wal mart and big bazaar : a comparitive analysis

vis-à-vis

CULTURE,VALUES as key forces in shaping STRATEGY and developing

COMPETENCIES …Paras Deshpande

AGENDA

• Look out for differences and similarities in WAL MART and Big Bazaar.

• Look if strategy was shaped because of Value and necessity.

• Appreciate the unique Indian-ness Kishore Biyani has employed in retail chain buisness.

WALMART

• Sam Walton started as a specialty store owner of Ben Franklin franchise stores.

• He was forty four when we ‐opened first Wal Mart in ‐1962.

Opening the first WalMart• We really had only two choices left: stay in the variety store business; or open a discount store.

• Many of our best opportunities were created out of necessity. The things that we were forced to learn and do, because we started out in these remote, small communities.

EarlyTimes

• In the early days of Wal Mart the emphasis on item ‐promotion helped us to make up for a lot of shortcomings we had—an unsophisticated buying program, a less than ideal merchandise assortment, and practically no back office support. ‐

• Early periods were marked by extensive benchmarking to such a level that managers lived half of the time in competitors stores.

StrategicNotes• I think that misunderstanding worked to our advantage

for a long time, and enabled Wal Mart to fly under ‐everybody's radar until we were too far along to catch.

• But while the big guys were leapfrogging from large city to large city, they became so spread out that they left huge pockets of business out there for us.

• Our growth strategy was born out of necessity, but at least we recognized it as a strategy pretty early on. We figured we had to build our stores so that our distribution centers, or warehouses, could take care of them, but also so those stores could be controlled

OperationsManagement

Getting an early start on all these systems, building a foundation for our distribution centres development, starting to put data processing into the stores, really saved our bacon later on.

CreatingCulture

• Wal Mart is not a big success merely because we ‐grew up out here in the country, where people are just naturally friendly and therefore make great retail employees. It's true that we have many fine associates from the country, but they have had to enter our culture and learn retailing just like anybody else, and we have spent a good deal of time teaching many of them to overcome their natural shyness and learn to speak up and help our customers.

NEXT THE INDIAN CONTEXT

• Born in a middle class trading

family, Kishore Biyani started his career selling stone wash fabric as trader.

• His objective is to capture every rupee in the wallet of Indian consumer.

• He is concentrating not just on retail but his ambitions span over full consumer space.

• With the launch of Pantaloons, Big Bazaar, Food Bazaar, Central he has redefined the retailing business in India

Raja of Indian Retail

• There are three kinds of entrepreneurs - Creators, preservers and destroyers.

• He considers himself as both creator and destroyer at the same time. Preserving the status-quo has never been the cup of his tea.

• He strongly believes none of his business will ever cater to the elitist class.

• In the current era of knowledge economy Ideas will be the greatest assets of a company. Organizations that allow insights and information to flow freely will be the ones to come out as winners.

Kishore Biyani KBViews, Value and Vision.

• The changing demographic profiles, globalization, increasing income levels, urbanization, technology, and a free flow of ideas from within and outside is bringing about dramatic shift in consumer tastes and preferences.

• Underlying these trends there are tow undercurrents that are sweeping through young India – CONFIDENCE & CHANGE.

• These two have the potential to tweak an unprecedented era of CONSUMPTION.

Indian Consumer and 3C’s

• The younger India is expected to embrce the values of family and continue and live the Indian way.

• Therefore it is imperative to attract and deliver the consumer understanding and interpreting the ‘Indian-ness’ quotient of the consumer.

Indian Consumer

India One

India Two

India Three

Consuming class [ 14% ] – High disposable income

Serving class [ 50%] – Drivers, cleaners etc. They serve the consuming class.

Struggling Class – Live a hand to mouth existence.

• Also the consumer class and serving class never shop at the same stores.• Serving class feels comfortable in crowds and chaos and hesitates

even to enter the specialty stores.

