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Home > Business > Special

Kishore Biyani's new retail mantra

Pallavi Jha in New Delhi | September 24, 2007

Sudha Choudhary, a 43-year-old housewife and resident of Dombivli, a suburb on the outskirts of Mumbai, recently bought a mobile for her son and an LCD TV. No, she didn't pick them up from a mall - her shopping arena was a small kiosk, all of 120 square feet in area.

This is the new out-of-store format that Kishore Biyani's Future Group has come up with. The kiosk, which houses a computer terminal, offers access to information about 10,000 products for the consumer to choose from. He can place the order, pay by credit card or cash, and his purchases are shipped to his residence in maximum of 10 days. Simple, isn't it?

Clearly, with new malls coming up all over the place, retailers are scouting for new formats to gain an edge over the competition, especially since the investment needed to set up a large store can exceed Rs 25 crore (Rs 250 million). Currently, the The Future Group's out-of-store format is operating on a franchisee model.

The company plans to come up with 12-15 more stores in the next three months, and go into tier II cities with this model. "We are looking at locations that are not already covered by big retail outlets," says Sankarson Banerjee, chief executive officer,

Internationally, the kiosk format is quite successful. There's 7/11, a chain of small-format stores in the US which are mostly located on busy streets and business districts. Here, customers can place an order on-line, and either pick up the shopping basket at a location of their choice or get it delivered to a preferred location at a designated time. The Future Group is coming up with a similar concept in India.

According to Kaushik Guha Thakurta, manager, KPMG Advisory Services, "It is premature to predict whether such a format will work in India, mainly because of the large number of choices available to customers in terms of kirana and upscale convenience stores. Also, several players have toyed with similar ideas like online carts, but most plans have been put on cold storage since it didn't go down well with Indian consumers."

B. S. Nagesh, managing director, Shopper's Stop, is equally cautious: "It is still a relatively new concept in India. We will have to wait and see whether the medium kicks off."

However, retail experts believe that destination kiosks make a lot of sense for products/merchandise that are not available in the neighbourhood and where retailers could enjoy some customer stickiness. Example - books, music, accessories and certain leisure products.

"In fact, you will see a strong play in these format-category combinations going forward, and we have advised some of our retail clients to exploit this format aggressively," Guha Thakurta adds.

According to Banerjee, "The idea is to extend our retail presence, to extend the shopping experience to consumers who do not have access to modern retail outlets. Eventually the entire Big Bazaar range will be available through this format."

The first store in Dombivli is a month old. "Dombivli was an ideal location for us to test the format. It has a mix of working population and there are no big retail chains in that area," Banerjee says.

Company executives say that sales have been decent and 300-400 orders were placed in the first month itself. "The store is doing pretty well and people have accepted the concept. Consumers have bought products in almost every category, be it a T-shirt worth Rs 99 or an LCD TV worth Rs 40,000," a satisfied Banerjee says.

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