It's a Sunday afternoon at the Phoenix Mills shopping center in Bombay, and the crowds are crushing. The former textile mill is a chaotic sprawl of one- and two-story buildings that house 50-plus stores. In the center's open-air courtyard, vendors sell pizzas, popcorn, and roti bread from pushcarts. One establishment throbs with more activity than any other. Big Bazaar, the local version of Wal-Mart, is the modern Indian family's favorite store. It stocks everything from peanuts and avocados to mops and crockery. The ringing of the registers is constant. The crowds love it, as does Kishore Biyani, founder and chief executive of Pantaloon Retail (India) Ltd., which owns Big Bazaar and is India's largest retailer. "The mall of today is like the temple of yesterday, where people flocked on Sundays," he explains.
The retail revolution has finally hit India, after decades of being rebuffed by its traditional mom-and-pop neighborhood stores. But you won't find Wal-Mart Stores Inc. (WMT) or Carrefour here. Indian retail is still largely closed to foreign companies, so it's Biyani and his ilk who are profiting from the rapid growth of the mall-hopping Indian consuming class -- 105 million strong and swelling 10% a year. Retail stores and malls like Big Bazaar are expected to be 9% of the market by 2010, with sales of $23 billion, up from $6.4 billion last year.
There's plenty of room to grow. According to consultants KSA Technopak India, just 3% of India's $180 billion retail business is based in shopping centers and big stores, vs. 20% in China and 80% in the U.S. The rest is fragmented, with 12 million tiny shops catering to the needs of 1 billion Indians. Yet 60% of India is under the age of 30, and young India has an affinity for modern shopping. The country boasts 26 malls like Phoenix Mills, which will grow to 60 by December; the country's seven big retailers have 300 new stores under construction.
The level of competition will only increase once the government eases restrictions on foreign investment -- expected to happen within the next two or three years. Pantaloon's Biyani is preparing a battle plan. The son of a family of Bombay-based textile traders, Biyani, 43, started with one store in Calcutta in 1997. Today he owns 52 stores in 19 cities with revenues projected at $250 million for the year ending in June -- up 90% over last year. In any future battle with foreign competitors such as Wal-Mart, Biyani thinks he has the advantage of knowing the Indian consumer. One trademark of his stores: winding, U- and C-shaped aisles that create corners for families to consult about purchases. "Indians like to shop in groups and find straight aisles insipid," he says.
Biyani now sells every variety of goods under three brands. His 13-outlet department-store chain is called Pantaloons. Then there is discount hypermarket Big Bazaar and supermarket chain Food Bazaar. By December, Biyani's stores will occupy 3 million square feet of retail space. Pantaloons' stock price has zoomed from $5 a year ago to $17 today.
Skeptical analysts worry that Biyani is expanding too fast. He's got strong local competition, too. The Tata Group's Westside department store chain is growing as fast as Pantaloon. Other competitors include Shoppers Stop and the RPG Group's Spencer's. But Biyani dismisses the worrywarts. A rough-hewn entrepreneur himself, he has begun hiring experienced managers and accountants to drive expansion and manage inventory. There will be lots of new entrants to the business over the next two years, he says, but "we will have made most of our mistakes by then." It's still early days in India's retail industry, and down the road there is bound to be a shakeout. But it's clearly going to be tough to push Kishore Biyani off the top of the retail mountain.
By Manjeet Kripalani in Bombay