the defining moment for Indian retailing industry? All the new malls that are in the anvil will be ready by then. We will also have a retail policy in place and consumers too will be ready by then, so we are ready for interesting times. We will see lifestyle retails, high-end retail. Every retailer will be in the market.

So, 2009 will be deciding factor for the retail market in India. Will the bubble burst? We have too many retail forums and too many malls have come up. The period to watch out for will be 2009 and it will be a testing time for retailers, I feel. We will all know by then what the real demand is and what the real supply is in the market. In the meantime, the challenge will be to find the right kind of people and trained people for the industry. 'Rising realty rates a big challenge'

The three-day India Retail Forum held in Mumbai recently saw a healthy crowd gathering everyday to gauge the state of India's retail business. You mentioned in your speech at the India Retail Forum that the rising realty rates in India will be a challenge to the retail industry. Can you explain the rationale? The consumer always saves money when there is inflation. He spends less when things are expensive. Inflation affects the consumer's psychology and people now tend to save money in such scenario and not spend. It has been observed that when real estate prices keep going up people tend to save and the consumption drops automatically. Why have you started credit card banking and how is the response? It is only 45 days old and the response has been good. It is one of the future ways of the retail market and a learning business for us. We are learning it. We have given loans to 500 customers so far. We are learning while we are doing our business. What has the learning so far? (Laughs) The first applications are always those of fraudsters.

What kind of potential do you foresee? There is a huge potential and we have just begun. We are creating our checks and balances. In the last 45 days we have learnt a lot on who is a trade-worthy customer and that is a business secret. 'There are two Indias -- only one is growing'

A big bazar outlet in Mumbai. You mentioned that there are two Indias today. The first one are those people who have power to spend and the second one are those who are dependant on them like drivers, cleaners and housemaids. Can you explain this? Today, only one India is growing. The people who have aspirations and brains, they are the big consumers of retail market. This class is not making the other India grow. Lot of people have to do a lot of things to change the scenario. One option is that those who have a good income will have to create an income for the India that is left out. I call that group as the second India. They have to be protected in a network and we need to give them a chance to grow and become one of the consumers. You once said that social security system is bad in India and that needs to be improved... Today, India's social security system is a family security system. People save money for bad days but if you compare that with developed countries people spend money because they know that their government will look after them in bad days. They are not afraid of spending money in the developed countries. In the same way we need to create a system in India where people should not fear to spend money and not bother about their

insecurities. What can private players do in such situation? The only solution to this problem would be to raise income levels. If we do that, then everybody will have spending power. Do you think the real estate market has reached its peak and will crash? I cannot comment on it. I would however say that this is a game of supply and demand. Price correction will always be there in such situation. You said that you are approaching the Brazilian and Mexican ways to develop retailing business. Can you explain? Every retail shop has domestic finance scheme in some cities of Brazil and Mexico. We are also looking at that model. If you study their trend then you will find that there is 6 percent default and I feel it is okay because 7 percent default is the norm in credit cards too. 'We keep women in mind'

Recently, Mumbai hosted India Retail Forum wherein business houses from across the

country showcased their products. What are the products that can be funded? Lot of products can be funded. We have started with some products initially but eventually the idea is to fund consumption as much as we can. Do you believe in customer brand loyalty? I believe there is something called emotional attachment to a brand. People do switch over their loyalty at times. I feel that these days, maintaining brand loyalty comes with a cost. I personally believe that the customer is like a nomad. He will go from one store to another store. He will only come to you if you give him value. How did you crack the shopping woman's psyche so that they eventually end up spending in Big Bazaar shops? (Laughs) We keep women in mind. We work with them. We understand their emotions and therefore they end up spending in Big Bazaar. Any plans for an IPO? We have announced Future Capital Business and that will come up for IPO. The board has approved IPO and it will take its own process. Advertisement

Big retail's big blunders - October 9th, 2007 Reliance Retail chief Mukesh Ambani and others who've bet big on organised retail taking off must be cursing themselves for getting the equation wrong. First, they hugely underestimated the problems in getting large enough tracts of land close to residential areas to set up their shops - as a result, they've achieved just a fraction of their targets (while Bharti Wal-Mart is already talking of opening its stores with a year's delay, Reliance has achieved just 20-25 per cent of its target of setting up nearly 1,000 stores by March 2007). Second, this was before the really big opposition even kicked in, in the form of UP Chief Minister Mayawati and the protests in West Bengal and so on - Wednesday will see the biggest ever rally (between 50,000 and 100,000 persons are expected to attend) against big retail in Mumbai's Azad Maidan, and will bring together all the disaffected, the small kirana shops, the middlemen, and the unsuspecting.

