A Project on Store Operation of Big Bazaar

Presented toMr. Subhranil Dutta,

Store Manager, Big Bazaar, Lee Road, Kolkata

Presented byPradipto Dey

Kausik Tarafdar

Upander Singh

Post Graduate Program in Retail management (2007-2009)

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Acknowledgement

This project report was written during the spring of year 2008 and is the result of 6 weeks of hard work. These 6 weeks have been a very interesting period that has provided us with a deeper knowledge about the area of Store operation. With this project, we hope to develop a futuristic view of industry’s progress.

A study like this can not be completed without help from other persons and therefore we would like to express our gratitude to all persons having contributed to completition of this project.

First of all, we would like to think our mentor Mr. Subranil Dutta Store Manager, Big Bazaar, Lee Road, Kolkata. Who has been provided us with guidance, inspiration, perspective and stimulating discussion, throughout the writing of this report.

Additionally we would like to express our gratitude to Mr. Sandip Marwah, Head Operation (East zone). Thank you for allocating this project. This study would not have been possible conduct without your help.

Furthermore, we would thank to Mr. Aniruddha Sengupta and Mr. to provide us relevant information for this Project.

Finally, we would like to thank our friends and family member for giving us constant support and encouragement.

NSHM, KolkataPGPRM (2007-2009)

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Dated-17th March2008

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Table of Contents

1. Executive Summery…………………………………………………………..……..3

2. India Retail Scenario……………………………………………………….………..5

3. Company Profile …………………………………………………………………...14

4. Future Group Manifesto …………………………………………………………...16

5. Hierarchy of Pantaloon (Future Group)…………………………………………….18

6. Findings………………………………………………………………..……………19

7. Retail Scenario of Kolkata………...………………………………………………..20

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Executive Summary

Retailing is emerging as a sunrise industry in India and is presently the largest employer after agriculture. In the year 2004, the size of Indian organized retail industry was Rs 28,000 Crores, which was only 3% of the total retailing market. Retailing in its present form started in the latter half of 20th Century in USA and Europe and today constitutes 20% of US GDP. It is the 3rd largest employer segment in USA. Organized retailing in India is projected to grow at the rate of 25%-30% p.a. and is estimated to reach an astounding Rs 1,00,000 Crores by 2010. The contribution of organized retail is expected to rise from 3% to 9% by the end of the decade. The projection for the current year ie 2005 is Rs 35,000 Crores. In India, it has been found out that the top 6 cities contribute for 66% of total organized retailing. With the metros already been exploited, the focus has now been shifted towards the tier-II cities**. The 'retail boom', 85% of which has so far been concentrated in the metros is beginning to percolate down to these smaller cities and towns. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. In the year 2004, Rs 28,000 Crores organized retail industry had Clothing, Textiles & fashion accessories as the highest contributor (39%), where as health & beauty had a contribution of 2%. Food & Grocery contributed to 18% whereas Pharma Retail had a contribution of 2%. Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple retail formats, the company operates over 5 million square feet of retail space, has over 450 stores across 40 cities in India and employs over 18,000 people.

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INDIAN RETAIL SCENARIO 

OVERALL INDIA VIEW 

Area(`000 sq km) =3,300

Population(million) =1,095

Medium Age  =25 years

Government Type =Federal Republic   

◊ Economic Overview : Indian is currently undergoing an economic revolution which is generating fast-paced changes and development.

There is stable 8 % annual growth,

Rising foreign exchange reserves of close to USD 140 billion, Consistent and flowing Foreign Direct Investment(FDI) of close to UDS 8 billion, Export surge in excess of 20%.

This altogether enable the Indian economy to expand in coming years. 

◊ Investment eccentric : With a rapidly expanding consumer base (private consumption currently account for 61% of India’s GDP) and stabilized consumer price index rate 4.2%. India is now preferred investment destination and has surpassed the U.S to become the second most favourable destination for FDI, in the world after China. 

GDP and CPI

  2002 2003 2004 2005

GDP Growth(%)

3.6 8.3 8.5 8.5

CPI(%) 4.3 3.8 3.8 4.2

Source : EIU, July 2006 

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FOREIGN DIRECT INVESTMENTS:

 Foreign direct investment is opened to single brand retailers. 

Steady increase in FDI 

  2002 2003 2004 2005

FDI (INR m) 273530.2 201379.6 248062.4 295293.4

FDI (FDI bn) 5.6 4.3 5.5 6.7

Source : EIU, July 2006  

DEMOGRAPHICS AND CONSUMER BEHAVIOUR 

• A growing population, a youthful workforce and soaring consumer confidence are solid argument for long term growth. 

