Business Strategies Helping Pantaloon to Grow Higher than Peers

Business Experience matters more than inherited cash cow especially when you are in the Retail / Consumer facing business. The Pioneer of Indian Retail – Mr. Kishore Biyani is continuously on the cycle of putting best practices in Retail. Today we would like to share with you some of the strategic business decisions taken by Biyani and his board.

One of the best and first decision before the retail downturn was Biyani’s mail to his employees to cut costs wherever possible and has now become a management lesson in all the premier institutes of India – Garav Sey Kaho Hum Kanjoos Hey [Say with pride that we are miser]

Declining the Inventory Days:
Future group has integrated some back-end operations for similar retail formats in order to cut operational costs and enhance efficiency. The initiatives help in effective sourcing, save on labour costs and aid margins. We expect inventory days to decline to 103 in FY10 from 123 in FY09. helps in reduced stock-outs, and pare / eliminate non performing categories / SKUs / items.

Decision to scale back growth plans (~20m square feet in 2011 was curtailed to 14m), shuttered unviable businesses (Planet Retail Holdings, Pan India Food Solutions, etc).

Strategy of outsourcing non-core operations to subsidiaries continues, resulting in lower staff costs, rentals and better leverage, which should mean a 120bps margin expansion in current Financial year.

Renegotiated Rentals for its stores after the Real Estate Bubble Burst in India.

All these have lead to margin expansion of over 200 bps for current year and the management is no mood to give up the leadership position to Reliance or Birla’s as thy continue to bring retail best practices to the marketplace first.