The country's farmers fall in the last category since they don't really get affected. If, on the other hand, big retailers do manage to eliminate the middlemen and procure directly from them, their incomes should go up substantially. But the middlemen who could get hurt are putting up the farmers and, it would appear, Reliance and others did not estimate the strength of this opposition, just as they've underestimated the power of those who don't wish to give up their land for SEZs. That all this should happen when the economy's growing at the fastest pace ever and is creating more jobs than ever before (between 1999-00 and 2004-05, jobs grew at 2.93 per cent per annum, or three times the rate they did between 1993-94 and 1999-00) makes it even worse. After all, it is when jobs are growing fast that those getting displaced by big retailers should complain the least. So what were Big Retail's big blunders? Great expectations Trap: The way the story went, customers would get dramatically lower prices for everyday groceries (something that takes up 45 per cent of the household budget) and farmers would earn at least a third or more as big retailers began procuring from them directly. But none of this has really happened, and may not either. The country's First Retailer, Kishore Biyani, for instance, says he plans to set up 1,500 no-frills 2,000-square-foot fair price shops (KB's Fair Price Shops) in city neighbourhoods over the next two years, which will give customers 10 per cent off MRP on national brands and 20 per cent off on local brands - the model is adapted from Subhiksha, which has 800-900 such stores. While firms like Reliance are not talking of the discounts they're offering, most are changing their models to set up more small neighbourhood stores as opposed to the earlier big-box formats, which would have been located too far away from most customers to offer anything more than limited value. The Shivam/Garg stores in my neighbourhood offer 8-10 per cent discounts off MRP on national brands anyway - so, what's the big deal? And if a Reliance/Bharti/Biyani is going to do just the same, what's the point of having them, especially given that small kiranas provide employment to around 40 million people, many of whom could lose their jobs once big retailers come in. Wrong private label strategy: This is related to the expectations trap. As part of the strategy to reduce consumer prices, and I suspect equally largely, as part of the strategy to get the stock markets/investors charged up, most big retailers talked of an aggressive private label strategy. Big retailers, the story went, would no longer just buy consumables/durables from a Hindustan Unilever or a Voltas, but would get them custom-manufactured and thereby cut consumer prices by 20-25 per cent. The greater the private label share, the more excited investors got. But the problem with this strategy is that it's only after you've got

enough stores and sales that making your own products, and of a certain quality, can work. So, when customers walk in to a big retail store today, they still find most goods are those manufactured by well-known firms (the discounts on which are low) and the quality of store labels is far from uniform. Opening too many fronts: Despite what the Icrier study says on how kiranas will not lose out to big retailers, it was always obvious that if big retail made big enough inroads, kiranas would oppose them. So you'd expect big retailers to try not to open up more fronts, and concentrate on taking care of this one - perhaps by building up customer loyalty through offering bigger discounts, maybe even importing cheaper substitutes from places like China, using a well-oiled supply chain and superior logistics (to use the Subhiksha ad-line, Morcha against Kharcha). Yet, what do big retailers like Reliance go and do? They open up another front by talking of procuring directly from farmers. Sure, fruit and vegetables are a lucrative segment, considering they add up to around a tenth of the family consumption basket, but this was asking for trouble since it allowed the opposition (the middlemen in the mandis) to conjure up the possibility of retailers taking over farmers' land. In any case, setting up a cold chain and getting farmers to supply produce of a uniform quality takes years, so a low-key approach with model farms, like Bharti has done, was always a better idea. A very small part of the turnover of Biyani's Big Bazaar, by the way, comes from fruit and vegetables. Retailers like Reliance have already changed their model dramatically once before. It remains to be seen what they do now. Advertisement

