HomeTown may be spun off from Future Retail to create a new firm by combining it with FabFurnish.com
Mumbai: Kishore Biyani, group chief executive officer of retail conglomerate Future Group, may hive off the home retail business HomeTown from its flagship Future Retail Ltd and create a new home furnishing company by combining it with FabFurnish.com, which it acquired last month.
Future Group is the parent of listed companies such as Future Retail Ltd, Future Lifestyle Fashions Ltd and Future Consumer Enterprise Ltd.
The company has been operating the HomeTown retail chain for the last 10 years and creating a standalone home furnishings company is a move towards unlocking value, the company said.
“We are looking at creating value as we merge and create an independent identity for our home furnishing business,” Biyani told a press conference on Wednesday to announce the re-launch of fabfurnish.com on 5 May along with a campaign and discounts in the marketplace.
HomeTown is expected to become a Rs.1,000 crore business by the end of the current financial year which makes it the largest home furnishing company in the country, said Mahesh Shah, chief executive officer, HomeTown.
There are 42 HomeTown retail stores and the plan is to add eight more in this fiscal year, he added.
Globally, very few retailers sell everything from fashion to furniture and groceries, with most large companies specializing in a particular area of operations, said Abhishek Malhotra, leads the consumer industries and retail products practice for India at AT Kearney. “It makes sense to start creating separate specialist companies now that these businesses are gaining scale,” he said.
However, in India, not many home furnishing firms have gained success or scale. Reliance Industries Ltd’s retail arm Reliance Retail exited from its home furnishings retail business Reliance Living in 2014. Even hypermarket chain HyperCITY Retail India Ltd exited the furniture and electronics retail business two years ago.
Meanwhile, Swedish furniture and home furnishings maker Ikea’s first India store is expected to launch in 2017, which could further disrupt the sector.
Biyani, however, feels that by the time Ikea launches, HomeTown will be a sizeable business, with Rs.1,500 crore revenue and, hence, would not be impacted.
HomeTown will be a vendor on Fabfurnish.com, which will also sell home and furnishing products from other retailers.
Ashish Garg, co-founder, FabFurnish, said the company will turn profitable in the next three months, adding that it will be one of the first online retailers to achieve profitability in India as it looks to keep costs low and boost business.
Over the next three months Future Group will also launch its eZone app and online shopping portals for Big Bazaar, shoe brand Clarks and plus-sized women’s clothing brand All, said Vivek Biyani, director Future Group.
The group’s original listed entity Pantaloons Retail India Ltd and Future Venture India Ltd have over the years changed forms and names to become three listed entities spanning across groceries retail—Future Retail, Future Lifestyles (fashion) and Future Consumer Enterprise (an integrated packaged consumer goods company).
Currently, Future Retail is in the process of merging with Bharti Retail Ltd which will see the creation of two companies—one with the front-end retail operations and the second a back-end, infrastructure and investments company.
The home furnishings company, if created will be the fifth listed company of the group.