Big Bazaar

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About Big Bazaar About Big Bazaar

Hypermarket Chain of Departmental Stores

Outlet

100 outlets in India Located in 70 Cities

Parent group

Pantaloon Retail Group (PRIL) Subsidary of Future Group

Owner

Kishore Biyani

Founded

2001

Headquarter

Jogeshwari, Mumbai

Industry

Retail

Website

www.bigbazar.com ‘is se sasta aur achha kahin nahi’

Tag Line

Main Features  Understanding needs of Indian Consumers  Traditional bazaar ambience  Create a Shopping experience  Low Pricing of products  Value for your Money  Cater to every possible retail need of a consumer  Economies of Scale

Products Food Apparels Child Care and Toys Furniture

Other Services Fashion and Jewellery

Electronics

Farm Products Chill Station

Home and Personal Care

PRIL Profit and Loss Statement Fiscal Year Ending June 30 (USD millions)

2001

2002

2003

Total Net Sales

41.65

65.80

102.54 151.78 250.41

58%

56%

48%

65%

5.29

8.79

13.15

20.90

Percent increase

EBITD

3.39

2004

2005

PRIL Balance Sheet

Walmart Statistics

Traditional Retailing in India • In 2005,Indian Retail Market was world’s eighth largest and represented 33.3% of Indian GDP. • It was valued at $250 Billion and projected to grow by more that 7% annually • India had over 12 million retail outlets – more than the rest of the world combined

Traditional Retail Mix • Traditional retailers dominated the industry as it was highly fragmented. • In 2003, 82% of the retail sales were made through the local “kirana” stores, small local and family businesses • They were a success because of their location, low prices and offered credits and the personal touch factors

Traditional Retail Traditional Outlets

Proximity to Consume homes

Low Prices Credit Facilities

Personal Touch Factors

Modern Supermarkets • The Retail supermarkets and hypermarket had only 0.4% - 3.5% share of the retail sales in 2003 - 2005. • Even though there was high volume of foot traffic the conversion ratio was less than 5% which lead to store closure due to high rentals. • With the government easing restrictions on the FDI, it became easier to import consumer goods which added more variety to the Indian market. • Still a long way to go due constraints of complex taxes, high supply chain cost, infrastructure problems, inflexible labor laws.

FOREIGN DIRECT INVESTMENT • • • • •

Economic reforms in 1990 fueled growth as Govt implemented broad liberalization policies relating to imports and FDIs. GDP grew faster which stimulated increased demand for consumer goods in rich and middleclass – leading to retail sector growth. As a result, Foreign retailers entered India and began expanding their operations Domestic retail community grew concerned as the new competition would result in job losses and closures hence -lobbied against FDI’s. Government banned FDI in 1997 but left loopholes which allowed foreign retailers to enter Indian markets. Ex – Macdonalds, M&S

FDI continued.. • In Feb – 2005 Indian Govt. passed 100% FDI in construction and development sector – paving the way for the foreign investments to develop shopping malls and warehouses. • A year later, the cabinet approved policy allowing “Single Brand” retailers to operate. • Analyst believe that entry of foreign retailers is just a matter of time citing 2005 – 2009 as a window of opportunity for domestic retailers to shape up

MODERN RETAILING INDIA

Life style format • Consisted of department stores and single brand outlets and franchises which sold “aspirational” merchandise

Value retail format • Includes hypermarkets, food supermarkets and discount retailers who focused on offering low prices.

STRUCTURE OF INDIAN RETAIL

•All Organized stores accounts for less than 2%. •Big Bazaar Innovative promotions allowed Big Bazaar to draw in consumers who had not yet shopped at organized retailers. •Big Bazaar also organize its Big Day specially on local religious festivals to provide look and feel of organized stores for aspirational consumers

COMPONENTS OF US$ 250 BILLION RETAIL MARKET

In August, 2005, PRIL management noted same store growth of 30% in the value retailing segment and 19% in the lifestyle In march 2006, PRIL sold merchandise in 5 segments fashion, food, general merchandise, leisure and entertainment. Fashion was the company’s leading category and accounted 50% of its revenue

OWNERS OF US$ 250 BILLION MARKET

PRIL respond’s to the market with their well diverse retail portfolio consists of four retail category : department stores, discount hypermarkets, grocery stores and seamless malls.

• Pantaloons “High fashion” family department, geared toward Indian middle and upper classes. In 2005, pantaloons rolled out a new merchandise and brand communication campaign to position itself as fashion trendsetter appeal to India’s youth.

• Central Mall Positioned as destination where consumers could “shop, eat and celebrate.

• Big Bazaar In 2007, PRIL debuted its Big Bazaar hypermarket concept, designed to blend elements of a typical Indian bazaar with modern retailing features such as parking, and air conditional shopping environment and merchandise return privileges.

• Food Bazaar Food Bazaar, a grocery retailer, opened its first outlet in June 2002, within a Big Bazaar store, six month later the chain had grown to 42 outlets: 18 stand alones.

SHOPPING AT BIG BAZAAR • Pantaloon considered itself a “Class-less” retailer, appealing to all demographic and socio-economic types. • The average consumer at a Big Bazaar store spent roughly $8 per visit and took around an hour to complete the transaction • With rising incomes, hectic lives, and often dual career households, Indian families are frequently constrained for times and want a no-hassle shopping experience • The management uses innovative promotions to

•Attractive tag lines like “Umeed se dugna” , “pahela sasta, doosra usse bhi sasta” and “Joona do, naya lo” are used to attract more aspirational consumers •Pantaloons vision is to capture as much share of the customer’s wallet as possible by retailing.