Rs 25,000-Crore Market in Play - August 14th, 2006 Korean firms LG and Samsung havent won the battle for the consumer durables market. Indian firms such as Onida, Videocon and BPL are making a comeback and retailers like Futures Kishore Biyani are launching store-brands. Just about when everybody thought that the war for durability in the Rs 25,000-crore consumer electronics industry in India had been fought and won, the industry seems to be gearing up for another battle. On the face of it, nothing seems to have changed, not the game, nor the players and not even the prize. The industry continues to grow sluggishly, an 8 percent compounded average growth rate (CAGR) between 2000 and 2004 (China grew 14 percent CAGR during this period, LG and Samsung continue to rule the market, accounting for around 50 percent of the total Rs 25,000-crore industry and the other Indian as well as multinational players like Videocon, BPL, Mirc Electronics, Whirlpool,

and Sony continue to play catch-up. Under the surface though, things are stirring. For one, the also rans are refusing to play their part and are making a strong comeback bid. It is not for nothing that the Devil (a character that represents brand Onida) is back, gushes Gulu Mirchandani, Chairman and Managing Director (MD), Mirc Electronics. He is here to rule the market again. Apart from televisions, where it has historically held its own against competition, Mirc is making an aggressive play in categories such as washing machines, air conditioners, microwave ovens and DVDs. Then says Mirchandani , there are exports. He claims to have sold between 100,000 and 150,000 color televisions each in Ukraine and Russia last year, and hopes to translate this into a competitive advantage in the Indian market. BPL Ltd, which ruled the CTV market in India till early 2000 and then slipped into heavy losses (the net loss stood at Rs 214 crore in 2003 and Rs 214 crore in 2003 and Rs 74 crore in 2005) , has formed a 50:50 joint venture with Japans Sanyo Electric. The latter has committed $100 million (Rs 450 crore) to its Indian operations. The JV has launched CTVs, LCDs and plasma screens under the Sanyo and BPL brand names and is also foraying into refrigerators, washing machines and DVDs. We intend to be a 2,000 crore venture by 2009 with a considerable market share in all segments, says Ajit Nambiar, Chairman and Chief Executive Officer, Sanyo BPL. Videocon Industries, another leading Indian player that go battered during the late 90s and early 2000s, boasts revenues of Rs 4,500 crore today. The groups oil business contributes significantly to this, but the consumer electronics business is thriving, too. Chairman Venugopal Dhoot identified a different route to growth: Allwyn, Kelvinator, Hyundai, Toshiba and Electrolux in the domestic market, and of manufacturing facilities such as French Electronics major Thomsons color picture tube, globally. If there is one player that will thrive in Indian market, besides the Korean majors, it is Videocon, says Dhoot. Whirlpool India is another company, which after a long cold winter, is getting back into shape. The company, which recorded a net loss of Rs 38 crore in 2005-06, recently announced a $20-million (Rs 90 crore) investment for 2006 and 2007 and launched several new products. The company says Arvind Uppal, its Managing Director, is committed to India. Then, there are others like Godrej Appliances, Sony, Haier, Sharp, Hitachi and various other smaller companies that are aiming to corner some share in the industry. All This And No Growth These ambitions plans and strategies would not seem misplaced if the consumer electronics industry were growing the way other industries are. Last year, when GDP grew by around 8.1 percent, the stock markets boomed and most industries, even those that had been in dire straits, fast moving consumer goods, grew at between 15 and 30 per cent; consumer electronics was one sector that grew only 5 percent. In terms of value, the biggest constituent of the segment, CTVs, actually saw a decline. Nor are growth

