Dissertation on Future Group

Dissertation Report on

“RETAIL STRATEGIES OF FUTURE GROUP”

Submitted to

University of Petroleum & Energy Studies

Dehradun

In partial fulfillment of MBA in Logistics & Supply Chain Management course

Under Guidance of

PROF. S. MOHAN

College of Management & Economic Studies

University of Petroleum & Energy Studies

Prepared by

Mr. Nikhil Kumar

MBA - Logistics & Supply Chain Management

Enrollment Number – R600209065

2009-2011

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CERTIFICATE

.

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the dissertation report on “Retail strategy of FUTURE Group” completed

and submitted to University of Petroleum and Energy Studies, Dehradun by Nikhil Kumar in

partial fulfillment of the provisions and requirements for the award of degree of Master Of

Business Administration (Logistics and Supply Chain Management), 2009-2011 is a

bonafide work carried by the scholar under my supervision and guidance.

To the best of my knowledge and belief the work is based on investigation made, data

collected and analyzed by the scholar, and this work has not been submitted anywhere else or to

any other university or institution for the award of any degree/diploma.

Prof. S. Mohan

CMES

UPES

Place: Dehradun

Date: 27th April, 2011 Signature of the Students.

NIKHIL KUMAR MBA (LSCM)

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ACKNOWLEDGEMENT

The success of any project is the result of dedication, hard work & Enterprise of not one but many person

participating in this project.

I take this as a prospect to declare that it is an achievement to have succeed in my final dissertation

project which would be not have been possible without the proper guidance of prof. S. Mohan my project

guide at UPES, dehradun.

I also express my apprehension and ingratitude towards all the faculty members at University of

Petroleum and energy studies for making this project a memorable experience. Hereby, I want to take the

opportunity to thank all sources, family, people, friends, guides who help me to get the required data.

Because of them I’ll able to the knowledge of my peculiarity about the subject. And those people who

take out time from their busy program to support me.

NIKHIL KUMAR

(MBA-

LSCM)

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TABLE OF CONTENT

Sr. No. Topics Page No.

1 EXECUTIVE SUMMARY 5-10

1.1 Introduction to Indian Retail Industry 7

1.2 History of Retailing 9

1.3 Evolution of Retail 10

2 RESEARCH METHODOLOGY 11-14

2.1 Research Objective 11

2.2 Literature Review 11

2.3 Type of Research 14

2.4 Sources of data collection 14

2.5 Scope of Study 14

2.6 Limitation of the study 14

3 INTRODUCTION TO FUTURE GROUP 15-17

4 SUCCESSFUL IMPLEMENTED STRATEGIES 18-23

5 SUPPLY CHAIN DESIGN 24-28

6 PROBLEMS FACED 29

7 SOLUTION TO PRESENT SCENARIO CONCLUSION 30

8 CONCLUSION 31

9 BIBLIOGRAPHY 32

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EXECUTIVE SUMMARY EXECUTIVE SUMMARY

The Indian Retail Industry is valued at about $300 billion and is expected to grow to $427 billion

in 2010 and $637 billion in 2015. Only three percent of Indian Retail Sector is organized.

Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model

Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP and

around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of

the most dynamic and fast paced industries with several players entering the market.

The retail industry sector has undergone many changes over the past few years; better

communication between retailers and suppliers has been taking place more exchanges in

information and know-how and perhaps a slightly more transparent commitment to building a

win/win approach to competitiveness.

Retailing is all about value extraction from the supply chain and delivering it in a viable way to

the consumer. It is characterized by a clear strategy and an operational plan and recently, the

industry has made a heavy use of information technology tools to manage the logistics and

marketing functions.

The project work title “Retail strategy of future group. Critically focus on the supply chain issue

& adopted strategy which ultimately leads to affect the customer satisfaction & effective

business in the retail sector. The project work also through a light on the Indian retail organized

sector, the challenges faces by the industry as well as the problem belong to the future group.

Before starting the project, I have selected the few Retail chain operating in India specially the

future group, these Retail chain are similar in their product category and functioning even they

have the same targeted customer. The selected Retail Chain outlets are Big bazaar, Pantaloons,

E-zone, Food bazaar, Furniture bazaar and the Local grocery shops.

