We feel privileged that Bharti has chosen us: Kishore Biyani

Interview with Founder and chief executive of Future Group, and vice-chairman of Bharti Enterprises, respectively

On Monday, Future Retail and Bharti Retail announced a merger. Kishore Biyani, founder and chief executive of Future Group, and Rajan Bharti Mittal, vice-chairman of Bharti Enterprises, spoke to Digbijay Mishra & Nivedita Mookerji. Excerpts:

How has the journey in Indian retail been? Mr Mittal, what does this merger mean to you? Mr Biyani, what does the Bharti deal mean to you, as you were reportedly in talks with many companies, including Carrefour?

Biyani: We feel privileged that after Walmart, they (Bharti) have chosen us (laughs).

Mittal: It's an evolving process … We had a partnership and that's over. We always want and look for a strategic partner that would bring value to the board in our businesses. I don't think I can find a better partner than Future Group in India.

Though it is being touted as a win-win deal for both, who is the real winner?

Biyani: The consumer is the winner in every way. There will be a price advantage. You will be the ultimate winner, if you can give the price advantage. The scale and efficiency of this merger would enable that.

Bharti built a retail business and got foreign investment from Walmart (for cash-and-carry business). Isn't this merger a step back for the Bharti group?

Mittal: These are strategic decisions, depending on the time of the business. Also, there are structural challenges within this sector … Let's say they got 180 hypermarkets. I don't know how long it would take to build that in India, because there is no real estate. If you see the entire sector, there are 60-70 hypermarkets. So, there are structural challenges and issues. It's a great story from our point of view ... Look at how we built the telecom business … We started in Delhi … Now, we have a national footprint. Today, it's the other way round, as we have merged with a larger entity. It looks great at this point.

Could Bharti exit at any point? Has that been discussed?

Mittal: We have just entered. Why are you making us exit? You need another conference for that … Why are you wasting your pen on that today?

Bharti Retail has over 5,000 employees. What happens to them after the merger?

Mittal: All store employees will remain with the stores. Employees are not an issue. There is no cannibalisation of stores.

Biyani: We are a growing organisation … Big Bazaar is growing 20-25 per cent a year and when you are growing at that rate, you need more people. We aim to open 4,000 stores in five years. So, that would require more people.

What investment would the expansion of stores require?

Biyani: Quite a lot will be franchise-based. But whatever surplus we generate, it will be invested in retail.

Is the merger meant to give you more strength to compete with other bricks-and-mortar companies or is it to fight e-commerce firms?

Biyani: For us, it is all about selling a product to the consumer … by whichever means. You could use technology or physical stores. Globally, the best models that are scalable and profitable are a combination of physical and digital.

Is the growing online business a threat?

Biyani: How could we grow 25 per cent every year if online was a threat? It has been hyped up lately.

Fashion is becoming a key segment for online and offline retailers. How do you plan to take that forward?

Biyani: For us, fashion is growing about 25 per cent a year, and we will continue to do that. Fashion runs on brands. Whether these are e-commerce or traditional retail, we keep adding and deleting brands.