Apr 9, 2017

Future Group's plan for Consumer Industry segment

Future group plans to set up 10,000 convenience stores:
The concept is hybrid between kirana store, and large supermarket.
Loyalty driven convenience store.
Member-shoppers will get more discount than those offered by others.
We have build the entire ecosystem such as logistics, partnership with FMCG companies and customer database around the stores.

Data analysts will help us analyze what to store.

Each store will enroll 1500 customers for an annual fee. Those customers will get 10% more discount above any existing one.
These smaller stores will have three badges – Easy day, Heritage Retail and Nilgiri’s.

Since last month, the company has been opening about 15 smaller stores a week. The retailer will also open a warehouse within 100 km radius of the stores to drive efficient logistics. Over the past few weeks, Future group has been piloting a similar program at Easy Day and has managed to enroll one-lakh members so far.

By doing so, Biyani hopes to achieve sales of Rs 40,000 cr thorugh these stores by 2021.
These stores will be like neighborhood stores.

In India, food and grocery accounts for almost 50% of the overall retail basket, although online penetration is still less than 1%, an indication of the growth potential.

Morgan Stanley expects the grocery and food delivery market to reach an online penetration rate of 4% by 2020, touching gross merchandise of $19 billion, making it largest category after electronics and apparel.

Biyani has acquired almost all convenience store format brands in the past fine years, while rivals have been focusing on big-box formats. Also, Future group has its own FMCG and logistic company to support the stores.

Globally small corner stores are doing good. 7-Eleven in Japan, Taiwan and Singapore, Lawson in Japan and Oxxo in Mexico are largest retailer in respective region, reflecting the growing business of small outlets despite the market being opened for retail giants.

Even in India, rival Tata that has partnered British retail giant Tesco, launched a neighborhood convenience store format – Star Daily – modeled after Tesco Express.

The new initiative also dovetails into Biyani’s wider strategy to generate about 70% of its sales from in-house brands in four years, and establish itself as a standalone consumer goods company.

Local neighborhood stores generate about 85% of consumer products industry.

From: Kishore Biyani lines up loyalty-driven convenience stores to beat Amazon, Flipkart in discounts