Is Retail in India at the crossroads?

“The Indian consumer is not yet ready for a store with clean linear layouts”, Kishore Biyani, Owner Bigbaazar, Pantaloon group. “We have to convince the consumer that we understand his or her needs the way the neighborhood retail does” Arvind singhal of Technopak, a retail consultancy.

MANAGING SUPPLY CHAIN FOR PACKAGED CONSUMER GOODS AT FOOD BAZAAR

•Food bazaar stores were located within big bazaar stores occupying 15,000 sqf in a 50,000 sqf store

•Biyani thought that Food bazaar & Big bazaar were the crown jewels In PRIL’s portfolio

Aggressive growth –Food bazaar Company planned to grow to over 100 FB stores by 2008 and annual revenues of $350 million •To rent properties from shop owners in exchange of profits generated from store •purchase food grains directly from manufactures •to develop private label brands and devote 60 % shelf space to it.

TRADITIONAL SUPPLY CHAIN-FMCG FACTORY •4.75% margin for traditional retailer •Net margin of 0.5%

Wholesal er

Small retailer

C & F AGENT

•LOCAL ENTREPRENEUR •INTERFACE BETWEEN STATE GOVT & MANUFACTURER •1% COMPANY SALES /TON

DISTRIBUTO R

Modern trade retailer

Large retailer 8% gross margin

15% gross margin

Adv of traditional supply chain for food bazaar •Distributors did not impose on minimum order quantity and shipments were made in small batches •Oder quantity could be changed a day or two in advance of delivery •For premium products ,Food bazaar received 1%-2%of sales – DISPLAY INCOME 4% - DISCOUNT FROM MANUFACTURE 3% - DISCOUNT FROM DISTRIBUTOR

Shroff concern....

•In case of a Product-specific promotion, volumes would swamp a distributors capabilities •Wall mart & Reliance were likely to enter market with modern supply chain •(Reliance to invest $2.2 in billion hyper markets with •60 supply centres) •Project is expensive and financial returns are uncertain •Cannot achieve economics of scale by operating in diff states •Biyani likely to remain loyal to TSC

Charting the Future • Creator, Preserver & Destroyer • SWOT Analysis • Organizational Life Cycle • Organizational / Customer Value Matrix • 4P Market Mix • Future Challenges . .

SWOT Analysis of Big Bazaar STRENGTH •High Brand Equity in evolving retails markets •State-of-art infrastructure of Big Bazaar outlets •POP to increase the purchase •One stop shop for variety of products, increasing customer time and available choices OPPORTUNITY •Organized retail is just 4.15%of total pie of Indian retail market •Evolving Customer preferences in recent years

WEAKNESS •Unable to meet store opening target so far •Falling revenue per square feet

THREAT •Competitors, global big players planning to foray into market •Unorganized retail market of India •Government policies are not well-defined in India

Life Cycle INTRODUCTORY GROWTH STAGE STAGE

MATURITY STAGE

DECLINE STAGE TOTAL MARKET SALES

S A L E S

TIME

Organization Value & Customer Value Matrix •High Organization Value •Low Customer Value

•High Organization Value •High Customer Value

•Low Organization Value •Low Customer Value

•Low Organization Value •Low Customer Value

4P Marketing Mix Product Offers wide range of products, range from apparels, food, farm products, furniture, child care, toys, etc. All Major Brands Fashion, electronics and travel segments made up about 70% of sales. Many In-house brands promoted by Big Bazaar.

4P Marketing Mix Contd.. Price Economics of scale Pricing objective is to get "Maximum Market Share” Value Pricing • EDLP - Every Day Low Pricing Promises consumers the lowest available price Differentiated Pricing: • Time pricing, i.e., difference in rate based on peak and non-peak hours or days of shopping Bundling: • Combo-packs • Value to customer.

4P Marketing Mix Contd.. • Promotional Pricing: Psychological discounting (Rs. 99, Rs. 49, etc.) Special Event Pricing (Close to Diwali, Gudi Padva, and Durga Pooja)

4P Marketing Mix Contd..

Place

• Stores are located in 50 cities and 100 stores in operation • Presence in almost all the major Indian Cities. Aggressive on their expansion plans. Promotion • New and innovative cross-sell and up-sell strategies in Indian retail market. • Future Card (the card offers 3% discount) • Endorsement by M. S. Dhoni • Point-of-Purchase Promotions. • Advertising in Print media, TV, Radio (FM) and Road-Side Bill-Boards.

Promotion.. • “Is se sasta aur accha kahin nahi ” • “Umeed se duguna” • “pehla sasta, doosra usse bhi sastaa” • “Joona do naya lo” • “Saal ka sabse sasta 3 din”- Republic Day Promotion

“Joona Do, Naya Lo”

“Sabse Saste 3 Din” Republic Day Sales Images 25-26-27 Jan 2006

Future Challanges • Need Infrastructure Development, Own Logistic Solutions • Global Big Players and Competitors Planning to foray into Market Bharti-Wal-Mart, Carrefour is all set to gain its foothold in India • Government Regulations and Taxation FDI, Taxes & Duties

Preparing For Future • Endless Opportunities to Serve Indian Market India's retail market is forecast to double in another six years from the current $375 billion • Introduced Management Training Programme in Retailing for Employees • Lack of Malls problem is being taken care of by Property Funds managed by PRIL

Questions!!! • Should he slow down? • Should he focus on the company and let a few retail opportunities go by? • Should he let the momentum propel him forward?