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IRN: Tell us about your background and your career leading upto now
Kal: I was born in Africa and raised in the UK. I studied Chemical Engineering, worked for a chemical company, then moved to Accenture and spent several years at KPMG where I launched their business transformation practice in the UK. After that I moved to a boutique strategy consulting firm called Stratagos, run by Gary Hammell who was a professor at London Business School and was a close collaborator of CK (Prahlad). Our objective was to build capabilities in companies to transform the industry structure and not necessarily be bound by traditional silos. Nokia was our first client. I then moved to the US with the same firm and worked with Best Buy as a client. Brad Anderson, the then CEO of Best Buy made me an offer to join the company. I was fascinated by his point of view around people and innovation within the company. I joined in 2003 as VP, Strategy. We did some pioneering work around customer centricity, which is often quoted now. A year and a half later I was asked to explore international opportunities. I now lead the operations in China, Turkey and the sourcing of our private brands out of China for the US.
IRN: How would you characterize the growth of the Indian retail industry so far?
Kal: I must start by adding a caveat that my knowledge about retail in India is not based on actual ground work done in India, but I have had discussions with several key players and I must say that retail in India is at a very exciting stage. We have spoken with all the retail majors in India and are closely watching the progress there. There are a lot of wonderful experiments being done by the likes of Future Group, Croma, Viveks, etc. There is business model innovation happening based on learnings from the field. This evolution is good for the industry and will force it to innovate to get around infrastructure and other constraints. Sometimes when things are too easy, you don't innovate.
IRN: When it comes to Asia, where is BestBuy's focus right now? Where does India stand in your plans?
Kal: The focus right now is clearly China. We entered China by acquiring 75% of Five Star, a local chain. We fully own and operate it now. It is a $1.8 billion business for us. We also have 8 Best Buy stores in Shanghai which are more high end and similar to our US stores. We have established good local leadership in our Chinese operations and have the support of the Chinese government. We are the number 3 player in China now for technology retailing. I am passionate about Asia and we see a lot of our future growth coming from this region.
It's still early days for us in India. We are watching the market and talking to the key players to understand how the industry will evolve. We are in the process of understanding how fast the manufacturers are willing to push change in the industry when it comes to the supply chain, for example. We are also trying to understand how much the government is willing to encourage healthy competition. Internally, we are gauging our capacity to experiment in India as well.
When we do enter India though, we will be completely open-minded about how we do it. We will enter using the business model that makes sense for us. It could mean taking the franchise route. It could mean partnering with a local company. It could include home shopping, ecommerce or some other model. We have a lot more tolerance for creative entry strategies. Remember we also have a services business and own brands that we sell.
IRN: What role will FDI play in these options?
Kal: FDI will play a role, but we will not let that dictate our approach. We will be broader around what business model makes sense and choose based on that. Even if FDI is allowed, if there are restrictions attached which don't make sense for us, we might prefer to use a different option. If we decide to work with a local partner, there are a few things we are very particular about - their value system, for example.
IRN: What are your learnings from China that you could apply here?
Kal: We have had good success in China because we took our time to understand the local market, worked closely with the government and found that the Chinese were very pragmatic about it in the sense that they realized that we were good for their economy in terms of bringing in good employee and customer practices and encouraging local manufacturing, especially in the consumer electronics sector, which they perceive as more sophisticated. Also, Five Star is a wholly owned subsidiary and its employees are part of our global system. They are both learning and sharing best practices. For example, they are excellent at managing holiday traffic. There are several big Chinese holidays compared to the US. So we are sharing some of their learnings there with the US and other regions.
IRN: Any suggestions for the Indian government, in terms of policy?
Kal: I would like the Indian government to think of technology retailing differently from other retailing because of its capacity to drive manufacturing and how good it will be for the country. The technology value chain is global and India stands a chance to play actively in it. Remember that we play in the entire technology value chain. Retailing can be thought of the last part of this value chain.
We hope the government will allow companies to compete for customers. Companies that treat employees and customers the right way need to be encouraged. It will mean a better experience and better prices for customers and the whole industry will take off. It will help manufacturing become more efficient and position India as a global player.
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