Business, Finance & Economics

The Wal-Mart of India


BANGALORE, India — Kishore Biyani wants to be thought of as frugal.

Biyani, 47, head of India’s largest retail empire Future Group, has a motto for these recession-hit times. Employees across hundreds of Big Bazaar and Food Bazaar stores, the Indian equivalent of Wal-Mart, have adopted his pledge, “Garv se kaho, hum kanjoos hain” (Say with pride, we are stingy).

It is a motto signifying a back-to-the-basics strategy, said Biyani, who wants his $1.5-billion group to be the retailer of choice in cost-conscious India. A culture of frugality and corporate thrift can help trim costs. These savings can be passed on to stretched customers, Biyani tells his staff.

Fittingly, all visitors to Biyani’s fifth-floor offices at Mumbai’s Crossroads Mall are offered glass tumblers only half-filled with tea. Company executives, Biyani included, fly coach class. Nobody is allowed to wear a jacket or tie to work. “In India, a jacket and tie are just corporate hypocrisy,” said the bespectacled, grey-haired Biyani, who is dressed in shirt and trousers, attire well suited to muggy Mumbai.

Biyani’s Big Bazaar hypermarkets, often likened to Wal-Mart stores, are clean, well-lit and air-conditioned. But the similarity ends there. Inside the crowded store in Mumbai’s Phoenix Mills, not far from Biyani’s offices, the aisles are too narrow and cluttered for shopping carts to pass through. Bollywood film music blasts over the sound system, interrupted by the blare of in-store announcements.

In carefully-conceived disarray, rice and sugar in huge, open silos spill over to the floor. A few onions in the piled up crates are near-rotten and clumps of soil stick to some of the potatoes. In an overflowing bin nearby, kitchen ladles are minus their wrapping. A “chakki," a grinding mill, in the corner serves shoppers who can feel, smell and choose their grain to be freshly ground.

For the price-sensitive and selective Indian consumer, the chaos evokes the hurly-burly typical of Indian markets where shoppers haggle over the price of tomatoes and the quality of rice.

The dirt suggests to shoppers that the produce is farm-fresh, the rotten onions are deliberately placed so shoppers can feel they are choosing the best, and the ladles are presented in a way that customers feel encouraged to touch and buy.

All of this is designed to lure “conscious consumers” said Biyani, who added that a majority of Indians are not “conspicuous consumers” anyway. In 2008, about 250 million shoppers passed through Biyani’s stores.

India’s $350 billion retail industry is dominated by neighborhood grocery stores and open air vegetable markets. But organized retail is growing at a blazing rate, even as multinational retailers like Wal-Mart Stores, Tesco and Carrefour are eyeing the market.

Whatever the potential foreign competition, Biyani can teach a lesson or two on enticing the careful shopper.

With his oath of "kanjoosi” (thrift) he has shrunk the size of his headquarters in employee numbers and space. In the suburbs, 630 people are now squeezed into an office that once held 400. Employees signing off on an expense or travel voucher have to first tick off on the question, “Was the expenditure worth it?”

At stores too, staff is becoming sensitized to cost efficiency. The Phoenix Mills store manager Rahil Ajani said he is saving on energy costs by turning up the air conditioning a couple of degrees. Since he took the pledge of kanjoosi, Ajani has cut monthly water bills to nearly half, optimized the re-use of packaging material and doubled revenues from selling scrap. No saving is too small, said Ajani, who re-uses office envelopes a dozen times.

Sales numbers are holding despite the economic downturn, said Biyani, whose group also runs a bowling chain and restaurants. Business has been good across all categories except furniture and cell phones. “Raw material, real estate, people and inputs costs have all fallen so we cannot hope for a better scenario than this,” he said. Back in his office, Biyani said his focus is on maintaining demand.

At the far end, the office wall is lined with framed photographs of Biyani’s icons. Charlie Chaplin, Albert Einstein and Sam Walton share space with Mother Teresa and Indian entrepreneurs Dhirubhai Ambani of Reliance and Narayana Murthy of the outsourcing firm Infosys. The last of the frames holds a mirror.

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