Big Bazaar 2014_v1

8/10/2019 Big Bazaar 2014_v1

1/34

1

Case Study

8/10/2019 Big Bazaar 2014_v1

2/34

2

Retail IndustryIndia

8/10/2019 Big Bazaar 2014_v1

3/34

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

8/10/2019 Big Bazaar 2014_v1

4/34

RETAIL - Introduction

8/10/2019 Big Bazaar 2014_v1

5/34

RETAIL - Introduction

8/10/2019 Big Bazaar 2014_v1

6/34

RETAILAdvantage India

8/10/2019 Big Bazaar 2014_v1

7/34

Retail formats in India

8/10/2019 Big Bazaar 2014_v1

8/34

Key Players in Retail

8/10/2019 Big Bazaar 2014_v1

9/34

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

8/10/2019 Big Bazaar 2014_v1

10/34

8/10/2019 Big Bazaar 2014_v1

11/34

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.

8/10/2019 Big Bazaar 2014_v1

12/34

Growth drivers for Retail in India

8/10/2019 Big Bazaar 2014_v1

13/34

FDI policy for Retail growth

8/10/2019 Big Bazaar 2014_v1

14/34

Benefits of FDI

8/10/2019 Big Bazaar 2014_v1

15/34

FDI Policy detailsSingle/Multi brand

8/10/2019 Big Bazaar 2014_v1

16/34

16

Characteristics of Retailing

8/10/2019 Big Bazaar 2014_v1

17/34

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.

8/10/2019 Big Bazaar 2014_v1

18/34

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

8/10/2019 Big Bazaar 2014_v1

19/34

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

8/10/2019 Big Bazaar 2014_v1

20/34

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

8/10/2019 Big Bazaar 2014_v1

21/34

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

8/10/2019 Big Bazaar 2014_v1

22/34

Big Bazaar

Positioning : High Service

Low Service

High PriceLow Price

8/10/2019 Big Bazaar 2014_v1

23/34

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

160

10

55

188

8/10/2019 Big Bazaar 2014_v1

24/34

Big Bazaar

Product mix:

8/10/2019 Big Bazaar 2014_v1

25/34

Big Bazaar

Product mix contd:

8/10/2019 Big Bazaar 2014_v1

26/34

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

8/10/2019 Big Bazaar 2014_v1

27/34

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)

8/10/2019 Big Bazaar 2014_v1

28/34

Big Bazaar

8/10/2019 Big Bazaar 2014_v1

29/34

Big Bazaar

Big Bazaar brand extension :

8/10/2019 Big Bazaar 2014_v1

30/34

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

8/10/2019 Big Bazaar 2014_v1

31/34

What Should Biyani do

8/10/2019 Big Bazaar 2014_v1

32/34

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

8/10/2019 Big Bazaar 2014_v1

33/34

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

8/10/2019 Big Bazaar 2014_v1

34/34

34

Thank You