Next round of consumer growth will happen through financing: Kishore Biyani

Kishore Biyani, Group CEO, Future Group spoke to Retailer Media on the occasion of announcement of the partnership.
Kishore Biyani, Group CEO, Future Group

While ushering into digital era of smart purchase Future Group has partnered with Bajaj Finance Limited to enable and empower customers to convert all their purchases from any of the Future Group brand into easy EMIs.

With the move the new and existing customers can buy groceries to fashion to consumer durables to furniture using new Bajaj Finserv EMI network card with a minimum purchase of just Rs 5,000. Thus while aiming to acquire 1cr new customers in the next 5-6 years Kishore Biyani, Group CEO, Future Group spoke to Retailer Media on the occasion of announcement of the partnership.

Why you think this is the right time to align with Bajaj Finance and what is your ambition?
I think there is right time and a right place to do the right things and you need to align in a right way. In think this is a time where credit can play now an important role. Hence, with this alignment we have a stated ambition of acquiring 1 cr customers spending Rs 1 lakh annually across all our format stores in the next 5-6 years. I think this will be the major catalyst if Bajaj Finance will work with us. And this attempt of ours is going to change the landscape of consumption in the country.

What will be the credit facility available to the consumers?
Credit facility will be available on minimum invoice amount is Rs 5,000 to up to a maximum of Rs 3 lacs and the tenure of loan would be three months.

Don’t you think 1 cr is aggressive target that you have put to yourself of acquiring customers?
There are around 35cr people walk into our big bazaar store every year and as a group collectively we get 40cr footfalls out of which we have loyal consumer database of 3cr. Normally our customer spend on grocery around Rs 35,000 –Rs 40000 a year. If we include their mobile, electricity bill, rental and clothing and other needs then we believe they spend close to 100,000 plus a year.

On an average a family earns Rs 3 lakh a year. And if this entire spend can happen at our outlets of electronic goods, grocery and clothing then we are hugely benefitted. Because acquiring new customer is more expensive than to make existing customer buy everything from Future Group outlets.

Indians have a tendency of ‘Pao utna hi failao jitni chaddar honi chahiye’ so how will you encourage consumers buy more through consumer finance across all the retail stores of Future Group?
Indians are quite balance at all the aspects, they have that restrictions as ‘Pao utna hi failao jitni chaddar honi chahiye’ (pay in the limits of affordability). But I think the younger generation is sensible enough it doesn’t have that restriction. It is trained about not to spend much. Hence I think there will be balance exercise and our society will be developed reasonably in terms of taking consumer credit. Consumers will have the convenience of returning loan amount in instalments at a lower cost. Then why should we not take credit for everything.

Are you convinced that people will spend more for FMCG goods when they have the option of financing?
100 per cent yes, I think this is what happened to the car industry, look at its growth after the credit came into play. Similarly it has to come to the furniture industry as it has already come into the consumer durables with the Bajaj Finance significant way.

What will be the quick around time of processing the application of consumer finance at the counter?
We will be able to process the application within 10 minutes. With the long years expertise of Bajaj we can create a seamless experience. Thus with technological advancement processing time further come down much significantly. It will not be exactly the interest driven model but coupled with promotion, product range offerings and a lot of things.

Cost of the transaction will depend on the category, the product and what is our level of engagement with the particular product or a category. I think the cost has to be very reasonable as ultimately customer doesn’t like to pay more than what he spends.

As your customers are already buying through consumer financing at Ezone so how will you encourage them to shop at your other stores?
A consumer is a consumer, everybody wants grocery, clothing our whole job is to make them to come into our other format stores. You can acquire customer from anywhere but ultimately we have to move around and make him shop everything.

How data science allows you to take some risk on consumers?
We have data on consumers shopping pattern, changing consumer social behaviour with the penetration of internet, consumers propensity to pay, their aspiration level. Therefore data science allows you to take some risk on consumers and how can we let consumer consume more and pre-pone their purchases is the exercise we should focus upon.

You have tied-up with Oxygen and then acquired FabFurnish so do you think tie-up is a good option to reach more and more people?
I think every company cannot do everything of its own. There are certain people who have developed expertise so tie up is a way of growth now. I doubt there is anybody else in the country who can do something what we are trying to do.

How much this tie-up will add to your loyalty customer base?
Two things happened today one is pre-pone of a purchase and next is upgradation of purchase and both results into increase in business for us. Whatever little experiment we have done with consumer financing at Ezone and HomeTown stores has resulted into increase of 2.5X to 4X of the business. I think bringing this credit finance into grocery and apparel will prepone a lot of purchases and can increase the business by another 4X in terms of ticket size. This might be the game changer in the history of future group.

Why do you think that the next round of consumption growth will only happen through consumer financing?
The next round of consumer growth will happen through financing. Let’s think if we are able to finance x number of people to buy anything then basically it’s a deferment of a payment cycle and that money comes into the system on consumption. In a sense it increases per capita consumption in a society. Through consumer financing more money available to consumer more leads to more manufacturing and more services. Normally Indians have ability to pay though there is steadiness in income.

What is your view on so many developments are happening in the FDI space?
They are all welcome most especially in the food processing and single brand retailing. They have simplified the way FDI should be looked upon you can’t get better than that. 

What will be the future of consumption in India?
In India there was an era of shortages and now there is an era of abundance. We have more goods than what we can sell. The power of consumption is huge. Consumption is equal to development of any society. If every Indian will consume Rs 2000 goods more annually then our GDP will grow by 2 percent. Consumers are ready they wanting to consumer more and more. Demographic aspiration level, kind of exposure they are getting and the rising income level will lead to rising consumption.

Kishore Biyani
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