comparision of indian retail
DESCRIPTION
In terms of Strategy , SWOT PEST analysis To compare the different strategies adopted by Indian Retails industry to have asustainable businessTRANSCRIPT
"Compare and
contrast the
resources, capabilities
and competencies of
two leading Retail
firms in India -
Reliance & Future
Group”
Roadmap..
Introduction
Resources Analysis
– Porter's Five Forces Model
– PEST
– SWOT
Capabilities Analysis
Strategy Analysis
Resource Gap Analysis
Recommendations
Though the firms chosen are Future group & Reliance Group
for comparing and contrasting the Resources, Capabilities &
Competencies our study shall be limited to Big Bazaar &
Reliance Mart of Future Group & Reliance group
respectively.
Scope of our study..
Retailing
The term “Retailing” refers to any activity that involves a
sale to an individual customer. It is the interface between
the producer and the individual consumer buying for
personal consumption.
Indian Retail Market
The retail sector in India is growing at a phenomenal pace.
According to the Global Retail Development Index 2012, India
ranks fifth among the top 30 emerging markets for retail.
The size of India's retail sector is currently estimated at around
$450 billion and organised retail accounts for around 5% of
the total market share.
It is estimated that the retail sector would continue to grow at
10-12 % per annum.
Brief Introduction about the
Firms
Corporate Profile
• Future Group is India’s largest retailer and one of the leading business houses.
• Its founder and Group CEO is Mr.Kishore Biyani .
• Future Group’s retail network touches the lives of more than 200 million Indians in 73 cities and 65 rural locations across the country.
• Currently operates around 1,000 stores spread over 16 million square feet of retail space.
How it grew…
• 1987 incorporated as Manz Wear Private Limited, launch of
Pantaloons trouser (India’s first formal trouser brand)
• 1992 launch of Initial public offer (IPO)
• 1994 establishment of Future Group India
• 1997 Pantaloons – India’s family store launched
• 2001 Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s
first hypermarket chain launched
• 2002 Food Bazaar, launch of supermarket chain
• 2007 Future Group achieved milestone of $1 billion turnover
Future Group
PANTALOON RETAIL INDIA LTD.
HOME SOLUTIONS RETAIL INDIA LTD.
FUTURE BRANDS LIMITED
FUTURE MEDIA (INDIA) LIMITED
FUTURE SUPPLY CHAIN SOLUTIONS LIMITED
FUTURE AXIOM TELECOM LIMITED
FUTURE VALUE RETAIL LIMITED
PANTALOON FOOD PRODUCTS (INDIA) LIMITED
FUTURE KNOWLEDGE SERVICES LIMITED
FUTURE CAPITAL HOLDINGS LIMITED
FUTURE GENERALI INSURANCE COMPANY LIMITED
FUTURE BAZAAR INDIA LIMITED
STAPLES FUTURE OFFICE PRODUCTS PVT. LIMITED
Vision: Future Group shall deliver Everything, Everywhere, Every
time for Every Indian Consumer in the most profitable
manner.
Mission: We share the vision and belief that our customers and
stakeholders shall be served only by creating and executing
future scenarios in the consumption space leading to economic
development.
Future Group
• Big Bazaar was started by Kishore Biyani, the Group CEO and Managing
Director of Pantaloon Retail India.
• Big Bazaar was launched in September, 2001 with the opening of its first four
stores in Calcutta, Indore, Bangalore and Hyderabad in 22 days.
• Within a span of ten years, there are now 161 Big Bazaar stores in 90 cities
and towns across India.
• Though Big Bazaar was launched purely as a fashion format including
apparel, cosmetics, accessory and general merchandise, over the years it has
included wide range of products and services.
• The current formats includes Big Bazaar, Food Bazaar, Electronic Bazaar and
Furniture Bazaar.
• As the modern Indian family's favorite retail store, Big Bazaar is popularly
known as the "Indian Walmart".
Corporate Profile
• Reliance Retail, Ltd. is a subsidiary company of Reliance
Industries. Founded by Mukesh Ambani in 2006 based
in Mumbai
• It is the second largest retailer in India.