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The base of the research is that the supply chain function affects the satisfaction and perception

of the customer, to confirm this fact a comparative study of strategies adopted is done among the

selected Retail’s supply chain.

The research started with the gathering of secondary data through internet magazines journals

and visiting libraries. Initially it was very difficult to get hold of adequate information as very

little is known and written about the retail industry of the country. It was observed that even

though India has the highest number of retail outlets in the whole world the industry as on date is

highly fragmented unorganized and unprofessional. The distribution networks are extremely well

developed by the concept of internal logistics is literally unknown.

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INTRODUCTION TO INDIAN RETAIL INDUSTRY

“As organized retailers carve out a bigger piece of the retail pie for themselves it’s an exciting

time for the retail sector”. (By Dominic K)

The Indian retail industry in valued at about $300 billion and is expected to grow to $427 billion

in 2010 and $637 billion in 2015. Only three percent of Indian retail is organized. Retailers of

multiple brands can operate through a franchise or a cash-and-carry wholesale model.

Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP and

around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of

the most dynamic and fast paced industries with several players entering the market. That said,

the heavy initial investments required make break even hard to achieve and many players have

not tasted success to date. However, the future is promising; the market is growing, government

policies are becoming more favorable and emerging technologies are facilitating operations

The Indian retailing sector is at an inflexion point where the growth of organized retailing and

growth in the consumption by the Indian population is going to take a higher growth trajectory.

The Indian population is witnessing a significant change in its demographics. a large young

working population with median age of 24 years nuclear families in urban areas along with

increasing working women population and emerging opportunities in the services sector are

going to be the key growth driver of the organized retail sector in India.

The retail industry sector is undergoing major changes. As competition is expected to intensify

more, profit margins will become tighter and the ability for margins will become tighter and the

ability for effective management through continued cost reduction is going to determine winners

from losers. Integrated management through the extended supply chain is however the best way

forward to effective value provision to the end customer. The extended supply chain however

may not necessarily means structural and methodological change but the ability to move away

from conventional rigid approaches characterized by a win/lose approach.

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The Retail industry has undergone many changes over the past few years; better communication

between retailers and suppliers has been taking place more exchanges in information and know-

how and perhaps a slightly more transparent commitment to building a win/win approach to

competitiveness. Retailing is all about value extraction from the supply chain and delivering it in

a viable way to the consumer. It is characterized by a clear strategy and an operational plan and

recently, the industry has made a heavy use of information technology tools to manage the

logistics and marketing functions.

The project work title “Retail strategy of future group”, focus on the supply chain issue &

adopted strategy which ultimately leads to affect the customer satisfaction & effective business

in the retail sector.

Table 1-Retail Market in India

Size 2004 (Rs. Bn) 2010 (Rs. Bn)

Estimated size of retail in India 9300 14000

Share of Organized retail (%) in India 3 10-12

Size of organized retail in India 280 1400-1500

Source: KSA Techno park

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History of Retailing

1870’s : General Stores

1870’s onwards : Increase urbanization in west due to increase industrialization; growth of specialty store.

1880’s Great Atlantic and Pacific Tea Company started as a modern chain of stores.

1890’s : Department store start appearing on the scene which is bigger in size and stock variety is considerably increased.

1920’s supermarkets appear

1940’s

(Post world war ) Trend of discount stores starts where the products are made available to buyers at lower than MRP prices; this format catches on rapidly in the USA and UK and is a huge success.

1970’s the bigger stores and malls start moving to the suburbs in USA.

1995’s Evolution on Net based retailing.

2003 Implementing web based technology (online trading)

2007 Boom in retail industry

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EVOLUTION OF INDIAN RETAIL INDUSTRY

For Indian retailing, things started to change slowly in the 1980’s when India first began opening

its economy. Textiles sector was the first to see the emergence of retail chains. Later on Titan,

maker of premium watches successfully created an organized retailing concept in India by

establishing a series of elegant showrooms.

For long these remained the only organized retailers but the latter half of the 1990s saw a fresh

wave of entrants in the retailing business. This time around it was not the manufacturer looking

for and alternative sales channels. These were pure retailers with no serious plans of getting into

manufacturing. These entrants were in various fields, like Food World, Future Group,

Subhiksha, Big- Apple, 6-ten, and Nilgiris in Food and FMCG; Planet M and music World in

music.

