Team News Riveting
King of modern retail Kishore Biyani has finally surrendered.
After running from pillar to post to get a suitable buyer, he has sold the Future Group that housed leading retail formats, including supermarket chain Big Bazaar, upmarket food stores Foodhall, and bargain clothing chain Brand Factory, to billionaire Mukesh Ambani’s.
The mega transaction with a combined value of Rs 24,713 crore cements the position of Reliance Retail as the undisputed leader in the organised retail segment and adds muscle to an ongoing battle with Amazon for the Indian e-commerce market. But will Reliance succeed in sustaining the big retail business?
By now, the financial experts, economists and big wings have started studying what went wrong. But not many will explore the opinions of common man and design the business model with their perception.
The News Riveting compiles a few points raised by non-financial experts.
As one puts it, Big Bazaar is unable to attract customers that come from middle class or lower class. Bargaining option is not available and customers in India find their happiness on small negotiation.
Unlike western cities, India is not planned and every street has retail or grocery shops, and that makes it really hard for people to plan and buy everything from one place like a big retail store, opined another.
Even big retails stored in Western countries are profitable when outside the city to match cheap price and save taxes as well as lot of frozen ready to use stuffs which Indians avoid and prefer cooking, buying raw materials directly from farmers since 60 per cent population live in villages or nearby that’s too not affordable from huge retail stores.
Clothes in India are mostly stitched fit and worn so not many buyers. All that makes less buyers and broke retail stores which need to pay hell lot for electricity and other maintenance charges to make it attractive at the same time affordable too.
One of the consumers observed the Future Group’s failure was because of the very unique nature of Indian customer’s mindset. Unlike developed countries, an average Indian customer would get intimidated by a big store, and would prefer a small kirana shop. Kishore Biyani had himself endorsed it in his book “Made in India” as to how he had to customize his big bazaar stores to look more messy and cramped to make Indians comfortable enough to enter in his stores.
Big retail did not anticipate the power of e-commerce, which has displaced them from their game. Apart from this large input costs and low profitability has been another classic reason.