• Its retail outlets offer foods, groceries, apparel and footwear,
lifestyle and home improvement products, electronic goods,
and farm implements and inputs.
• The company’s outlets also provide vegetables, fruits, and
flowers.
• More than 5 years into operation, RRL has now
expanded its presence in more than 85 cities across 14
states in India.
• The firm has expanded to more than 1,000 retail stores
across all formats.
How it grew..
Vision: With a vision to generate inclusive growth and prosperity
for farmers, vendor partners, small shopkeepers and consumers,
Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to
lead Reliance Group’s foray into organized retail.
Reliance Retail Ltd.
RELIANCE FRESH LIMITED
RELIANCE DIGITAL LIMITED
RELIANCE JEWELS LIMITED
RELIANCE TIME OUT LIMITED
RELIANCE TRENDS LIMITED
RELIANCE MART LMITED
RELIANCE FOOTPRINTS LIMITED
RELIANCE WELLNESS LIMITED
Other businesses
• Part of Reliance Retail Ltd headed by Mr. Mukesh Ambani
• First store in August 2006 at Ahmedabad
• It is designed to be an all under one roof supermarket that caters
to household needs like Food article , apparel, kitchen utensil,
electronics goods, furniture etc
• The hypermarket is selling the products on EDLP (every day low
price) basis at prices15-20 percent lower than market prices.
• In order to grow faster and better in local markets with higher
margins, it has focused largely on local brands instead of national
brands.
• Reliance is also selling clothes ,furniture, food article with private
labels.
Resource Based Approach for
Strategy Analysis of the Two
Firms
Porter’s five forces analysis
Threat of new entrant FDI policy now made favorable for
international players but still some
states are not willing to allow them in
retailing.
Domestic conglomerates looking to start
retail chain
Bargaining power of the
Supplier
The retail chain are using it own brand
in apparel as well in food segment.,
they are also big B2B consumer and
they are in better position to bargain
with the supplier.
There are few suppliers who have a
slight advantage over others on
account of being established players
and enjoying brand distinction
Bargaining power of Buyer Consumers are price sensitive
Availability of more choice
Threat of Substitute Unorganized retail
Rivalry among competitors
Shoppers Stop, Wills Lifestyle,
Spencers
Vishal Retail
Bharti & Walmart etc.
Contd..
Competitive Rivalry within
Industry
(High)
Threat of new Entrant
(Moderate)
Bargaining power of Suppliers
(Low)
Threat of Substitutes
(High)
Bargaining power of buyers
(High)
POLITICAL
A stable govt at the center will facilitate speedy economic recovery and create an encouraging investment climate
Problems of getting proper protection from local government.
.
ECONOMIC
India one of the fastest growing economies
increasing income of people
Increase in percentage of service contribution to GDP
Stable even during recession
Growth stage: High revenue but high expenditure on promotion
SOCIAL CULTURAL
Increase in nuclear families
Preference to shop in nearby local store with credit facility
Increase in working women proposition
Life style changes
Shift in product and service preferences
Increase in young population
TECHNOLOGICAL
Technological development for faster service
Better application of IT in the modern retail industry, like in supply chain management , store management and CRM
Electronic billing
Use ERP module for handling inventory and finance.
PEST
Strengths
Big Bazaar Reliance Mart
• High brand equity enjoyed by Big
Bazaar
•Low Price/Different Discount Scheme
• State of the art infrastructure – Huge
Display area
• Product Diversity - A vast variety of
stuff available under one roof
• Everyday low prices, which attract
customers
• Maximum percent of footfalls
converted in sales
• Huge investment capacity
• Biggest value retail chain in India
•Available facilities such as online
booking and delivery of goods
• First to enter into this
unorganized sector of
vegetables and fruits
•Private label sale – own
products (Reliance Select)
• Contract Farming
•Everyday low prices, which
attract customers
• Network – 1600 channels in
villages
Weakness
Big Bazaar Reliance Mart
• Unable to meet store opening
targets on time
• Falling revenue per sq ft
• General perception: ‘Low price
Low quality’
• Overcrowded during offers
• Long lines at billing counters
which are time consuming
• Limited only to value offering
low price products. A no of
branded products are still
missing from Big Bazaar’s line
of products. E.g. Jockey, Van
heusen,
•Limited consumer insight
• lack of detailed region specific
customer data.
