big bazaar 2014_v1
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Case Study
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Retail IndustryIndia
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Indian Retail industry : Organised Retail poised for big leap----dynamic and fast paced
and challenging.
Accounts for over 10 per cent of the countrys GDP and around 8% of the
employment in India.
The country is today the fifth largest global destination in the world for retail.
Retail market poised to double from Rs.31 lakh Cr. in 2014 to Rs.62 lakh Cr. in 2020
Organised retail share will grow from 8% to 14% in the same period and Organised e-
tailing will grow from 1% to 3% -- may be 5% ( same period)
Tier-II and Tier-III cities such as Jaipur, Nagpur, Ludhiana, Vadodara, Aurangabad, Kochi,
etc., are emerging as the new hot spots of consumption
RIL has 1700 stores in different categories with revenue of Rs.14500 Crores ( 2013-14)
Reliance Market has innovated with Wholesale Cash & Carry segment --- 32 operational
stores --- enjoys patronage of more than 1.2 million registered members.
RETAILPoised for quantum change
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RETAIL - Introduction
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RETAIL - Introduction
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RETAILAdvantage India
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Retail formats in India
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Key Players in Retail
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Competitive landscape in India
Retail Formats
Speciality Retail
Convenience
Stores (Food
and Packaged
HH products)
Electronics Hypermarts Apparel Restaurants
Titan Nilgiris E-Zone Big Bazar Arrow Saravana Bhavan
Tahnisq Food World Croma Hypercity Zodiac Pizza hut
Landmark Birla MORE Vijay Spencers Globus Dominos
Crossword Varkeys Vasanth Reliance Footwear Caf coffee day
Mobile Store Mobile Store Vivek Trent Bata Barista
Universal Universal Reliance Digital Tata Star Footprints
Reliance Vision Reliance Fresh I-Store Liberty
Apollo Reliance super
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Organised Retail
Organised Retail Penetration (ORP) in India is low (8%) compared to other countries
such as US (85%)
There are over 15 million mom-and-pop stores
The organised retail is expected to account for 14% of overall retail market by 2020.
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Growth drivers for Retail in India
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FDI policy for Retail growth
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Benefits of FDI
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FDI Policy detailsSingle/Multi brand
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Characteristics of Retailing
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Organised v/s Unorganised retailing
Conventional retailing Organised retailing
Small neighborhood shops (mom and pop stores)Spacious, hygienic stores --- areas ranging from
3,000 sq. ft. to > 1,50,000 sq. ft.
Shoppers stand outside the shop, ask for the things
they want --- have no access to entry in shop and
examine things themselves
Air-conditioned. Self service. Touch, feel and
explore
The shopkeeper picks up / packs the product asked
for from the shop
The shoppers themselves can pick up the products
of their choice on their own from the array of
displayed products.
There are many in each neighbourhood. Easy
access--- particularly for FMCG products. They
come in all shapes and sizes
In hot spots, high street and not necessarily in each
neighbourhood. Large size desired for better
viability
Grocery and other commodities are not packed and
labeled in the shop.
The products are available in packed form properly
labeled with all details for a shopper to make a
buying decision.
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Build scale
Huge upfront investment in Store capex
Integrate
Supply chain management. Own brand development
For mass penetration pricing/value is critical
Evolve over a period
Successful retailers evolve over a period of time
Continuous experimentation across categories / locations to discover a promising
concept.
Excel in execution Excellence in execution is a result of right investment in resources --- people,
systems and processes
Vision
Clarity around the offering, the identity of the target group, and the value
proposition.
Characteristics of successful retailing
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Key aspects
Location: Frontage , Flow of traffic, parking space, Hot Spot or Neighbourhood
Format/Size:
Dimensioning format size key to break-even/ future growth
Area and format of operations
Identification of geographystate / district / town or city
Thorough pre-work for identification of an area/s within the town or city
based on the demographics of target consumer group / catchment
Expansion
Clarity on further expansion
o ONLY metros
o ONLY state or a particular region
o ONLY category B/C towns
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Supply chain for profitability: Robust supply chain to ensure timely deliveries / re-filling and managing stock
pipeline
Ensure better margins by exploring direct sourcing
eg. Fruits and vegetables from farmers
Managing inventory turns
Customer service
Build a very strong customer service management module
Acquire new as well as retain existing subs through loyalty programs
Build a strong brand
Umbrella brandeg. Reliance
Product specific brandeg. Reliance Fresh, Reliance Foot Print, Reliance Digital
Key aspects
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Innovation : Launching new formats eg. Shop-in-shop / small neighborhood stores, etc.
