We Are Like This Only

It isnít easy to do things differently in India. Yet, some have succeeded because they based their bets on sharp consumer insights

Published: Oct 12, 2009 01:49:25 PM IST
Updated: Oct 12, 2009 02:20:40 PM IST

Way back in 2001, Kishore Biyani tried his hand at big-box retailing. Till then, most retailers had stuck to the department store format — or opened supermarkets, particularly down South. In Kolkata, Biyani opened his first Big Bazaar, a soups-to-nuts hypermarket. Within the first week, Biyani knew that he had found the Holy Grail. In the very first week, the store pulled in one lakh customers generating a daily turnover of Rs. 1 crore on some days. “I’ve found the pan Indian model of retail,” an ecstatic Biyani told a young colleague of mine just days after that momentous launch. He was right.

In the months and years to follow, Big Bazaar went on to become the biggest thing to happen in Indian retail this decade. Since then, several new players have entered the space, including some of the biggest corporations in the country. But nothing still comes close to it. Today, Big Bazaar has 120 stores across India and generates almost Rs. 5,000 crore in turnover.

It was one helluva bet. Till then, Biyani was a man who hung around the fringes of the retail industry. No one took him seriously. The media couldn’t figure what he did or said. His peers never gave him respect and branded him a compulsive risk-taker, who never played by conventional rules. Big Bazaar’s success took Biyani into centre stage. It established him as the undisputed King of Indian retail. Spurred by his success, Biyani went on to open several other formats. But none of them were ever as successful as Big Bazaar. Today, the format accounts for a little more than 70 percent of Pantaloon Retail’s turnover.

So where is this little story heading to? I was in Amritsar recently for a field trip to Walmart’s new cash-and-carry format. (As you know, the story is on our latest cover). For two years, the world’s biggest retailer has been quietly working on its strategy for India. About four months ago, it launched Best Price Modern Wholesale on the outskirts of Amritsar. The response was phenomenal. I’ll leave you to read the full story in the print edition, but suffice to say, Walmart is expecting its newest baby to deliver a billion dollar turnover in four years. In the past five years, no retailer, Indian or foreign, has expressed such a strong conviction about the potential of a desi format that’s been developed here for the very first time in Walmart’s history.

Many big Indian corporations have announced such billion dollar targets in retail in recent times. But they’ve been more hype than reality. Most such plans have usually landed with a huge thud. So it’s certainly fair to therefore ask: Why did we as a magazine stick our neck out on this one? After all, there’s just one store in place. And isn’t it a bit early to predict how things will turn out from here on?

Biyani’s story is instructive for that simple reason. In India, it isn’t easy to do anything different. If it hasn’t been done before, most incumbents will scoff at it and find a hundred different reasons to argue why it doesn’t work. Let’s take a recent example: The Mint newspaper. When Mint was launched in 2007, no one gave it much chance of survival. Its founding editor, Raju Narisetti, had spent all his time in the US and so how could he possibly know the pulse of the Indian reader? Critics were dismissive: No one in India reads long stories that don’t quite deal with hard news. Today, Mint has quietly become the second largest business newspaper. Narisetti has since returned to the US. But today, inside the hallowed portals of the Press Club in Mumbai, there is now grudging respect for the paper. Discerning readers seem to be picking it up as their paper of choice — and Mint is clearly gaining traction. As Narisetti told my colleague and Associate Editor, Dinesh Narayanan, in an interview some months ago, “Many business journalists want to be part of the business establishment or be close to it. That results in journalism that isn’t about readers.

Like Mint’s focus on independent, value added journalism, Big Bazaar did well because it had a compelling value proposition for its customers: It offered the cheapest prices in the city. And its store was designed to recreate the chaos of the Indian bazaar. No Western style clean and neat aisles, but crowded departments where you had to jostle to shop, much like in an Indian bazaar. Biyani’s hypothesis was simple: He didn’t want his customers go through a dramatic habit change. And his hypothesis worked.

Walmart has its own assumptions about its customers, like the small kirana shop owner or the purchasing head of a hotel chain. And they’ve meticulously gathered some very clear insights — and then built a business model based on that. I spent almost a full day at the store, speaking to customers and store personnel. I tried to get a handle on why this could be a game-changer for Indian retail after a gap of almost a decade.

