THESE days, Kishore Biyani is reading a new book titled A Perfect Mess. The book, written by an American professor and a business journalist, questions the widespread assumption that organisation and neatness are inherently better than disorder and clutter. It's a theme that has always been close to Mr Biyani's heart. In fact, his popular Big Bazaar hypermarkets are consciously designed to be disorderly-just like a typical Indian bazaar.
"Chaos is a way of doing business. Clean stores are so easy to build. But in India, if you don't butt into someone while shopping, it feels strange," says the maverick retailer.
Yet in the last two weeks, Mr Biyani has shown a surprising change of heart. In a flurry of moves, he has injected more than a dose of order-a new structure, process and strategy-into his Rs 2,017-crore retail empire. He has pulled himself out of operations and handed over the reins of his retail business to younger brother Rakesh. He has clearly separated his steadystate businesses (like Big Bazaar) from the those that need incubation. He has appointed professional CEOs for each of his mature formats-Big Bazaar, Pantaloon, Central and Food Bazaar-and another one to manage all the new forays. These large formats will now become separate companies under a holding firm that Mr Biyani is planning to create named Future Retail. The holding company will have stakes in each of these companies. The idea is simple: to allow these four `mature' businesses to function like independent subsidiaries so that they can get into JVs with global retailers, seek private equity funding or even tap the capital markets.
In bringing about these changes, Mr Biyani listened to advice from McKinsey & Co, management consultants who see it as their job to teach entrepreneurs how to run orderly businesses.
Some would say Mr Biyani's moves to put his house in order haven't come a day too soon. The competitive environment is rapidly changing. Organised retail is no longer virgin territory. Every big corporate house in India sees fortunes in retail. So does every Fortune 500 retail giant. Mr Biyani suddenly finds enemies at the gate, eyeing his people and business. The man who prided himself on discovering how to get middle class Indians into his chain of stores is beginning to realise one more truism: while innovation is important, scale, structure and processes are just as important over time.
`It's now all about processes, processes and processes. We are getting bigger and bigger and we need to look at the depth and breadth of everything we do," says Mr Biyani.
Mr Biyani is hoping that he can kill more than two birds with one stone. He expects to corner nearly 30 million sq ft of retail space by 2010 from 5 million sq ft. But for that, he needs more than Rs 4,000 crore of capitalsomething competitors like Bharti and Reliance have. So the holding company structure allows him to raise capital to grow mature businesses like Big Bazaar, Food Bazaar, Pantaloon and Central. Currently, value formats contribute 55% to the total turnover with the rest coming in from lifestyle retail.
But Mr Biyani has bigger concerns than just tackling bigger rivals. In the past one year, insiders say turnovers of his retail business have galloped 30-40 %, but bottom lines haven't grown more than 3-4 %. A lot of it has to do with the way the group was run. As the group CEO, Mr Biyani oversaw the entire business while senior managers ran different lines of businesses-be it apparel, food, etc. As his retail empire grew, Mr Biyani found it increasingly difficult to devote time to the day-to-day operations. The result: the formats found it difficult to grow profitably without someone senior stepping into resolve operational issues.
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