Speaking at a retail convention, Kishore Biyani said the worst is yet to come for retailers.
Future Group founder Kishore Biyani said on Wednesday that the local retail company lost nearly 7 billion rupees in revenue in the first three to four months of the COVID-19 pandemic due to store closures, leading to it sell your business to Reliance Industries.
“To be very honest, we got into a trap with COVID-19. In the first 3-4 months, we lost nearly Rs 7 billion of revenue,” Biyani said at the Phygital Retail Convention.
There was no way the company would have survived losing such an amount, he said, adding that “the problem is that the rent does not stop, the interest (on the debt) does not stop.”
“We made too many acquisitions in the last six or seven years … I thought there was no other answer but to get out,” he said.
He said the worst is yet to come for retailers.
“We have designed the business to be profitable at 90 percent of our goals. In any scenario … we will not be able to reach 70-80 percent (of goal) … If you look at long-term planning, at 10 years, it won’t be easy for physical stores, “he said.
Biyani also said that consumer behavior is changing, which could make it difficult for retail stores to win back shoppers. He added that most large-format stores have become useless due to movement restrictions, so people now prefer to shop at the nearest stores.
In August this year, Billionaire Mukesh Ambani’s Reliance Industries announced the acquisition of the Future Group’s retail and wholesale business and logistics and warehousing business as going concern on a falling sales basis for a global consideration of Rs 24,713 crore.
Through the August deal with Reliance Industries, the Ambani-led firm will acquire Future Retail, owner of BigBazaar, which sells everything from groceries to cosmetics to clothing, and Future Lifestyle Fashions Ltd, which operates the fashion discount chain. Brand Factory.
While Reliance will take over Future Consumer, which sells food, household and personal care products, Future Group’s insurance and financial business is not part of the deal.
Future Retail operated 1,550 stores. Its flagship brands BigBazaar, FBB and Foodhall, Easyday, Heritage Fresh and WHSmith. Future Lifestyle Fashion operates 354 stores.
Reliance’s investment would help Future founder Biyani reduce debt. The deal is awaiting regulatory approvals.
Last week, US online retailer Amazon sent a legal notice to Future Group, alleging that the sale of assets of Rs 24,713 crore from the retailer to Reliance Industries violated an agreement with the e-commerce giant.
“We have taken steps to enforce our contractual rights,” said a spokesman for the Seattle-based e-commerce giant. “As the matter is sub-judice, we cannot provide details.”
Last year, Amazon bought a 49 percent stake in one of Future’s unlisted companies, Future Coupons Ltd, with the right to buy into the flagship Future Retail after a period of 3-10 years. Future Coupons owns a 7.3 percent stake in Future Retail.
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