How might the e-commerce policy change in the business model of some of the large e-commerce operators, boost the likes of retailers such as yourself?
The policy once we went through was one of the best clarifications to have come from the government because there were rules which talked about marketplace B2B business and doing retail business was the circumvention of that policy, an ambiguity, which in some way people were taking advantage of.
This brings an end to people doing retail business which was the intent of the policy that was there for a long period of time. We are very happy that there is a level playing field. There is a policy clarity. Why cannot we build our own Indian Alibaba or Indian Amazon? I do not know why we are so enamoured by the international players.
Does this move by the government impact your discussion with a potential e-commerce giant? Does it give you more bargaining power?
I would say we are looking at a collaborative approach of doing things and we believe we have a created interesting infrastructure in the country in terms of operating out of 355 towns, having our own value chain management, having our own supply chain, having our own physical retail stores, data, the multiple things.
We believe if we can align with somebody, we can grow much faster. There is always a collaborative way of working which I believe will continue to happen and we would be looking at how we can collaborate with multiple players to do multiple things to excite our customers and make products reach at a much faster speed to the consumer.
The Indian retail sector saw some interesting events and changes also. Experts believe this sector is at an inflexion point and could go substantial in 2019. Do you agree with that? How do you see Future Group grow in 2019?
Retail is always an exciting play. I personally believe retail always be exciting because every day is a new day. Customers are changing, products are changing, categories are emerging. There are new ways of doing business. Technology has come into play. Data is coming into play. So business is probably more exciting than ever. Yes there is so much of opportunity in India because India is a country of 1.3 billion people with aspirations rising, affluence rising, infrastructure getting created, lot of new categories getting formed. As one of the players in the market, we are more excited because of the opportunity which lies ahead of us since we have built a whole business around managing the entire value chain and building infrastructure to manage the scale and complexity of this business.
In India, grocery accounts for 62% of the total revenue but the store based retails have captured only 3% of the opportunity and online penetration is not even half a per cent. Could this be the story for 2019 and could this be the story for Future Retail also?
We operate in more than 355 cities and around 8,000-9,000 rural towns. We have a large distribution base. We have plans to open 10,000 small stores over the period of next seven years. We are currently opening around two-three stores a day and our effort is to make grocery a very important part of our business. Since we have lot of our own manufacturing, nearly 40 manufacturing units which we have set up, food parks in Bangalore and Nagpur and more coming up. For us grocery is an important play but it is 35% to 40% of our food business. We believe as we go forward with lots of small stores coming up, the percentage of grocery might increase.