As of the year ending 2000 the size of the Indian organized retail industry was estimated at

around Rs.13000 Crore. The various segment of retail stores are given in the table. Retail

growth is already gathering momentum and the organized retail industry is touched Rs.45000

Crore in 2005. The modern retail industry could be worth US $ 175-200 billion by 2016.

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RESEARCH METHODOLOGY

RESEARCH OBJECTIVE-

To explore different innovative supply chain strategies adopted by Future Group.

To explore the other strategies those are adopted across the globe by various retail players

that can be used in Indian context.

LITERATURE REVIEW

The retail scenario in India is in a phase characterized by Supply Chain management,

Operations, Technology and processes (Ernst and Young in Sreejith and Raj 2007). The

increasing purchasing power of the Indian middle class is seen as a great source of money that

can push the profits of retailers up by giving consumers more choice.

The foremost company that is trying to become the Wal-Mart and Tesco of India is the

Pantaloon Group operating its stores under the ‘Big Bazaar’ banner which has already

established a major presence across many important cities. Following it closely are the Reliance

Group and the Bharti group, whose tie-up with Wal-Mart has also come under criticism even

though the government has given a go-ahead for the deal (Economic Times, 2007). Other

international retailers are thus open to such a joint venture where they would get to manage the

back-end operations.

In the list of banned things for FDI in India, retail stands first (SIA, 2008). Emotions are

raised when this topic comes up and the opposing view is currently strong. Even those arguing

for allowing FDI do with caution; that the entry should be ‘gradual and with social safeguards’

(Guruswamy et al, 2005). That the retail sector is estimated to be the second biggest sector of the

economy contributing over 10% of the GDP (Department of Commerce, 2005) highlights its

importance.

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The Future Supply Chain Solutions team currently oversees the operations of an existing

fleet of over 600 dedicated trucks, contracted from established regional and national transport

carriers, most of which are now equipped with GPS sets. In addition it provides integrated end-

to-end SCM, warehousing and distribution, multi-modal transportation and container freight

station. The total consolidated warehouse space that the company intends to have operational by

2010-11 is nearly 7.50 million square feet.

Questions however remain as to whether India would go the full way of liberalizing the

retail trade in light of opening up of the economy, a policy it has followed since the 1990’s.

There have been many demands to allow full FDI in light of arguments of efficiency and the

effect FDI has played in other sectors as automobiles. There are negative reactions of allowing

FDI in this owing to the “Wal-Martization” effect; where more and more power(economic and

otherwise) is control by fewer corporations (Ribeiro, 2005).That major retailers would want to

enter India is not a surprise going by the increasing standards and consumer oriented mindset of

the population. With the economy in the growth path since the last decade and real consumption

estimated to grow from 17 trillion rupees to 70 trillion rupees by 2025 (Narayanswamy and

Zainulbhai, 2007), it’s no wonder big companies want a share of this pie.

Two retailing giants – Wal-Mart and Tesco already source goods worth billions of dollars from

India and both are looking to establish a presence there in light of the great opportunities present

(Elliott, 2006) and German giant Metro already has multiple outlets in the Cash and Carry

wholesale segment.

Sobel and Dean (2008) have argued that despite contrary belief, Wal-Mart has

statistically insignificant impact on the local small business sector in the US and have used

Schumpeter’s theory of Creative Destruction that even though it may cause some individual

business’s to fail, these are offset by entry of other businesses elsewhere in the economy. Thus,

in their thoughts, Wal-Mart is simply an evolution over other forms.

There are arguments that these big superstores are simply a better way of resource

utilization in the economy and should therefore be good for the economy. Moreover, even the

big retailers have failed elsewhere. Going with its price competition has not been successful for

Wal-Mart in Germany, where it, along with other retailers was forced to increase prices

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(Andrews, 2000). Its ignorance of the competitive German market could be another reason

(Knorr and Arndt, 2003). Tesco, even though successful in many other international destinations,

had failed in France in 1996-97 (Dunn et al, 2003). Thus, even if such big companies were to

enter India, success would not be guaranteed. There is growing evidence that ‘Wal-Mart does

not bear the full economic and social costs of its business practices’ (Irvin and Clark, 2006 ) and

thus it is the community that has to do the balancing act and bear the brunt of having a Wal-Mart

nearby. This may not be a good option for developing countries like India which may not be able

to take additional social burden. Each worker in Wal-Mart replaces about 1.4 from the labour

market (Neumark et al, 2007) and the practice followed by in respect to payments for employees

has not been great (Greenhouse, 2002). Studies have also shown that small towns lose about 47%

of their retail trade after about 10 years of a Wal-Mart opening nearby (Stone quoted by Stone,

1997)

Moreover, competing for good is not a necessary assumption in this case. Often

companies with deep pockets would want to wipe out competition and then play as a monopolist.