A growing population, a youthful workforce and soaring consumer confidence are solid argument for long term growth.

India’s population in 2005, is estimated to 1095mn. By 2016, India will have second highest population in world after China.

  2002 2003 2004 2005

Population (mn)

1049.7 1065.1 1080.3 1095.2

  

More than 50% of the India’s Population is less than 25 years of age compared to others developed countries. Age profile 

% of total population

1999 2004 2009 Trend

0-14 years 34.0 31.7 29.6 ↓

15-64 years 61.4 63.5 65.2 ↑

Over 65 years 4.6 4.8 5.2 ↑

Source : EIU, July 2006    

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MAJOR RETAIL PLAYERS 

Comprised of organized and traditional retail formats,Indian Retail market is estimated to be worth USD 350 billions.

o Organised Retail is estimated at USD 8 billions.Organised Retail is growing at over 30% annually.

o Of india’s 12 millions retail outlets,more than 80% are operated by small family business using household loabour.

o The retail industry represents 13% of GDP and accounts for 6% of india’s work force.Burgeoing growth rate in the retail industry are attributed to growth in India economy,rising income and changing consumption and expenditure patterns.                       

 

TOP MAJOR RETAIL PLAYERS

Retailer Existing formats

Brand Names

No.of Stores

Total Retail Space(‘000 sq ft)

Total Sales 2004-05(USD mn)

Expansions Plans

Pantaloon Retail Indian Ltd

Department store

Pantaloon 13 1,948 241 Invest around USD125 mn between FY06-FY08. Open 80-100 more stores across formats.

Hypermarket Big Bazaar 18 N/A N/A Triple total Retail area by FY08 to 6.5 mn Sq. ft.

Supermarkets Food Bazaar

9 N/A N/A Enter into Furniture and home retailing.

Seamless Malls

Central 3 N/A N/A  

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RPG Retail

Hyper markets Spencer’s 3 480 96 Open 21 hypermarkets and supermarkets

Music Stores Music world

225 N/A N/A Open another 100 Music Stores in FY08.

Super markets Spencer’s 49 N/A N/A  

Shopper’s Stop Ltd.

Department stores

Shopper’s Stop

20 1000 96 Add 2 mn Sq. Ft. of Retail Space in FY08

Books & Music Stores

Crosswords 33 N/A N/A Entering Hypermarket format, 18 Stores planned by FY08

Home furnishing

Home Stop N/A N/A N/A Setting up Speciality Stores for Home Solutions.

Landmark Group (Based in Dubai)

Department Stores

Lifestyle 8 370 67 Set up 25 New Departmental stores by FY08. Invest USD 65mn over next 5 years.

Trent India Ltd

Department Stores

West side 19 350 52 Add 640,000 sq.ft. of Retail Space.

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Hypermarkets Star India Bazaar

1 N/A N/A Open 17 Stores under the departmental and Hypermarket formats by FY08.

Books & Music Stores

Land Mark 4 N/A N/A  

 

Upcoming Malls in India (till 2007) 

Metropolitan Cities No. of Malls

National Capital Region 60

Mumbai 28

Hyderabad 15

Bangalore 9

Kolkata 9

Chennai 4

Sub Total 125

   

Mini Metropolitan Cities No. of Malls

Pune 9

Ahmedabad 5

Tier II Cities 81

Total 220

Let us look at the evolution process

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Detailing reasons why Indian organized retail is at the brink of revolution, the IMAGES-KSA report says that the last few years have seen rapid transformation in many areas and the setting of scalable and profitable retail models across categories. Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no more a constraint for growth. India is on the radar of Global Retailers and suppliers / brands worldwide are willing to partner with retailers here. Further, large Indian corporate groups like Tata, Reliance, Raheja, ITC, Bombay Dyeing, Murugappa & Piramal Groups etc and also foreign investors and private equity players are firming up plans to identify investment opportunities in the Indian retail sector. The quantum of investments is likely to skyrocket as the inherent attractiveness of the segment lures more and more investors to earn large profits. Investments into the sector are estimated at    INR 2000 - 2500 Crore in the next 2-3 years, and over INR 20,000 Crore by end of 201

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Company Profile:-

Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer marker.   Headquartered in Mumbai (Bombay), the company operates over 5 million square feet of retail space, has over 450 stores across 40 cities in India and employs over 18,000 people.