estimates for the future any more sanguine. According to market research agency Datamonitor, the industry is likely to grow around 7.7 percent CAGR for five years ending 2009. There are many reasons for sluggishness in the industry; some immediate and others, historical. Most people attribute last years slow growth to two factors-confusion regarding value-added tax (VAT) and a surge in stock markets. Confusion regarding VAT in the first quarter last year took a heavy toll on sales, says K.R.Kim, intriguing correlation between stock markets and consumer durables industry. It has been observed that whatever stock markets or real estate sectors are booming, consumers tend to postpone their consumer durable purchases and invest their money in these assets. Says Bhuwan B. Singh, Director (Client Service), ORG Gfk Then, there are historical reasons. When the government opened up the sector, recalls Mirchandani, incumbent players were not ready for competition and most of them died or are still bleeding. Videocons Dhoot holds heavy taxation responsible for industries woes. Total tax incidence in India even now stands at around 25-30 per cent, whereas the corresponding tariffs in other Asian countries are between 7 and 17 percent, he says. Poor infrastructure is another reason that seems to have held back the industry. Regular power supply is imperative for any consumer electronics product. But that remains a major hiccup in India, says Ravinder Zutchi, Deputy Managing Director, Samsung. Indeed, over 80 percent of the rural market in India remains irrelevant for the industry because of these reasons. But the fact remains that these problems are not going to be resolved in the near future. And the companies will have to factor them in when they draw new growth plans. Which they have now done. Shorter replacement cycles, especially in urban areas, also give companies cause for hope. Over the next few years, the topography of the industry will likely change, with some companies gaining at the expense of others. Eventually, however, the market itself will grow, as rural markets evolve and companies create specific products for them. The Threat of Retail There is another imminent threat for the industry, the emergence of organized retail. World over consumer electronics is used as a loss-leader category to woo consumers, says Ireena Vittal, Principal, McKinsey. Retailers give consumers huge discounts on these products to win over consumers, which, in turn, mean squeeze on margins. Vittal points to another trend that is sure to hit the players, that of organized retailers launching their store brands. That, in fact, is already happening. Electronic bazaar has started importing air conditioners and microwave ovens from China and is selling them, under the brand name Koryo, at prices that are over 40 per cent cheaper than those of competing products. Initial response to these products has been encouraging, says MD Kishore Biyani. We intend to import other products like TV and washing machines soon. Mukesh Ambanis Reliance Retail is also said to be exploring such opportunities. In fact,

the group is said to be in talks with some companies that neither have any manufacturing facility nor a strong distribution network in the country, but are keen on a presence here. There are companies that can take advantage of the free trade agreement (FTA) route and import their products to India and then, sell them through us without making any ground-level investments, says a senior executive at the Reliance Retail. To be sure, companies like Hitachi, Sharp and TCL Holdings are already looking at exploiting the FTA route. We are looking at increasing our market share in CTV, LCD and plasma screen business, says Prasun Banerjee, Vice President (Sales and Marketing) Sharp India. We would largely be importing these products, making use of the FTA route. It is not that the players are oblivious to these challenges; they have no opinion but to look at the brighter side of the picture, which in Indias case is its potential. The Indian market remains heavily under-penetrated, which is a big opportunity for all players, says Zutshi. Then, foraying into rural markets has a considerable cost component attached to it. Companies not only have to set up the basic infrastructure in terms of office space, manpower, but also spend on transportation for moving inventory. Even LG and Samsung, which are touted as having the largest distribution network in the country , have a direct presence only in 15,000 to 18,000 of around 40,000 retail outlets (for consumer durables) in the country. Players admit that the increasing competition and new challenges will lead to another phase of consolidation with some losing and others winning. Early indications of that are already visible. The buzz in the market is that Samsung incurred losses (around Rs 80100 crore) for the first time in 2005. Zutshi, however, refutes to this. Our profits did take a hit last year, but there were no losses. Whirlpool India, Godrej appliances and BPL Ltd, companies making a comeback, arent out of woods yet. LGs Kim says that in the next two to three years half the players will be pushed to fringes again. Only two or three players will survive in each category. And who are the players who will survive? Only those who are resilient, committed to the industry and Indian market and at the same time, are looking at being globally relevant, is the chorus ndia in 2010: The Making of a Blockbuster - October 25th, 2006 Very interesting article i took from the cover story of Business World. With India hurtling down the growth superhighway, heres what things could look like just three years from now.

