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We Are Like This Only

It isn’t 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.

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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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