The company’s leading formats include Pantaloons, a chain of fashion outlets,  Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include, Depot, Shoe Factory, Brand Factory, Blue Sky, Fashion Station, aLL, Top 10, mBazaar and Star and Sitara. The company also operates an online portal, futurebazaar.com.

A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-format home solutions store, Collection i, selling home furniture products and E-Zone focused on catering to the consumer electronics segment.

Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona.

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

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Future Group Manifesto

“Future” – the word which signifies optimism, growth, achievement, strength, beauty, rewards and perfection. Future encourages us to explore areas yet unexplored, write rules yet unwritten; create new opportunities and new successes. To strive for a glorious future brings to us our strength, our ability to learn, unlearn and re-learn, our ability to evolve.

We, in Future Group, will not wait for the Future to unfold itself but create future scenarios in the consumer space and facilitate consumption because consumption is development. Thereby, we will effect socio-economic development for our customers, employees, shareholders, associates and partners.

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.

It is this understanding that has helped us succeed. And it is this that will help us succeed in the Future. We shall keep relearning. And in this process, do just one thing.

Rewrite Rules. Retain Values.

Group VisionFuture Group shall deliver Everything, Everywhere, Everytime for Every Indian Consumer in the most profitable manner.

Group MissionWe 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.

We will be the trendsetters in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments – for classes and for masses.

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We shall infuse Indian brands with confidence and renewed ambition.

We shall be efficient, cost- conscious and committed to quality in whatever we do.

We shall ensure that our positive attitude, sincerity, humility and united determination shall be the driving force to make us successful.

Core ValuesIndian ness : 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.

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Hierarchy of Pantaloon (Future Group)

Mr. Kishore Biyani, Managing Director

Mr. Gopikishan Biyani, Wholetime Director

Mr. Rakesh Biyani, Wholetime Director

Mr. Ved Prakash Arya, Director

Mr. Shailesh Haribhakti, Independent Director

Mr. S Doreswamy, Independent Director

Dr. D O Koshy, Independent Director

Ms. Anju Poddar, Independent Director

Ms. Bala Deshpande, Independent Director

Mr. Anil Harish, Independent Director

Rakesh Biyani CEO - RetailAnshuman Singh

CEO - Value Fashion

Damodar Mall CEO - Incubation & InnovationHans Udeshi CEO - General MerchandisingHemchandra Javeri

CEO - Home Solutions Retail (India) Ltd.

Kailash Bhatia CEO - Integrated Merchandising GroupMadhumati Lele

CEO - Services

Rajan Malhotra

CEO - Big Bazaar

Sadashiv Nayak

CEO - Food Bazaar

Sanjeev Aggarwal

CEO - Pantaloons

Vishnu Prasad CEO - Central & Brand Factory

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Kruben Moodliar

President- Operations (Value Retailing)

Mayur Toshniwal

Head - Operations (North Zone)

Rajesh Joshi Head - Operations (West Zone) Rohit Malhotra Head - Operations (South Zone)Sandeep Marwaha

Head - Operations (East Zone)

Sanjay Jog Head - Human ResourcesUshir Bhatt Executive Board Member Atul Takle Head - Corporate CommunicationsPrashant Desai Head - Group IR & New Ventures (PE)Vinay Shroff Head - Supply Chain Management

Big Bazaar-A paradigm shift to the Modern Retail Bazaar

Big Bazaar PRIL’s Hypermarket format that truly heighten up the expectation of value concisious Indian customer to a new level ever before. It has changed the customer’s perception to that extent that they have already started to realize that Big Bazaar can provide real value for their money. The first store opened in Kolkata in 2001 at VIP and was followed by stores in Hyderabad and Bangalore in short span of 22 days. These stores contributed over Rs.43 crores to the company’s business and over Rs. 2.89 crores to the PBDIT in first year it self.

Sabse Sasta 3 din

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Science, 2006 Republic day’s mega sale of Big Bazaar has been generating a unprecedented response from customer. Its now been extended for three days .In the

2007 customer had spent Rs. 125 cores and in 2008 it has made a sale of whopping Rs.300 cores

During our project period, we had specifically studied those three days of Mega sale at Big Bazaar. We noticed several scope of improvement in the Big Bazaar store (Lee Road, Kolkata) like customer handling, stock replenishments and customer satisfaction

We have found that few areas need some attention from the management side. We realized that customer is somewhat willing to forgive a bit despite their inconvenience because of the understanding of difficulties of store personals and management people. But, if we will take care of those areas and fix them as soon as possible then overall profitability of the store and customer’s shopping experience would be definitely better then before.

