Subhiksha: Managing Store Operations

Founded in 1997, Subhiksha had grown from one store in 1997 to more than

1000 retail outlets in 2008. It sold FMCG, grocery, pharmacy, mobile products,

and fruits and vegetables (F&V). It was the largest supermarket and mobile retail

chain in India with presence in 90 cities. Although organized retail was identified

as a high-growth area by the middle of 2008, players had realized that organized

retail in India was going to be tough business. Various players (Reliance, Bharti,

Birla, and the Future Group) were experimenting with different formats and

models. Subhiksha decided to come up with its own model, which in its view was

suitable to the Indian context. Subhiksha targeted the middle and lower classes,

not the high-end customers. IT operated with an everyday low pricing model and

located several smaller stores closer to customers who lacked markets nearby.

At the operational level, the company constantly increased the supply chain

process efficiency to deliver goods at low prices. The Subhiksha business model

is explained through a detailed description of operations of a store (Indiranagar)

located in Bangalore. It also describes operations of the distribution center that

served the Indiranagar store as well as 58 other stores. The case discusses the

challenges of organized retail in general and specific challenges of inventory and

cost management for a discount retailer. It also provides detailed data that can

be used for the diagnosis of the supply chain system at Subhiksha.

The Subhiksha case is a comprehensive case dealing with retail operations and

supply chain issues. Ideally this case should be scheduled after all the basic

concepts in supply chain management have been covered in the course. It is

also useful for discussing the complexity of introducing a unique business model

in the Indian organized retail context. The case also covers a wide range of

issues in supply chain management and can be used to develop skills in supply

chain diagnostics. As it can be handled at various levels of complexity, it can be

used as a summary case for a course or module focusing on supply chain

fundamentals such as: Retail supply chain management (SCM) Supply chain

strategy and performance measures Supply chain planning practices Forecasting

Inventory management Transportation management Warehouse management

Assortment planning IT and SCM Supply chain integration There is enough

scope for the instructor to get into several degrees of detail in each of these

issues. The instructor can also use this case to hone the diagnostic skills of

students.