Indian Consumer Space

• By 2010, almost half of our citizens will be working

age group of twenty to fifty four years . A youthful, exuberant generation, bred on success will not only drive productivity but also set a spiraling effect on consumption and income generation

• As retailers, we have not only to acknowledge this change but remain ahead of evolution curve, not to mention be an agent of change.

Indian Consumer Space continued

• Indian consumer needs indigenous solutions to her shopping needs –that give her best value for money in an environment she is comfortable with..

While designing our Big Bazaar the core idea was to merge the look and feel of ‘mandis’ with modern retail’s features like quality, choice and convenience.

Catering the Indian Consumer

• The Indian consumer has her peculiar preferences when it comes to staple food. She would like to touch, feel the grains for herself before she would buy them. It is hence at Food Bazaar staples are sold loose.

Catering the Indian Consumer

Catering the Indian Consumer• Abroad hypermarkets are typically designed on box

type formats, shoppers abroad usually shop alone and it isn't considered an exciting activity.

• For Indians shopping is entertainment, they come with entire family and move in groups.

The U shaped sections proved to be more appropriate than the long aisles of western hypermarket.

• Shopping in India is a local experience and habit. It is therefore imperative to understand each and every community and make the decisions on the grass root insights acquired.

• Also it has set up Big Bazaar in key real estate location in heart of important cities, which can be leveraged in the long run.

Catering the Indian Consumer

• Retail stores need to drive sales and not be sales driven.

• KB is of a strong philosophy that the retailers job is to create demand and the supply chain will follow out of necessity.

• By focusing on customers we have managed to keep our business simple and agile.

• Local sourcing has been adopted as centralized processes may not be viable of a diverse country as India.

Modus Operandi

• Although because of the value proposition and scarcity of organized retail might have given Big Bazaar the luxury to sideline operations, it is expected to take the center stage as the format scales up.

Modus Operandi

• Central A mall with virtually no walls to

separate different store. The brands pay a percentage of their sale to proprietor and the owner gets to decide which brands to keep.

• Specialty retail stores.• KB’s Wholesale Market.

New Formats

Allied ventures

• Buyer’s switching cost is low

• Firm can adjust prices quickly

• Price elasticity of demand demand

Five Force Analysis : Competitors

CompetitorsSuppliers

Substitutes

Customers

Potential Entrant

• FDI • Big Business houses

Five Force Analysis : Entrants

CompetitorsSuppliers

Substitutes

Customers

Potential Entrant

• Use strong cash flows from other sectors.

• Have network capabilities.• Sourcing capabilities.

• Local Supplies provide flexibility.

• Contracts with large firms provides efficiency.

Five Force Analysis : Suppliers

CompetitorsSuppliers

Substitutes

Customers

Potential Entrant

• Locally sourced suppliers.• Big companies like P&G &

HUL.• Home grown brands like

D&G John Miller.

• Low switching cost• Transportation cost• Because of wider product offering the customer will not

have options in every segment.

Five Force Analysis : Customers

CompetitorsSuppliers

Substitutes

Customers

Potential Entrant

SWOT Analysis STRENGHT

• High Brand Equity• Every Day Low price [ EDLP ]• Real estate and Infrastructure•Understanding Consumer Preferences

WEEKNESS

• Falling Revenue/ Sq Ft.• Unable To Meet Store Opening Target• Perception Amongst Consumers

OPPORTUNITIES

•Targeting Area More Prone To Development•In Store Experience Improvements•New formats and consumption space

THREATS

• Competitors domestic and foreign • Economic Conditions

• IT Happened In India : Kishore Biyani.• Made In America : Sam Walton.• Flowingdata.com .• Google Image Search.

References

RETAIL IS DETAIL

TAG CLOUDRE

WRI

TE R

ULES

RETAIN VALUES

Drive demand NOT Demand Driven

Change is no more incremental its TRANSFORMATIONAL

Stack 'em HIGH and sell 'em LOW