The erosion of traditional industry boundaries and with companies as Microsoft, Wal-Mart,

Tesco and Intel knowing the ecosystem much better (Moore, 1997), competition would often fall

to pieces even if it was there. What happens after the entire competition is wiped out? Is a

monopolist situation better for the country?

Retail modernization in developing countries and its effect on the broader food system

has been a major focus of research since the early 2000s. The most visible banner for this work

has been the “supermarket revolution”. Supermarkets existed in Latin America from at least the

1960s, but began to grow much more rapidly in that region during the economic boom and

opening to Foreign Direct Investment (FDI) of the 1990s. Growth began later in East/Southeast

Asia and Central Europe, followed by selected countries of Africa (Reardon et al, 2004). This

growth, together with new procurement practices that the firms work to apply, has lead to a rash

of studies attempting to document and anticipate the impacts of these firms on existing actors in

the food system, and to draw policy implications for governments and donors.

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Type of Research:

Case study research methodology.

Sources of data collection :

The data will be collected from secondary sources. The secondary sources will be

collected from various books, business magazines, reports; websites etc. then primary research as

interviews be conducted to carry the further research.

Scope of Study:

With the Indian retail landscape undergoing a sea change via the entry of organized

players and multinationals, the fate of the neighborhood kirana store as well as the posh

supermarket is bound to change. The study will cover the different aspects of Supply chain i.e.

Transportation, Packaging, Handling, Storage & inventory and Distribution activities in the

Retail business of future group. The study is important with respect to working on private labels

and work on improving back-end inefficiencies. The research can further be generalized to the

whole retail sector.

Limitation of the study:

The study and the research will be limited to the Retail sector.

The major limitations could be that company may not find it feasible to disclose their

confidential information.

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INTRODUCTION TO FUTURE GROUP

Pantaloon Retail (India) Limited is India’s largest leading retailers. It operates on

multiple platforms like Value and life style segment in the Indian consumers market. Company

head quarters located in Mumbai. As on Feb 2009 Company operates over 12 million square feet

of retail space, 1000 stores in 71 cities with employee strength of 30,000 people. The company is

in aspect of giving retailing a modern look with reachable for middle and middle lower class

people. Retailing includes retail formats like Pantaloons, Big bazzer, Food bazzar, brand factory,

Blue sky, and Top 10, Star & sitar and e zone. The company also operates on online future

bazzar.com for upper class that can get internet connectivity. Home Town a large-format home

solutions store.

Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire

Indian consumption space. Future Group led by its founder and Group CEO, Mr. Kishore Biyani,

is one of India’s leading business houses with multiple businesses spanning across the

consumption space. While retail forms the core business activity of Future Group, group

subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand

development, retail real estate development, retail media and logistics.

The company was established in 1987 as Manz wear private Limited launched its first

product Pantaloons trousers. In May-1992 company offered Initial public offering. The company

enters in modern retails business in 1997 from Kolkata with 8000Sq.ft store. In 2002 company

initiated a lunch of food chain market Food bazzar. In 2004 central mall was lunched to

concentrate on India one sector launched near brigade road in Bangalore.

In 2005 group moves beyond retailing starts diversification and in organic growth by

acquiring galaxy entrainment, Indus League clothing and Planet retail. In 2006 company starts

finical facilitation company to help internal need Future capital Holdings. They started its first

Home building and improvement product retailing in Bangalore. Starts joint ventures with

Staples, US based company and with Genreali a Italian Insurance major.

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In 2007 Group had turnover of $1 billion. Specialized companies in retail media,

logistics, IPR and brand development and retail-led technology services become operational. In

2008 big bazaar crosses 100 malls.

