‘I believe that shopping is an experience. There is a discovery during shopping, as well as human interaction’
Kishore Biyani is the Founder and Group Chief Executive Officer of Future Group, one of India’s leading consumer goods organisations focussed on the food, fashion and homeware segments. The organisation believes modern retail plays a vital role in the growth of the economy by creating demand for value added goods and thus supporting the growth of domestic manufacturing, jobs and income generation. The group’s emblem, the Sone Ki Chidiya, symbolises its vision of playing a role in bringing back the epithet of the ‘land of the golden bird’ back to India. In 2001, Kishore led the creation of Big Bazaar, a 280−store large format retail network that is counted among the most trusted brands in the country. The group’s businesses also include multiple retail chains like HyperCity, EasyDay, Nilgiris, Heritage Fresh, Foodworld, Central, Brand Factory, FBB and Home Town. These chains are present in over 355 cities and towns in almost every state of the country. The group also operates a pan−India logistics network, a fast growing portfolio of brands in fashion, footwear, food and personal care and manufacturing, agri−sourcing and processing facilities located across India.
Every year, almost 500 million customer visits are recorded at the group’s stores. Kishore has also led Future Group in investing and mentoring a number of supply partners and entrepreneurs as well as joint ventures with British footwear marker, Clarks, Italy’s leading insurer, Generali Group, Swiss consumer goods major, Mibelle AG, America’s Hain Celestial, New Zealand’s dairy group, Fonterra and Middle East’s Ramdas Khim¡i. Kishore is a firm believer in the maxim of ‘Rewrite Rules, Retain values.’ In 2007, he authored the book, ‘It Happened in India.’
Well, there have been several milestone moves and inflection points. We started of as a fashion company in the late ‘80s, selling fabric to leading brands and then our own menswear brands. Then we launched a network of franchised stores. A few years on, we opened our own large−format fashion retail stores. Clearly, a major turning point was the launch of Big Bazaar, which gave us the impetus to expand, grow and introduce new retail concepts. Even as our retail footprint was being expanded, we also invested strategically in developing our own brands in fashion, footwear, food, FMCG and homeware categories.
Currently, close to 50% of our sales come from own brands. And most of these brands also sell through other modern retail channels. Now, we are in the midst of another transformation as we move towards a data−led, technology forward organisation.
For consumption to continuously rise in the long run is a natural progression of any evolving economy. Typically, every generation consumes more than the previous ones. What is changing for retailers is the addition of speed and velocity, evolution of a demand− driven market, and the necessity of building deeper relationship with customers through data. The data economy will greatly influence retail’s future. Retailers will be driven by data science and artificial experience and customers will experience seamless journeys between the physical and digital worlds. We call it the Retail 3.0 − a high−tech and high−touch environment. The first phase was about high−touch physical stores. Then came the conventional, pure online models. The world is now moving towards New Retail. China has taken a huge lead with Alibaba, Tencent, JD.com leading major investments in layering technology over physical store networks. In the West, this is being exemplified by Amazon, WalMart, Kroger and others. I believe that we are well placed to lead this transformation in India as well.
I believe that shopping is an experience. There is a discovery during shopping, as well as human interaction. Nobody can take away that physical experience of retail. Even in the United States or any developed market, physical stores still capture more than 90% of sales.
However, there is no denying that technology and data sciences will play a transformative role going ahead. Data sciences and artificial intelligence is already transforming the way we engage with customers, help them discover products, brands, categories and make purchase decisions and the way we fulfil their orders. Every product or brand a customer chooses tells a story about the customer. Every day, on an average, there are almost one million customer transactions that take place across our businesses. Customers buy their daily needs such as food, grocery, fashion and home products from our stores. They visit us multiple times, often within a month, to shop with us. The cumulative data thus generated is huge. 7e are now using data sciences, machine learning and artificial intelligence to help make faster and more accurate decision for our business.