• Inadequate human resources
• lack of trained personnel at all
level
• Underdeveloped supply chain
and underdeveloped logistics
infrastructure.
Opportunities
• A lot of scope in Indian organized retail as it stands at
approximately 4%.Retail chain influence the people due
to lower price, easy availability and value to money
• Potential for investment and high growth due to
increasing number of youth
• Fastest growing formats
• Rural retail
• E-retailing
• Retail franchising
• Increasing mall culture in India
• More people these days prefer to visit big stores where
they can find large variety under one roof
Threats
• Political issues - Government policies are not well-defined in emerging markets like India
– stringent employment and industry laws
– Taxation hurdle.
• Social issues as large number of small kirana store will be effected
• Competitors, global big players planning to foray into Market
• Poor inventory turns and stock availability
• Transportation system in rural India is week resulting in lower realization of value chain system
• Policy related issues
• Numerous license , permits and registration
• Farmer and retailer unfriendly APMC act.
Major competitors of Big Baazar & Reliance
Mart • Shoppers' Stop
• Westside (Trent)
• Lifestyle
• RPG Retail (Food world, Music world)
• Wills Lifestyle
• Globus
• Piramals ( Pyramid & Crosswords)
• Ebony Retail Holdings Ltd.
Capabilities
Big Bazaar
• Effective and efficient
Inventory control
• Diverse Industries
• Volumes / Economies
Reliance Mart
• Forge strong & Lasting
bond with millions of
farmers
• Offer unmatched
affordability, quality,
convenience, service and
choice
• Consistent quality and
unbeatable freshness
Performance of Future Group
Performance of RRL….
Competencies
Biz Bazaar
• Best pricing throughout
the year.
• A choice of more than
20,000 products
• Fast deliveries – tie ups
with world leaders in
logistics & transportation
services
• Special emphasis on
apparels and life style
products Providing
interesting discounts
Reliance Mart
•Ability to understand the
needs of the middle class
Indian customers and their
unflinching service
orientation.
Strategy: Big Bazaar
Real-estate game:
• According to kishore biyani, real estate cost should be
lesser than 5% of total sales of store in order to provide
maximum benefits to customer
• The strategic decisions to secure spaces before other
retailers join in have resulted in cost saving.
Nurturing relationship:
• Kishore Biyani follows the strategy to develop trust and
nurture relationship with suppliers. Whoever works with
Future Group, either leaves in initial deals or continues
forever.
Big Bazaar’s Chaos Theory evolved to
cater to the Indian Mindset
Strategy: Reliance Mart
Growth through Value Creation
• With a vision to generate inclusive growth and prosperity for
farmers, vendor partners, small shopkeepers and consumers,
it was set up to lead Reliance Group’s foray into organized
retail.
• Based on its core growth strategy of backward integration,
RRL has made rapid progress towards building an entire value
chain starting from the farmers to the end consumers.
•Employed Farm to fork in Reliance Fresh, No middlemen,
Farmers – Customer
Reliance Fresh - Farm To Fork Model
Gaps in the resources of the two retail firms
• Scope for improvement in Supply chain management
and weak support infrastructure
– Poor infrastructure-Underdeveloped supply chains, lack of
strong cold chains, poor warehousing facilities, bad roads,
etc.
– Absence of a mature Third Party Logistics (3PL) industry
– Fragmented supply base
• Rentals – skyrocketing to all time high
• Mistakes by retailers have also added to external
troubles
– Crowding in unattractive locations
– Inability to compete with traditional retail
– Over reliance on debt funding
Recommendations
Recommendations
Recommendations (contd..)
• Build a competent SCM system
– Strengthen support infrastructure
– Warehouses
– Cold Chain
– Third Party Logistics (3PL)
– Backward integration
– Optimize Processes
• Build a competent CRM system
– Service and quality can be improved by integrating customer
feedback with back-end systems and partners and.
– Growth of CRM facilitated by the help of IT in the organization
will earn a lot of reputation for the retail chain
Recommendations (contd..)
Thank You!