The company observes retail customer trend and changing consumption tastes. Organization

is customer driven opposed to product driven .Company is very conscious about culture and

regional consumption pattern. Strategies change frequently due to orient to the customer’s needs.

The continues of learning, unlearning and relearning is applied to update the quick changing

strategies across the organization. As Kishore Biyani MD Pantaloon retail India LTD says Retail

is like riding bicycle. In uphill if you stop pedaling you will slide down´. The statement express

the need of continues learning process to form the strategies.

GROUP VISION

Future Group shall deliver Everything, Everywhere, Every time for Every Indian Consumer in

the most profitable manner.

CORPORATE STATEMENT

Our customers will not just get what they need, but also get them where, how and when

they need.

We will not just post satisfactory results, we will write success stories.

We will not just operate efficiently in the Indian economy, we will evolve it.

We will not just spot trends, we will set trends by marrying our understanding of the

Indian consumer to their needs of tomorrow.

Rewrite Rules, Retain Values.

CORE VALUES

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Indianness: confidence in ourselves.

Leadership: to be a leader, both in thought and business.

Respect & Humility: to respect every individual and be humble in our conduct.

Introspection: leading to purposeful thinking.

Openness: to be open and receptive to new ideas, knowledge and information.

Valuing and Nurturing Relationships: to build long term relationships.

Simplicity & Positivity: Simplicity and positivity in our thought, business and action.

Adaptability: to be flexible and adaptable, to meet challenges.

Flow: to respect and understand the universal laws of nature.

SUCCESSFUL IMPLEMENTED STRATEGIES

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Based on analysis its business strategies can be categorized in 3 major groups. They are:-

Diversification strategy

Classes destination strategy

Maximum market shares strategy

DIVERSIFICATION STRATEGY

The company started its business as textile manufactures but growth in modern

organized retailing attracted the company to switch diversify to the next consumption pattern.

The company diversified and acquired a large business in organic and inorganic way. But

company did not forget ripe its strategy and values in the diversified company. Diversification is

done in two main categories: RETAIL FORMATS and SPECIALIZED BUSINESS.

CLASSES DESTINATION STRATEGY

Future group has diversified its business keeping the retiling as common goal. To set and

concentrate on one stratum is main objective of this strategy. Each business is set to operate on

defined strata. Company has divided Indian customers in three different groups. INDIA ONE,

INDIA TWO, INDIA THREE. Each has different values, products and quality requirements.

INDIA ONE or consuming class .The population of this constitutes only 14%.Till recent

times the modern retiling formats is offered for this class. According Maslow’s theory of

hierarchy the 14% people are in self actualization and Esteem needs in the pyramid. For this

class pantaloon patterned Future bazaar, E zone, Central, brand factory, Home town and star

Galaxy entertainment.

INDIA TWO or the serving class it includes people like house hold helpers, office peon

etc. This is the people who make service INDIA ONE class. The population of this class is more

than 30%. In the needs hierarchy they are located in for Social and security .Earning capacity of

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this class is 60% lesser than INDIA ONE. For this class as the big bazaar, Food bazaar, Future

money and other retail formats are presented.

INDIA THREE or struggling class. The class led life on hand to mouth existence. They

can’t afford for beater living style. This segment doesn’t contribute much in the contribution

cycle. The need of the segment is local as they are finding it cheaper. The present business model

is not addressing this class.

Statics describes change in consumption patter by different class in 2001-02 and 2007-08.INDIA

ONE has changed from 25% to 35% normally the total profit in this segment will comparatively

20% more than they are sold in next segment. As ambiance is factor and other pleasuring non

value added services are necessary. INDIA TWO has not changed it conception level. INDIA

THREE has seen 10 % decline.

MAXIMUM MARKET SHARES STRATEGY

The retail chain by pantaloon in all business patterns tries to achieve maximum market

share in all the products or service it provides .The Company does not bothers about short term

profit or loss by a strategy. This are considered as learning. The business will sell at marginal

profit some times to attract the new customer who will prove potential customers in future. The

strategy achieved by focusing pricing factors in INDAI TWO and on service and quality in

INDIA ONE.

