Kishore Biyani's Future Group, which runs more than 1,000 stores, plan to cut back on advertisements, recruitment costs and reduce travel expenses to save as much as Rs 165 crore (Rs 1.65 billion) in financial year 2008-09 in an effort to tackle the slowdown in demand.
The group, which employs nearly 26,000 employees, plans to cut employee costs by one per cent, or Rs 65 crore (Rs 650 million), in the current year by redeploying people in its various businesses and reducing new hirings.
"Instead of external hiring, we have redeployed a part of our people resources from our mature businesses to the new ventures," Future Group CEO Kishore Biyani said.
For instance, a major portion of human resources cost savings came when the back-end operations of Home Solutions Retail, which houses electronics, furniture, home formats and other ventures, was merged with Big Bazaar, which resulted into savings of one-third of employee expenditure, Sanjay Jog, Pantaloon's chief people officer said.
Through this, the group was saved from the trouble of recruiting more than 250 people, as it redeployed employees into newer businesses, such as Big Bazaar Best Deals, KB Fair Price Shops, Aadhar, Future Knowledge Services, among others.
"The back-ends of both HSRIL and Big Bazaar were collapsed into one, which helped us save on separate IT departments, sourcing divisions etc," Jog said.
This year, the group aims to cut 20 per cent of its advertising and communication costs. It plans to save nearly Rs 100 crore (Rs 1 billion) of these expenses across all its businesses, which spend nearly Rs 500 crore (Rs 5 billion) a year on advertising.
The group is also encouraging tele-conferencing instead of travel, reusing paper for print outs and reusing envelopes for internal dispatches.
Though Biyani refused to speak on advertising costs, an advertising professional, who did not wish to be quoted, said the group can afford to cut down on ads and communication as it has already built a good brand image for itself.
"When you do a business of Rs 1,000 crore (Rs 10 billion) and spend Rs 100 crore (Rs 1 billion) on ads, you need not double it when you increase your business to Rs 2,000 crore (Rs 20 billion).
"The company can cut down on advertising expenses," the executive said.
On the property front, the group has gone very slow on bookings in the last 12 months, says Biyani, as the group has booked its requirements till 2011-12.
The group has also closed and relocated a few stores and offices where rentals have gone up rapidly in the last couple of years.
For instance, the group has closed down five stores of lingerie brand Etam, a French company with which it has a JV, in malls where revenues were unable to keep up with rentals.