In retail, there’s one obvious difference. If you’re a smart entrepreneur like Biyani, you’d figure out fairly early on whether the model is working. From there on, the job is a lot easier: You keep replicating it and tweaking it for specific catchments where you open the store. Walmart is at that stage. It has tasted early success, but it reckons that it has learned enough about customers and its organisational model to make sure that its second Best Price store in Chandigarh is even more successful than the first.

Real innovations are usually hard to find. There are plenty of tomes that have been written about innovation. In my book, it means two simple things: Sharp consumer insights backed by courage of conviction. Of these, the latter is usually just as important in India. Would you agree?

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  • R. narayan

    Let me congratulate you and your team on your excellent magazine. I must admit I was one of many who received the news of its launch with a fair bit of skepticism but the initial fears have been completely dispelled. It comes across as a good, solid and easy to read magazine that primarily deals with business but has an ear open for interesting news. I particularly commend you on the 'Month of Melody' article in your latest issue. As a good Tam Brahm with more than a passing interest in Carnatic Music I have often wondered why there was not enough written about this significant musical event when mediocre jazz wannabes (especially, and I have heard a couple of them) hog most of the limelight. <br /> On the topic, I would love to know more details as I am planning to make a trip down to Chennai. Do let me know if there is a link or any other source.<br /> Once again well done and best wishes,<br /> Narayan

    on Dec 6, 2009
  • drajaganmohanreddy

    I do agree with you that courage of conviction is important. I also read your article in 4th dec issue making a passionate appeal to do good to society as well as part of our our business. Thank you so much for spreading such good thoughts among the youngsters.

    on Dec 3, 2009
  • Samrat Phadnis

    Excellent article. To add more, I would like to pay attention on MTV

    on Nov 13, 2009
  • Naveen

    Nice article. Thanks for writing in such simple language. Often, i find myself reading such lengthy paragraphs that i wonder whether I am reading a magazine or a theory in economics. I am reminded of my first day in my economics degree when my professor said, "Economics is nothing but complicated common sense". As you have pointed out, Journalists, I feel should get out out of their fixation to complicate and get their point across in a easy way. Keep the good work going!

    on Oct 30, 2009
  • Becoming a retail thespian....

    Fully Agree.<br /> Stick to conviction. Experiment on smaller scales. Decide Fast. Please consumer.<br /> <br /> Many of big Indian retailer are still struggling to find the key hole.<br /> Retailing has to be Localised no matter its an American or a Global company.<br /> <br /> B2C and B2B IS DIFFERENT !!!

    on Oct 21, 2009
  • Vikram Sheel

    IG - add Forbes India to that list! As Biyani says in my season's choice for a Diwali gift, "It Happened in India", you need to rewrite the rules. vsk

    on Oct 15, 2009
  • Chetan

    Very good article. Quite informative.

    on Oct 15, 2009
  • Mohamed Iqbal TV

    "I thought Wal Mart India is basically a cash & carry operation, have they started retailing directly to consumers? Any way, it's hard to see them succeed (with Bharti having no exp in retail) because their success has been mainly in the USA and it will be difficult for them to completely erase old habits. That is unless they can have Kishore Biyani managing their stores!"

    on Oct 14, 2009

    i read this article for the first time, i found it informative as well as exemplary.

    on Oct 13, 2009
  • Ravi

    Most such retail stores start with a big bang --- Then they all start to hawk household provisions in loose or store packages. With so many brands and so much premium being paid by companies to retailers -- the temptation to display only a selection of goods based on ROI from the producer and the buyers. Big Bazaar is a good omen but should not given in temptation and follow the path of many other retailers is becoming narrow minded and become a niche store.

    on Oct 13, 2009
  • Unni

    Only problem: Biyani continues with his vision in Pantaloon while 'Mint 'has dumped that vision after Narisetti fled. I still read Mint but can say with confidence -- and many other Mint readers echo this -- that the paper is a poor replica of its old self. Long live Biyani :)

    on Oct 12, 2009
  • Irshad Daftari

    IG, It would be instructive to know whether Wal-Mart actually hired any 'consultant' in its roll-out strategy or decided to go it all alone and learn ground up, like Biyani... Interesting that most of the other conglomerates that hired big name consultants for their roll-out strategy seem to be struggling with their business models.

    on Oct 12, 2009
  • Anil Chouhan

    Nice article! Yes, agree insights and courage / conviction is critical and there are many opportunities in India - i say far more than anywhere else in the world.

    on Oct 12, 2009