ICMR Case Collection
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ICFAI Center for Management Research
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CLSDM020
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Kishore Biyani - Pioneering a Retailing Revolution in India
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This caselet was written by Mylavarapu Vinaya Kumar, under the guidance of Ramya Narsimhan, ICFAI Center for Management Research (ICMR). Caselets are intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
2005, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means- - electronic or mechanical, without permission. To order copies, call +91-40-2343-0462/63 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India or email
[email protected]. Website: www.icmrindia.org
CLSDM/020
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Kishore Biyani Pioneering a Retailing Revolution in India “I use people as hands and legs. I prefer to do the thinking around here.” --Kishore Biyani, CEO & MD, Pantaloon Retail (India) Ltd.1
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Kishore Biyani (Biyani), CEO & MD of Pantaloon Retail (India) Ltd., planned to have 30 Food Bazaar outlets, 22 outlets under Big Bazaar, 21 Pantaloons outlets, and four seamless malls under the Central logo, by the end of 2005. He also planned to launch at least three businesses every year and had already selected music, footwear
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and car accessories as his next areas of investments. He was already the top retailer in India followed by Raghu Pillai of RPG and B. S. Nagesh of Shoppers’ Stop. As of 2004, Biyani was the owner of Rs 6,500 million businesses which involved 13 Pantaloon apparel stores, 9 Big Bazaars, 13 Food Bazaars, and 3 seamless malls
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(Central), one each located in Bangalore, Hyderabad, and Pune. Biyani’s journey from a person who looked after his family business to India’s top retailer started in 1987, when he launched Manz Wear Pvt. Ltd., the country’s first readymade trousers with ‘Pantaloon’ as the brand name. The company also launched its first jeans brand called ‘Bare’ in 1989. On September 20, 1991, Manz Wear Pvt. Ltd., went public and on September 25, 1992, it changed its name to ‘Pantaloon Fashions (India) Limited’ (PFIL). ‘John Miller’ was the first formal shirt brand from PFIL. It was first marketed through multi-brand stores but later through the company owned chain of franchised Pantaloon outlets, called ‘Pantaloon Shoppe’.
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The company started its own apparel stores, ‘Pantaloons’ at Kolkata in August 1997. The stores generated Rs 100 million in revenue in its first year as against the expected Rs 70 million. Biyani then realized the potential of the Indian market and started to aggressively tap the under-retailed Indian market. Accordingly, Biyani decided to expand into other segments of retailing besides apparel. To reflect this change in focus, the company changed its name to Pantaloon Retail (India) Limited (PRIL) in July 1999 and set itself a target of achieving Rs 10 billion in sales by June 2005. In
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course of time he launched three other retail formats -- Big Bazaar, Food Bazaar, and Central.
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Biyani had always been bold but silent. He once pointed out that most of the ideas of his peers in the retailing business were copied from the western retailers. He believed that a pan-Indian model of retailing should be emphasized. The successful retail system involving Big Bazaar, Food Bazaar, and Pantaloons were all suited to the purchasing style of Indian consumers. He was a huge risk taker and his planning was always different from the conventional way of doing business. This was also one of the factors that had prompted Biyani to move away from his father’s conventional way of doing business. During the initial stages of his success, his risk-taking attitude sometimes had the effect of turning away financiers. The biggest risk that Biyani took was in opening Big Bazaar in Mumbai in 2001. The company needed money to expand Big Bazaar’s operations. However, it had profits of only Rs 40 million with a low share price at eighteen rupees. Therefore, Biyani could not raise money through equity. In light of this situation, Biyani took a loan of Rs 1,200 million from ICICI2 for launching the operations of Big Bazaar, which increased his debt exposure. However, Big Bazaar proved to be a resounding success with 100,000 customer visits in its first week of operations. According to analysts, if Big Bazaar had failed, Biyani would have landed in a severe debt crisis. The success of Big Bazaar not only increased the company profits, it also changed the perception of investors. Many people criticized Biyani for not delegating authority and Biyani himself accepted the criticism. He said, “I use people as hands and legs. I prefer to do the thinking around here.” He preferred taking individual decisions on activities like 2
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strategic planning, ideas for other ventures, and other important issues. It was because of this that managers like Kush Medhora of Westside were initially apprehensive about joining Biyani’s business. However, Biyani changed his attitude gradually with the launch of Big Bazaar, Food Bazaar, and Central and appointed different people for managing different business units. Biyani believed in leading a simple life and in being simply dressed. His vision came from his diverse reading connected with retailing and other areas. He made it a point
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to visit each of his stores across the country. He aimed to spend at least seven hours a week at the stores. In the stores, he would stand at a corner and observe people. He also walked on streets, met common people, and talked to local leaders to plan and put up new products in his stores. Each of his stores was set with a weekly target, which was reviewed every Monday. Whenever a new store was opened, the details of
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its operations during the first 45 days were to be sent to him. Sometimes, he suggested remedies to some problems. Biyani believed in extensive advertising to make more people know about the product. His decision making was quick and devoid of unnecessary delays. Biyani was also a good learner and learned quickly
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from his mistakes. He planned to improve inventory management through responding effectively to the demands of the customers rather than forecasting them, as he felt that forecasting would pile up the inventory in this dynamic market.
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Questions for Discussion:
1. The tremendous success of the ‘Pantaloons’, ‘Big Bazaar’ and ‘Food Bazaar’ retailing formats, easily made PRIL the number one retailer in India by early 2004, in terms of turnover and retail area occupied by its outlets. Explain how Biyani is further planning to consolidate his businesses. 2. “Our striving toward looking at the Indian market differently and strategizing with the evolving customer helped us perform better.” What other qualities of Kishore Biyani do you think were instrumental in making him the top retailer of India?
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Additional Readings and References: 1. “Fashion thrives on advertising,” www.businessstandard.com, 2003. 2. “Leader speak,” www.indiainfoline.com, November 24, 2003. 3. “Shoppers without borders,” The Times of India, March 16, 2005. 4. Das Gupta, Surjeet, “Meet India’s king of retailing,” www.rediff.com, January 15, 2005.
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