Remember the BRICs report? The world sat up and took notice three years ago when Goldman Sachs turned out its path breaking Dreaming With BRICs report. It audaciously predicted that India and three others China, Russia and Brazil would be giant economic forces in the coming century. Well, we have got news for you. India is pelting along the superhighway to growth at a speed that makes the BRICs report look almost conservative. The economy is racing along and GDP climbed to about $690 billion (Rs 31,20,200 crore) in 2005 up from about $600 billion in 2003. At the current speed and with 8 per cent growth becoming the norm, it is slated to touch $1 trillion slightly before 2010. The economy is moving much faster than the BRICs level of 6.5 per cent, says Roopa Purushothaman, a co-author of the BRICs report. Purushothaman, an Indian-American born in the US, has left Goldman Sachs and is currently chief economist with the Mumbai-based Future Group. Is this all a pie in the sky? Castles in the air that will come tumbling down at the first rough brush with reality? Not at all. Remember that 2010 is barely 39 months away, and from a corporate planners point of view, it is practically upon us. There will be more of everything special economic zones, new world-class buildings, more supermarkets, more shopping malls, says Andrew Holland, managing director, Merrill Lynch, in Mumbai. Adds Purushothaman: These are realistic trend numbers. Even with a correction, corporates can plan along these lines. For all you doubters, heres a quiz on the fast-growth Indian economy: How many passenger cars will be produced this year and how much will that rise to in 2010? Answer: 1.1 million cars will be racing out of the factories this year. That will climb to over 2 million by 2010. And what about the two-wheeler industry that keeps middle-class India on the roads? Indias two-wheeler industry is the worlds second largest and turned out 7 million gleaming vehicles this year. That is likely to rev up to about 12 million by the turn of the decade. Or let us throw in a question about colour televisions, usually one of the first electronic purchases that every Indian household makes. India will make about 11 million television sets this year. Once again the picture looks good and that is likely to climb to about 20 million by 2010. What about hi-tech outsourcing in which India is famously a world-beater? Outsourcing is climbing at a steady 30 per cent annually and exports are slated to hit $60 billion by 2010. By then, about 2.3 million employees will be at their workstations tackling assignments from around the world. The good news: hi-tech outsourcing is currently worth about $23 billion and is moving slightly ahead of schedule to hit its targets. Wheels Of Growth

Take a look, for instance, at how Tata Motors is gearing up for the second decade of the new millennium. The trucks-to-buses-and-passenger car giant is urgently scouting for land in West Bengal so that it can roll out its small car by early 2008. Simultaneously, it is driving out of Pune to Uttaranchal where it will build a Rs 2,500crore plant for its super-hit small transporter, the Ace. Says Tata Motors managing director Ravi Kant: Times have changed. I am setting up this unit just for one product. You could say that Tata Motors was pleasantly wrong about the Ace. It began rather modestly in mid-2005 with plans to produce 30,000 of these last mile vehicles at its Pune factory. It ended up selling about 60,000 in the first year. The Uttaranchal factory is now being designed to turn out about 250,000 vehicles and will be ready in less than a year. Tata Motors is also making ambitious plans for the Korean unit it brought from Daewoo, and its bus-making firm in Spain, which has just picked up a giant order in Morocco. Roopa Purushothaman, co-author, Goldman Sachs BRICs report Now with Future Group, she points out that India is moving much faster than the BRICs level of 6.5 per cent Or, step into any mall across the country and check out if high-powered retailer Kishore Biyani has got there. If he has not, he probably will soon. Biyani, who has recently renamed his company Future Group, is shopping for space like a shopaholic who thinks theres no tomorrow. He is pushing up store space in malls and plazas across India from 4 million sq. ft to about 8 million sq. ft this year. But he isnt stopping there and aims to touch about 30 million sq. ft by 2010. We are planning for the India of 2010, says Biyani, who hopes that his group will grow from its current $1 billion turnover to anywhere between $6 billion and $7 billion by 2010. Biyani will certainly be offering shoppers plenty of choice. He is moving in several directions simultaneously and is filling his supermarket cart before the other biggies, whether Indian or foreign, can even write out their shopping lists. By the year end, he aims to open 80 Big Bazaars, which are extremely popular with value shoppers. Thats up from only 33 at the beginning of the year. Biyani is not neglecting the other top sectors of the shoppers universe and is moving ahead with a range of chains like Pantaloons (clothing), Gini & Johny (childrens clothing), Shoe Factory (footwear), Brand Factory and Star Sitara. In addition, he has tied up with foreign chains that are hoping to buy their way into India, like Marks & Spencer and the Next group. He is constantly on the move and last week opened the giant warehouse-like Hometown, which offers products for the home in a giant space of 150,000 sq. ft in Noida on the outskirts of Delhi. Says Biyani: We want to capture the consumption space of the consumer.

