Review 2007 / Retail Ahoy : Biyani retails more ideas

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Kishore Biyani

Retail maverick Kishore Biyani stirred yet another ripple in the growing retail circles by broaching the idea of fair price outlets and announcing his IPO plans during the last year. But the after-effects of the ripples will appear only in the future, challenging his competitors. But rather, everybody will appreciate this trendsetter for what he did in consolidating his Future Group through tie-ups and entry into fitness segment during 2007, as always in the past.

True to his penchant for novel concepts, Biyani launched his first home furnishing outlet under the brand name of HomeTown in Noida in the middle of the year, which was a first-of-its-kind home improvement retail format in the country. Spread across an 1,25,000 sqft, HomeTown offers plenty of choices under one roof. It also marked the entry of the group into services segment. It offers electrical, plumbing, interior decoration sservices and Vaastu consultancy among others. The HomeTown is divided into three sections: exhibitions, markets and services.

He went on to tie up with the UAE-based Axiom Telecom. His another arm Pantaloons roped in the Arab company which is an authorised distributor, retailer and after-sales service provider for mobile phones, phone accessories, wireless gadgets, memory and storage devices to develop the back-end sourcing infrastructure, the Pantaloon’s telecom retailing business. He also made a foray into fitness business. The leading retailer would open 50 gyms in major cities during the next financial year.

But what really caught his rivals by surprise was his yet another revolutionary idea—plan to open 1,500 fair price shops in two years, with a view to take on its rival Subhiksha by horns. These proposed fair price shops would stock leading brands of around 300 essentials and would be selling them at almost 10 percent cheaper than the prevailing market price, while the local brands will be sold 20 percent less.

Biyani also announced that the new outlets would be positioned as no-frills fair price shops with a tag line Sare Jahan Se Sasta and it would go on to rework a few rules of the retail scene in the country.

Initially, the Future Gropu would own these stores and in future other business models would also be identified based on the market research and success of the project. The company is planning these stores in Mumbai and New Delhi as pilot projects, followed by Kolkata, Bangalore, Pune, Chennai,  Ahmedabad, and Hyderabad.

“Our target is to provide essential items cheaper than the market price and we are looking at a 20 percent market share of the neighbourhood retail market,” said Pantaloons Foods managing director Narendra Baheti announcing the plan.

Another move that drew attention was his announcement to go public to raise Rs 1,260 crore from the market. The Pantaloon Retail board approved the proposal to issue 40 lakh equity shares on a face value Rs 2 each at a premium of Rs 498, aggregating Rs 200 crore, on preferential basis to private investors. It also gave green signal to an initial public offering of Future Capital Holdings for 10 percent of the post-issue capital. Pantaloon Retail will invest Rs 325 crore in Pantaloon Future Ventures, a wholly-owned subsidiary for making downstream investment in Future Ventures, which was set up to undertake new businesses, incubation of new ideas and businesses and getting into joint ventures.

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Neeta Nair

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