PRICING STRATEGIES

Pricing is strategy used by Pantaloon retail chain to attain maximum market shares. The

company offers numerous schemes to attract the new customer as well as to retain the present

customers. The company’s schemes are categorized in following groups

VALUE PRICING

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This approach is used where external factors such as recession or increased competition

force companies to provide 'value' products and services to retain sales. The product value will

be associated with external factors.

PROMOTIONAL PRICING

Pricing to promote a product is a very common application. The application of this is done by

BOGO (Buy one Get One), BTGO (Buy Two Get One Free) etc.

BUNDLING

Bundling is marketing tool sell two or more complementary product as a package with attractive

price. The price is will lesser then individual selling price.

LOW INTEREST RATE FINANCING

Future money helps in asset purchase at 0% interest.

PHYSIOLOGICAL DISCOUNTING

In India this approach is called as Bata rating system. Organization utilizes this approach

when product has emotional value rather than rational value. Example a product is priced for 99

instead of 100.When board shows price reduction from 100 to 99, Consumer looks at 3 digits to

2 digits rather than exact value

TIME PRICING

The innovative way of attract the customer is Timely pricing it is known that during

holidays rate of customer is more. Reduction of profit margin with lot of advertisement will

invite new customers. The company has learnt it from strategy made on public holiday 26-Feb.

When the turnover of the day reached 30 crore where average is 5 crore. With such experience

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crowded management is essential so to divert potential customers Wednesday bazaar´ where it

will offer less profit margin sales.

MARKETING:

Technique of offering two or more complementary goods or services together as a package deal.

Bundled items are sold at a price attractively lower than the total of their individual selling

prices.

HUMAN RESOURCE

Well trained staff, Appearance, Empowered individuals, Use scenario planning as a tool for

quick decision making, Brand ambassador

ORGANIZATION STRUCTURE & CONTROLS

The entrepreneurial culture and spirit prevails in the company, Appetite for taking risks is

encouraged, learning while doing, No rigid organizational structure, and organization design

approach.

BALANCED SCORE CARD APPROACH

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Retail control - Semi Centralized, Complex

Sourcing - E-touch with supplier, Self production facilities with small number of

suppliers, Short term contracts (based on lowest bid)

Process -Modern hard technology, Devolved internally, Reduces cost, new strategies

and process innovations

Facilities - Special propose, Large, Capital driven, Placed in major cities

MARKETING STRATEGY

Future group, is planning to start renting clothes for occasion wear and sell second-hand clothes.

This will allow customers to hire high-end clothes, bags, jewellery and other accessories for a

fraction of a price.

Pantaloon is also trying to build in-store branded sections for categories such as sunglasses

and watches and high fashion garments. It also has a separate section -aLL, which houses

fashionable apparel in western and ethnic wear for plus-size men & women

Type of Market:

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Major formats of in-sector retailing have been listed in table given below:

Format Description The value proposition

Branded stores Exclusive showrooms either owned or

franchised out by a manufacturer.

Complete range available for a

given brand certified product

quality.

Specialty stores Focus on a specific consumer need ,carry

most of the brands available

Greater choice to the consumer

comparison between brands

possible

Department stores Large stores having a wide variety of

products organized into different department

such as clothing, house-wares, furniture,

appliances, toys etc.

One stop shop catering to varied

consumer needs.

Supermarkets Extremely large self-services retail outlets. One stop shop catering to varied

consumer needs.

Discount stores Stores offering discounts on the retrial price

through selling high volumes and reaping

the economies of scale.

Low prices

Hyper-mart Larger than a supermarket sometimes with a

warehouse appearance generally located in

quieter part of the city

Low prices vast choice available

including services as cafeterias.

Convenience

stores

Small self service formats located in

crowded urban areas.

Convenient location and extended

operating hours.

Shopping malls An enclosure having different formats of in-

store retailers, all under one roof.

Variety of shops available close to

each other.

SUPPLY CHAIN DESIGN

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Each retail chain organization has its own supply chains which fulfill all the requirement of its

retail outlet in different location effectively. The supply chain belong to a retail chain may also

fulfill the requirement of the other retail outlet which does not belong to the original retail chain,

but it may be to get financial benefit.