Biyani has amazingly grand plans for 2010. But he isnt the only one by any stretch. Already the giants of Indian industry are limbering up to make their presence felt in the retailing sector, which has since time immemorial been dominated by tiny hole-in-thewall style mom-and-pop or rather family stores. In fact, the Retailers Association of India (RAI) expects that organised retail will climb from about 18 million sq. ft currently to almost 60 million sq. ft by 2010. So far, the biggies are still at the blueprint stage but their plans will quickly be turned into shop window reality. Reliance Industries Mukesh Ambani has been loudly threatening to spend about Rs 25,000 crore (thats roughly $5 billion if that helps to bring all those zeroes into perspective) over the next five years and hell be out there in the malls quite soon. Similarly, the Tatas have just announced their tie-up with Australias Woolworths and the Bharti Group is looking at ways to cement its ties with Tesco. Meanwhile, global giants like Carrefour are getting into a state of high excitement about the Indian market and may tie up with the Dubai-based Landmark Group. With all this about to happen, the shopping revolution is gaining pace at a remarkable speed. It will be a quantum leap and most of retail will become modern, says Gibson Vedamani, CEO, RAI. But the truth is that the changes that are now happening arent taking place in one or two sectors in isolation. They are taking place in practically every industry that matters. Take a look at telecom, for instance, where India is finally catching up with those fast-talking Chinese. The government, which once tied the entire sector up in messy bureaucratic red tape, is now talking about having 500 million phones by 2010. Does that sound a mite too ambitious? Remember that we have become world-beaters in this field and now have about 170 million phones ringing, according to the Telecom Regulatory Authority of India. In September alone, we added a hot-to-talk 6.1 million mobile connections.

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Home > Business > Special Get Rediff headlines in your inbox ! Meet India's king of retail

Surajeet Das Gupta | January 15, 2005

Pantaloon's Kishore Biyani has become India's largest retailer, but still has several aces
up his John Miller shirtsleeves. In India's chaotic markets, Kishore Biyani is the unchallenged king of retail. He has the knack of catching rivals off-guard and striking where it hurts most. And now that he's set himself the task of retaining control of the largest retail space in the country, he won't let anyone - suppliers or international promoters included - catch him slacking. The latest to face the wrath of the 43-year-old is South African hypermarket Shoprite, which opened shop in Mumbai last month through a franchise agreement with local company Nirmal Lifestyle. The hypermarket began retailing products from big boys Nestle, Unilever and Procter & Gamble at consumer discounts of 20-30 per cent, lower than even Biyani's purchase prices in his Big Bazaar and Food Bazaar stores. Instead of chewing his nails, Biyani turned confrontationist, asking why the multinationals were offering Shoprite better prices, even withdrawing Nestle products from his stores when the company did not respond. Two days later the Nestle products were back, but not before the company had clarified its stance. Says Biyani, "Shoprite is involved in predatory pricing. There are rules against this in every part of the world." But as a result of his tough stance, the three MNCs have asked Shoprite to roll back the offers or face withdrawal of supplies, he says. Pantaloon Man Unlike most people, Kishore Biyani makes no bones about his simplicity. He's the man you're most likely to ignore at the Pantaloon or Big Bazaar store, as he stands in a corner observing the way you shop. But make no mistake, what he may lack in sartorial style, he more than makes up through his observation powers. You'll never catch him in a tie and jacket. He isn't a stickler for large cars, and has just graduated from driving a Honda City to a Honda Accord, though he's just as content driving around in a junior manager's Maruti 800. He is a strict vegetarian, and is currently off cheese and fried foods, but will otherwise eat anything that is green.

