Kishore Biyani sure knows how to take the battle to his opponent.
Analysts had predicted that e-commerce would swamp physical retail steal away its loyal customers, but the Future Group founder says the opposite could be happen. “Online retail has a threat from us and it’s time people realised that they are not a threat to us,” Biyani told Economic Times.
Biyani has a reason to be confident. E-commerce firms have managed to garner mindshare and sales, but they’ve come at a cost. All e-commerce companies in India have been bleeding money. Flipkart lost Rs 5,223 crore, Amazon lost Rs. 3571 crore, and Snapdeal lost Rs. 2960 crore in 2016. “(Their) cost of doing business is also too high,” Biyani said. In contrast, Biyani’s own Future Retail managed to earn profits of Rs. 147 crore in just the last quarter.
Biayni also seems to believe that the e-commerce opportunity is overhyped — in spite of spending enormous sums of money, e-commerce companies haven’t really made inroads. “They don’t even have 1 per cent business share (in India),” he said. And Biyani believes that the issue is not just with India, it’s structural. “China which people think is the most digital driven country has 82 per cent physical, America has 89 per cent physical model and similarly India too has huge potential for physical retail as online share is very less,” he said.
But even as he dismisses e-commerce, he doesn’t dismiss technology as a whole. Biyani recently launched a grand 3-year vision for the Future Group in which he seemed to want to integrate technology into his retail business. Future Group wants to create 10,000 members-only stores across the country, with customers being able to order through WhatsApp and Facebook messenger. The company said it would also collaborate with startups to build Machine Learning systems around what its customers could order, and the 10,000 stores would be positioned within cities in collaboration with Google.
Biyani says that the physical and digital worlds are converging — even as the Future Group integrates more technology into its operations, Flipkart recently acquired a mobile phone repair company, and Amazon bought a 5% stake in Shoppers Stop. The next decade could well produce a hybrid model of retail that’s neither e-commerce or physical retail, but something in between. And Biyani seems to be betting that he’ll be able to understand tech before e-commerce companies can get a handle on retail. In those terms, Future Group’s 30-year plan doesn’t seem like a bad bet at all.