The appropriate design of supply chain will depend on both the customers’ needs and the roles

of stages involved. Organizations increasingly find that they must rely on effective supply

chains, or networks, to successfully compete in the global market and networked economy. In

Peter Drucker's (1998) management's new paradigms, this concept of business relationships

extends beyond traditional enterprise boundaries and seeks to organize entire business processes

throughout a value chain of multiple companies

Successful SCM requires a change from managing individual functions to integrating activities

into key supply chain processes. An example scenario: the purchasing department places orders

as requirements become appropriate. Marketing, responding to customer demand, communicates

with several distributors and retailers, and attempts to satisfy this demand. Shared information

between supply chain partners can only be fully leveraged through process integration.

Supply chain business process integration involves collaborative work between buyers and

suppliers, joint product development, common systems and shared information.

According to Lambert and Cooper (2000) operating an integrated supply chain requires

continuous information flows, which in turn assist to achieve the best product flows. Retailing in

India is gradually inching its way to becoming the next boom industry. The whole concept of

shopping has altered in terms of format and consumer buying behavior, ushering in a revolution

in shopping. Modern retail has entered India as seen in sprawling shopping centers, multi-storied

malls and huge complexes offer shopping, entertainment and food all under one roof.

SUPPLY CHAIN DESIGN

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Retail 3

Retail 1

Warehouse2

Retail 2

Manufacturer

Customer

Distributor

Farmers Mandi

Warehouse4

Warehouse3

Warehouse1

The information is shared at each level in a more effective way so that the product is available to its

customer in the store when it is required in minimum lead time.

DELIVERY AND LEAD TIME

In the Future stores supply chain the lead time is of two day, the store in charge indent the order in the

system which is centralized. All the order from different stores is collected at the central store or in Head

Office, from there the information is passed to different warehouse so that the particular product can be

made available to the customer on time.

The delivery pattern to the store from the different warehouse to each store is similar, all the stores get the

delivery of goods two times in a day, these are the items which are ordered or indent two days back.

Delivery of vegetable and fruits:-

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These are the items which are perishable in nature. The supply of these item is made on daily

basis each store received the fruits and vegetable according to their consumption. The Supply of

these items, including the dairy product, is made two times in a day one is around 7.00 a.m. and

second delivery is around 9p.m.

Delivery of Staple Item:

The delivery of Atta, Sugar, and Dal etc is done two or once in a week according to the need of

the store but minimum of two to three days are required for receiving a product after making or

indent is made.

Stock out Handling at Stores:

The unique feature of the reliance fresh store is that the stores are integrated so that the sudden

increase in the demand at a store can be met in a very short span of time. This is only possible

because of the store or retail integration, suppose if there is a sudden increase in the demand of a

product at a particular store and that particular product is short at that time, then because of the

retail integration this store can search the inventory level of that particular product lying at near

by store, than the stock from there can be transferred to the store manually where the demand is

high, by the store employee. It helps the store to meet the sudden increase in the demand of a

product.

Store timing and staff in a store:

A typical store opens at 5 a.m. in the morning for the staff. At this time the staff receives the

goods from the head office and arranges it on the shelf. The store remains open for public from

8.a.m. to 9 p.m. but for working staff its closes at 11p.m. in the night. There are two shifts of the

workers who worked in the store.

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Present Trend:

As the contemporary retail sector in India is reflected in sprawling shopping centers,

multiplex- malls and huge complexes offer shopping, entertainment and food all under one

roof, the concept of shopping has altered in terms of format and consumer buying behavior,

ushering in a revolution in shopping in India. This has also contributed to large-scale

investments in the real estate sector with major national and global players investing in

developing the infrastructure and construction of the retailing business. The trends that are

driving the growth of the retail sector in India are

Low share of organized retailing.

Falling real estate prices.

Increase in disposable income and customer aspiration.

Increase in expenditure for luxury items.

30%

27%7%

5%

5%

26%

Predicted Mall Distribution space in INDIA

Dehli & NCRMumbaiHyderabadPuneBangloreTier II cities

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The retailing configuration in India is fast developing as shopping malls are increasingly

becoming familiar in large cities. When it comes to development of retail space specially the

malls, the Tier II cities are no longer behind in the race. If development plans till 2007 is

studied it shows the projection of 220 shopping malls, with 139 malls in metros and the

remaining 81 in the Tier II cities. The government of states like Delhi and National Capital

Region (NCR) are very upbeat about permitting the use of land for commercial development

thus increasing the availability of land for retail space; thus making NCR render to 50% of the

malls in India.