According to him, golf is a waste of time. Instead, he's addicted to a daily half-hour walk and does yoga twice a week. He used to be a lawn tennis regular but gave it up citing lack of time. He can't understand the fuss about gyms and hasn't visited any. Biyani loves films and has even produced some, but was never part of that industry. His personal preference is films by Guru Dutt, Yash Chopra and Sanjay Leela Bhansali. He believes in taking quick decisions. The deal with Bennett, Coleman & Co was done in seven days flat. He has never met V Banga of Unilever in his life, and leaves the task of relationship building to his managers. Instead he spends time with property developers - Sanjay Chandra of Unitech is a pal merchant bankers and investment bankers. Biyani's victory isn't unexpected. India's own Sam Walton (the legendary promoter of Walmart) is quick to seize any advantage. Which is why the denim manufacturer who quit the trade because "it wasn't creative enough" commands over 1.3 million sq ft of retail space. But even size hasn't made a difference to Biyani's vaulting ambitions and he's on an even faster trajectory of growth. He's booked over 4.5 million sq ft of space across the country, and will utilise 3 million sq ft by this year's end in 23 Indian cities. He will invest over Rs 200 crore (Rs 2 billion) to make this dream a reality. Says R S Roy, editorial director of the magazine Retail, which tracks the industry closely: "Mall developers have him in mind before they start constructing. His presence ensures footfalls and a premium for the mall." Even Biyani concedes, "We have a store opening virtually every fortnight; I have lost count now of how many I have opened." But don't let Biyani fool you. He keeps a close watch over his empire with the assistance of his two brothers, who are directors in the company. He might have over 6,000 employees and 300 managers, but the buck stops only with him. Every time a store opens, managers have to rush daily reports for the first 45 days, and it isn't unusual for Biyani to be fixing any lacunae either over the phone or personally in the store. Weekly targets are fixed and reviewed every Monday. The badshah of the bazaar jets between his stores across the country to "spend at least six or seven hours every week in the stores", he says. Even when he's in inspection mode, Biyani takes time off to cut more deals.

Last week he snapped up Indus League Clothing, a garments company in which he picked up 68 per cent equity for Rs 24 crore (Rs 240 million). The following day, he sold 4.98 per cent equity in flagship Pantaloon Retail to Bennett, Coleman & Co for Rs 70 crore (Rs 700 million)- a substantial premium on the prevailing price of the shares in the market. Biyani hasn't always played in the big league. Having quit the family business, which supplied denim to Arvind Mills, in 1987, he collected Rs 7 lakh and set up a small plant that produced 200 trousers a day. In the crowded market of readymades, Biyani learned his first lesson - to be heard, you need to shout louder than the rest. As a result, though the turnover for his Bare brand was only Rs 7 lakh in the first year, he spent Rs 16 lakh advertising it. He also added John Miller shirts to his portfolio. This year, Pantaloon will spend Rs 85 crore (Rs 850 million) advertising its various store formats. The shift from manufacturing to retail was the critical point in Biyani's career. Distribution costs were the reason brands were snuffed out in the market, so Biyani decided to rewrite the rules of the game. In 1993, he experimented with a small store format, and Pantaloon Shoppe was launched in Panjim, Goa, "where we could make mistakes without anyone noticing them". From the shoppe to the large store format in 1998 - this time in Kolkata ("If you can conquer Kolkata, you can conquer other markets too. Calcuttans, contrary to perception, have money and are loyal customers. They are emotional people and get emotionally attached to a brand.") - was a carefully crafted plot. And he was proved right when the Kolkata Pantaloon store became a raging success and Biyani stepped on to the turf as a super retailer. Other professionals have wondered where Biyani picked up the tricks of the retailing trade. Some he learned from his own mistakes, he admits. Others he picked up from the big boys of international retail. "I read every book on Sam Walton, Macy's, Marks & Spencer and management gurus like Tom Peters whose book 'Reimagine' impressed me." Even now he reads a management book every fortnight - Stephen Covey, Robert Kaplan or James Collins. But unusual as it might seem, he also made it a point to stay away from these stores. The reason: "By going to a Walmart or a Macy's, you could get overwhelmed into thinking that was the best model and stop learning," he says.