Retail 3.0 is creating a seamless experience between physical and digital experiences for customers. It is layering every activity with data and technology. We have created a new organisation – Tathastu − purely focussed on building new capabilities in AI and data sciences. There are now almost 300 data scientists and technologists working on personalising customer experiences. We have over 14 million customers now on FuturePay and our teams now has the ability to work with very large and diverse data that an organisation such as ours generates. Over the years, we had developed multiple proprietary tools, including Consumer Shastra, Aspiration and Affluence Index, all of which give us insights on customers in each of our stores’ catchment areas. We are now layering these proprietary tools with the algorithms and AI capabilities. The objective is to have a single view of every customer and treat her or him as an individual, rather than as a part of a larger cohort or community of customers. As the personalisation gets more and more granulated, we believe that the customer will be willing to spend her entire wallet with us.
Grocery retail is the highest purchase−frequency retail format, and therefore, tremendously data−rich. Our neighbourhood store formats − EasyDay in North India, and Heritage Fresh in South India − encompass some 1600 stores across India; our target is to place a store with two kilometres of every consuming Indian in urban India.
The store operations and the consumer interface are entirely on digital platforms. In NCR, EasyDay Club members can order on an app, get home deliveries and scan and pay in−store without visiting the cashier. As we speak, we are experimenting with a chat−based interface or conversational commerce. These are all membership− driven stores, wherein members pay Rs 1000 to get a whole host of benefits, including a flat 10% discount on their grocery bill, access to new offers and new product launches, home delivery, ordering on phone or on apps and special promotions. The more the members shop with us, the more we are able to customise the stores and personalise their journeys. This is only possible due to the technology and data capabilities we have built.
Increasingly, the best examples of what the future of retail looks like comes from China. In addition to the sheer size and scope of the market, China is also not saddled with heritage formats and legacies that the west has. New Retail chains, including HEMA from Alibaba or the Bailian Group’s RISO supermarket format personify what the future of retail may look like. Wal−Mart is collaborating with JD.com and while Tencent is partnering with Carrefour in China to layer technology over physical networks. We are learning from every experience and building future scenarios wherein we can play a major role in shaping the future of retail.
There will be a big shift in terms of the speed, velocity of business, and the freshness of products that will come into supply chain. For us, we are now present over a large portion of our value chain in food and fashion. We operate factories, large design and sourcing functions, own the logistics and distribution and finally the brand and the retail network. Technology is allowing us to now see this entire value chain as a flow of data − from making the product to the customer who is consuming it. Being present across the value chain, consumer data from our stores is helping us manufacture or source in much more efficient ways, move goods at the optimal pace and quantities and increase productivity and efficiency of all our resources. As we work more with data and predictive analytics we believe we can estimate the correct quantities to manufacture or source, even before we launch a new product. This will reduce prices consumers pay for our products, and boost velocity of the business and product freshness at the point of consumption.
In a retail business, one has to acquire customers, take them through a journey of discovery through brands, products and categories and then deliver their orders. The traditional ecommerce model operates at a very high cost; the cash burn on customer acquisition and delivery services is unsustainably high. But when one has a physical network that is close to customers and one is able to build on it, layer it with technology platforms, the cost of doing business drops significantly. Globally the nest wave of retail is about physical networks being layered with technology. We believe that we are well placed in India to layer our network with technology platforms and operate at the lowest cost of doing this business. In addition, we are present across the value chain in food and fashion and that gives us additional scope for value creation − both for consumers and all stakeholders.
Over the next five years, you will find the boundaries between digital and physical retail networks completely vanishing; it will be a seamless universe. Retail will be a very personalised and customised experience for every customer. And you will notice retailers building large ecosystems for new businesses in and around their areas of operations.
At Future Group, we are now entering our nest wave of evolution. We want to be a data−driven organisation. We are building capabilities in data science and AI that can help automate decisions and take human discretion out of most decision making. Faster and more efficient decisions can help our customers experience a more personalised journey and also lower prices of our products. With more personalisation and engagement, we believe customers’ entire spends can be captured within our formats. If we can capture the entire spend on food, grocery, fashion and homeware for 20 million or 30 million customers, the potential can be huge.