One of India’s largest retailers is back to betting on the store.
Reiterating the relevance of physical retail spaces, Future Group chief Kishore Biyani has said that consumers need retail spaces despite the prevalence of e-commerce.
“One has to understand that at the end of the day, e-commerce is also a place where one is buying a product and a brand. In the long term, it’s all about who does it efficiently and what the customer prefers. Even after 20 years of e-commerce in the US, physical is 90% of retail. You can’t get out of physical. You have to use airports, roads, bridges – you can’t have digital or virtual transportation,” Biyani said in a recent interview with The Economic Times newspaper.
In the past, Biyani, who popularised shopping at departmental stores in India in the 1990s, has been dismissive of the country’s fledgeling online businesses and their excessive discounting practices.
India remains largely a traditional retail market where most buying and selling happens through neighbourhood mom and pop stores. In the last few years, though, online retail has caught the fancy of consumers and investors.
However, the recent massive devaluation of India’s billion-dollar e-tail startups and an impending consolidation in the industry are giving retailers like Biyani renewed confidence. After trying his hand at e-tailing four times and burning Rs 350 crores, Biyani has fallen back on what he does best – building more stores.
“We have done a lot of work around understanding the digital environment. Human beings are social animals, they like to socialise. And socialising happens in a physical environment. It doesn’t happen in a digital environment,” he added.
He has also worked over the last two years to segregate Future Group’s core retail business and its retail infrastructure businesses (such as supply chain and other investments), besides making acquisitions to further expand its footprint.
These developments are reflecting in the company’s financials. Future Retail’s stock has surged 128% between January and April, according to Bloomberg. For the year ended December 31, 2016, Future Retail, which operates the Big Bazaar chain of hypermarkets, Easy Day chain of grocery stores, and HomeTown chain of home improvement stores, earned a net income of Rs 245 crores as opposed to a loss of Rs 89.8 crores in the previous year.
“The total non-electronic business that happens online is less than the turnover of the Future Group [last fiscal, the revenue was Rs 21,000 crores]. So we were having the last laugh. It’s nothing new. I really enjoy sitting with e-commerce players and discussing business. Unko bhi pata hai unke paas kuch nahin hai [they also know they have nothing],” he added.
This article first appeared on Quartz.