That might sound like stunted logic, but Biyani already knew from Sam Walton that you needed to be merchandise driven (to concentrate on the product and the price) so operational efficiencies could follow. Macy's was useful for understanding the importance of size and large store formats. Marks & Spencer reinforced the importance of building in-house labels and the obsession with quality. He picked up the idea of "mind to market" (see box) from Spanish retail giant Zara. To translate theory into practice, Biyani took a leaf out of Walmart's book and appointed category managers. "We have over 150 product categories and each is looked after by a manager who is responsible for its growth and profit," says Biyani. In-house labels constitute 8 per cent of the turnover of food items in his stores, something he wants to up to 20 per cent by end-2005. Similarly, Pantaloon also has its own manufacturing facility for garments, and 15 per cent of his fashion and garments turnover comes from there. But the underlying message in books on retail strategy was the one thing India had been wary of - big is beautiful. Biyani wasn't above picking up the gauntlet and launched Big Bazaar, a hypermarket in Mumbai as a gamble, financing it mostly through a loan (the share price was so low he could not have raised equity). To India's surprise, the format worked and the rest is history. Detractors now attack him and say he is growing too fast. "He is leveraging his balance sheet to expand, and that could be a problem if some formats fail, and his margins are under pressure - his net profit as a percentage of sales is only 3 per cent," says a competitor. Points out another Biyani watcher: "You cannot have two or three Big Bazaars or Pantaloons in one area, which is why he is desperate about getting new brands like Indus League." Others rise to his defence. Says retail equity analyst Sanjay Dam: "He now has a size where some failures of format will not make a difference. That explains why Bennett, Coleman & Co was ready to pay a premium on his shares." Biyani remains unperturbed by most comments. He points out that he does not negotiate less than 60,000 sq ft of space, using it to leverage rentals that are 60-70 per cent lower than what others pay in the same mall.

The volumes, he says, have ensured that, as in Walmart, 50 per cent of the store products are bought directly from the manufacturers, passing on the middlemen's margins to the customer. Other rules have been learned through a process of trial and error. He will not increase the share of food and groceries to more than 25 per cent of the turnover because "that is the percentage of their salary that families spend on food. And margins in food can be as low as 5-8 per cent compared to 40 per cent in fashion wear." The larger challenge has been to understand the diversity in customer behaviour where even Hyderabad and Bangalore are as different as chalk and cheese. "Hyderabad is conservative, male dominated, where customers like loud colours and shop in groups," he says. "Bangalore is modern, where customers want subtle shades and shop on their own." In fact, Biyani has turned the study of community behaviour into a fine science through a specialised regional diversity tracking system. He goes personally to people's homes, talks to local community leaders and spends weeks walking streets of bazaars to get a feel of what products should be stacked in a new store. Biyani's current project is improving inventory management - though he replenishes entire stocks for grocery 30 times a year, and garments six times annually, he is not satisfied. Explains Biyani: "This will be the key differentiator between the winners and losers because it reduces working capital requirement and improves return on capital." And if Biyani gets it right, his retail juggernaut could well be unstoppable. Kishore Biyani is on to another idea, and he isn't letting go of it because it could change the face of the retail business. The goal is simple: to dramatically scrunch the time it takes from when a product is conceived to the time it takes to get to the stores. His target: 45 days flat. In the world of fashion, it takes four-six months for an approved idea to make it to the stores. Biyani says that forecasting trends has too many variables and the chances of getting customer needs wrong are high. In such cases stores are stuck with huge unsold inventories. "The aim of 'mind to market' is to respond to the demand of the market rather than try to forecast it months in advance," he says. Pantaloon has already started pilot projects. In October 2004, the company detected a demand for trendier trousers. The company launched Fashion "F" Trousers based on this tip-off in December.

To cater to the demand, all departments - design (he has hired fresh design graduates to work with him), production, category managers, marketing and fabrication - came together on the project plan. The team created a range of fashion styles and jointly agreed upon the fabrics that would be used, and the various price points at which the products would be launched. Says Biyani: "We were able to put these trousers on the shelves of our stores all over India in 40 days." At margins of 65 per cent, the pick-up offered great returns. No wonder Biyani's already on to the next project - he won't tell us the product though - where the lead time will be a meagre 22 days. Only Spanish retailer Zara's 15-day lead time is faster.