Loyalty programs
Creating private labels
Investing in IT systems for better operational efficiencies
Creating new distribution channels
Managing the work force
Create talent pool
Ensure growth of employees
Retention; Reward and recognition
Key aspects
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Big Bazaar
Positioning : High Service
Low Service
High PriceLow Price
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Big Bazaar
Strengths : High Brand equity
State-of-the-art infrastructure of outlets
Point of purchase promotions
Variety of products
Weakness : Falling revenue per square feet
unable to meet store opening targets
Opportunities :
Organised retail has a small pie of Indian
retail market Evolving customer preferences for
organised retail
Threats :
Competition from other organised retail
players , entry of global players.
Online
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Big Bazaar
Product mix:
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Big Bazaar
Product mix contd:
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Big Bazaar
Pricing mix:
Value pricing
Promise of Is se sasta aur accha kahin nahi!
Promotional pricing
Low interest financing
Psychological discounting (Rs 49, Rs 99, Rs 299, etc.)
Special event pricing (Diwali , Gudi Padwa, Republic day, etc.)
Differentiated pricing
Time based pricing (Peak / off-peak hours, Happy Wednesdays, etc.)
Bundling
Combo offers
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Big Bazaar
Promotional mix:
Below the Line promotions
Coupons / discounts
Get more at regular price
Bulk purchase discounts
Exchange offers (Juna do, naya lo)
Special occasion promotions
Tie Ups :
o Star Parivaar range of products in associaiton with Star India
o Bang-Bang range of garments
Above the Line promotions :
Advertised through TV / radio / print
Republic day promotion (Saal ke sabse saste 4 din)
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Big Bazaar
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Big Bazaar
Big Bazaar brand extension :
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Food and grocery retailing, which forms the largest chunk of organised retail, is a toughbusiness to be in.
Food and grocery typically has a gross margin of 10-15%, compared to 40-50% for
apparels.
Supermarket chains are struggling to create a profitable model.
On the store level, it generally takes 12-18 months to break-even but the period is taking
much longer now
Key aspects
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What Should Biyani do
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What has he done
Amazon India and Future Group have announced a strategic alliance under
which the e-tailer will sell the retail chain's products online.
Big Bazaar aims for 10,000 virtual franchisees in two years. agents who will
take orders from customers and send them to Big Bazaar which in turn will
deliver the goods at the doorsteps.
Biyani acquires Nilgiris for Rs.300 Crores.
Chasing profits, Kishore BiyanisFuture Group shut 40% of Food Bazaar
stores in 2013
http://profit.ndtv.com/news/corporates/article-big-bazaar-aims-for-10-000-virtual-franchisees-in-two-years-377644http://profit.ndtv.com/news/corporates/article-big-bazaar-aims-for-10-000-virtual-franchisees-in-two-years-377644http://profit.ndtv.com/news/corporates/article-big-bazaar-aims-for-10-000-virtual-franchisees-in-two-years-377644http://profit.ndtv.com/news/corporates/article-big-bazaar-aims-for-10-000-virtual-franchisees-in-two-years-377644http://profit.ndtv.com/news/corporates/article-big-bazaar-aims-for-10-000-virtual-franchisees-in-two-years-377644http://profit.ndtv.com/news/corporates/article-big-bazaar-aims-for-10-000-virtual-franchisees-in-two-years-377644 -
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Expand at a fast pace --- YesLook at smaller formats of 3000 sft to 5000 sft for convenience store ( Food and
monthly HH consumables )and aim to cover as many ZONES as possible in selected cities
Look at franchisee model for the smallconvenience store format.
Explore opportunity to take over stand alone/ Local outlet which is very strong in a
neighbourhood.
Achieve 70% plus geographical coverage in select cities before going into the next tier
Be flexible and ready to close down some stores if they are a drag
Move ahead of Sabse sasta aur achha. Deliver experience and value
Look at long term play and hence launch formats/stores with a definite break-even
mandate---- Eschew the temptation to build valuation by reckless roll out.
Each product category to operate independently as profit center
What Should Biyani do
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Thank You
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