10%

13%

2%

11%

21%

43%

Retail Space Distribution In Delhi, NCRDELHI NOIDA GREATER NOIDAFARIDABAD GHAZIABAD GURGAON

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PROBLEMS FACED:

The first challenge facing the organized retail sector is the competition from unorganized

sector.

In retail sector, Automatic approval is not allowed for foreign investment.

Taxation, which favors small retail businesses.

Developed supply chain and integrated IT management is absent in retail sector.

Lack of trained work force.

Low skill level for retailing management.

Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence and

low margins.

Organized retail sector has to pay huge taxes, which is negligible for small retail

business.

Cost of business operations is very high in India.

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SOLUTION TO PRESENT SCENARIO

Availability and cost of retail space is one major area where Government intervention is

necessary. Liberalizing policy guidelines for FDI needs focus as well. Proper training facilities

for meeting the increasing requirements of workers in the sector would need the attention of both

Government and the industry. Competition for experienced personnel would lead to belligerence

between retailers and higher rates of attrition, especially during the phase of accelerated growth

of the retail industry. The process of avoiding middlemen and providing increased income to

farmers through direct procurement by retail chains need the attention of policy makers. Taking

care of supply chain management, mass procurement arrangements and inventory management

are areas that need the focus of entrepreneurs.

EDGE OVER OTHERS…

Multiple Formats - If margins from apparel sales in Pantaloons (the Lifestyle store)

suffer, the company does have the option of moving stock to the discount store, Big

Bazaar.

Pantaloons Green Card Program. Your Green Card is your passport to a whole new world

of exclusive benefits and privileges. Targeting youth, setting their own garment factories.

Just in time approach - prevent over stock of inventories.

Green Card Shopper

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CONCLUSION:

The Retail industry is growing very fast and giving opportunity of the employment to many of

the candidate. The Indian retailing sector is at an inflexion point where the growth of organized

retail and growth in the consumption by Indians is going to adopt a higher growth trajectory.

This industry is now at its childhood stage in India.

We can assume that the coming or ongoing era is of era of Retailing. Retailing is now very much

focused by the companies.

The Pantaloon Retail India Ltd, the company has developed a comprehensive strategy, where in

it expects that in 2years, it will not recruit any new managers from outside.

"The estimated need is 1 lakh of employees till 2011", said Mr. Sanjoy Jog, HR Head at

Pantaloon Retail India Ltd. Pantaloon has the concept of partnership with educational Institute to

run retail courses across the entire chain. The company has tied up with 11-B schools including

K J Somaiya , Welinkars, Narsee Monjre and IISWBM. "The students joins the course and they

are given an appointment letter by Pantaloon to become employees" said Mr. Jog, Pantaloon.

Pantaloon is also planning to tie up with Ahmedabad-based National Institute of Design to start a

course in visual merchandising. "The apex body of Indian organized retailers, Retailers

Association of India( RAI) is also lending help hand to tide over the shortage of employees in

organized retail sector.

Finally it is important to note that these strategies are not strictly independent of each

other; value is function of not just price quality and service but can also be enhanced by

personalization and offering a memorable experience.

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BIBLIOGRAPHY

1. References from Books

Book name Auther

1. Strategic supply chain management Jim Miller2. Supply chain strategy Edward Frazelle3. Logistics and retail management john Fernie & Leigh Sparks

2. http://www.futuregroup.in/corporate_profile.asp

3. http://www.futuregroup.in/fretail.asp

4. http://www.pantaloonretail.in/companyinfo.asp

5. http://www.pantaloonretail.in/E-tailing.asp

6. Berman, A “talking Shop; outlook”,Dec9,2000

7. Cook and Walter, D (1991),” Retailing Marketing: Theory and Practice”, PHI, New Delhi

8. Chandrashakher .P.” Retailing in India trends and Opportunity: The Hindu Business Line

Catalyst(channi) dt.15/02/2002

9. Mohamed Zairi (1998) “Best practice in supply chain management: the experience of the

retail sector”, European Journal of innovation Management, vol 1. no.2,pp.59-66

10. Lambert, D.M and Cooper, M.C.(2000),”issues in supply chain management”, industrial

Marketing Management,vol. 29 No.1 1,pp 65-83.

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