As Reliance Retail gets control of Future Enterprises and all its businesses, do you think that the traditional mall model is not going to work?

In a way you are right that Biyani underestimated the big shift to only shopping. While Future group did have an online interface, they still relied largely on good old retailing through malls. But Netflix and Amazon were taking over lives in India.

Kishor Biyani loses control over the retail brands he created although the brand survives. Firstly, the traditional mall model was killed by online but the big hit came from the Coronavirus pandemic which sent people away from malls.

Let us look at how Flipkart and Amazon created the first risk for Future Group with their online offerings. They not only weaned away offline customers but also resulted in reduced footfalls as people did not see the need to go to malls and end up spending more.

This hit the revenue model of the offline stores, especially when these stores were paying fancy rents for location in fancy areas and the revenue flows were just not justifying the costs that were escalating. COVID was just the last straw on the camel’s back.

It was certainly the mall model that worked against Future Group. Revenue flows could never match up to the rental and other maintenance costs. Footfalls gravitated towards other activities and the actual purchase per customer was static or dropping.

That is when the debt also began to pinch. Future group had huge debt; both at the corporate level and at the promoter level. That had reached a level where the group was struggling to manage even with marginal profits.

COVID-19 actually exposed the limitations of the mall model, as is seen in most countries. Then Future group had no choice but to sell out to stave off a larger default. It was actually a mix of rising online and falling offline that hit Future group.