Findings

We have studied each scope of improvement and tried our best to make a proposition, which have drawn our attention.

1. While we were juggling customer on the shop floor at various departments, we were noticing that stocks were disappearing very quickly but replenishments were not done at timely manner and because of this a lot of customers were going back without making any purchase.

Our proposition to fix this situation that respective Category managers as well as Department managers need to be careful about the backup stock .Forecasting is to done in well advance .In case if it’s a relatively new store then past sales data of other stores of same retail chain can be used to anticipate the sales volume.

2. During Big sale days we have noticed that hundreds of customers were waiting on queues .The line never stop to buy a product, pay the bill, enter the store .These queues deter many customers to make a purchase, even worse enter into the store. After selecting products, many customers were leaving their baskets within the store.

So to improve the overall sales volume and profitability of the store management has to take necessary steps .To reducing the customer wait time we can implement ‘Queue Buster’ A handheld device ,it’s a mobile handheld it sported a barcode

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reader ,printer ,computer, swipe card reader .In this way customer’s can check out process will be faster in two ways

a) Customers can get their bill’s printout paid off bill amounts either in cash or credits to store personals who are using the handheld devices.

b) If any thing goes wrong, if the payment is not accepected by the handheld machine, then also customers reached the POS counter with mobile POS receipts could make the check out process faster by checking out the receipts they have got from the mobile printers and keep their cash ready when they arrived at cashiers.

Big Bazaar can thinks over another interesting technology to deploy to make better shopping experience for its customers especially on the extreme occasions. I-Scan (Symbol Technologies-New York) its a generation in precision replenishment. That allows the customer to scan the merchandise as they pick the products off-the-shelf, thus saving them significant amount of shopping time. Once the shopping is completed, they can handover the device to the customer service desk and can cash-out quickly.

Initial investment for implementation of these technologies might be high but they definitely improve the overall store profitability, which will offset the initial investments.

Visual Merchandising

What is VM?

VM is art and science of displaying merchandise within store, it is about implementing effective design, ideas to educate customer, create desire and finally increase store traffic and sales volume.

Findings

We noticed few section of store’s trading area wherein some scope of improvement lies, if visual merchandising of those area can be taken care of, then possibility of increase in the some particular category’s sales is quite high

The visibility of certain categories, especially apparel is very important if retailer wants to increase the sales volume of those categories. Because research’s shown that customer

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People generally search for the product on offer so the high margin product should be up fronted that means those item should be in the eye height so that it’s easily catches customers attention and generate impulse purchase

We have also noticed improper, inadequate some time no signage which creating inconvenience for the customer & ultimately hampering the sale

Demographics of Catchments

For the frontline employee it’s easier to judge the customer profile & behavior, because they are the one who come in direct contact with the customer. So in that way the job of a frontline staff is also quit important and the same time challenging. As we have worked there for three days we also find some interesting fact about the customers.

Customer ware mostly non-Bengali & form Gujrati, Sindhi, Marwari community and age approx 20-70 but mostly between 30-60. People generally came from vicinity of the store, although a few ware come form outside of the Kolkata also.

I found a high conversion rate in the customer at least in croaky and they all want to avail the offer. One thing was always in the back of their mind is the word SASTA. Although there was a lot of impulse purchase also. Nevertheless offers ware the main crowd puller.

We found customers ware not so happy with the verity and the rang we have. They want more verity to choose form. Many of them ware not too happy with the level of service also .

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Space productivity analysis

We calculated the space productivity of three different departments they are Kids, Home linen, Crockery. By this calculation the quantity sales been generated in Rupeecan be understood easily .It represents how effectively the retailers utilizes its space and is usually measured by sales per sq foot of selling space or gross margin Rupees per square foot of selling space.

Merchandise Productivity Analysis

Category Home linen

Total sales Rs. 6,745,45.25 Sales % total 4.49 Total sq ft 35000

Sq ft % total 2.1 Sales per sq ft 899.39 Total GM Rs 236090.83 GM % total 35 Space Productivity Index 16.6

Merchandise Productivity Analysis

Category Crockery Total Sales 2,75,748.85/-Sales % total 1.8Total sq ft 350 Sq ft % total 1 Sales per sq ft Rs. 787.85 Total GM Rs. 68937.21 GM % total 25 Space Productivity Index 25 : Analysis is been done for the period of three Big sale days only

: Analysis is been done for the period of three Big sale days only

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Therefore, from above analysis we have found that Crockery department productivity per square is highest among others, so category managers should focus more on this particular category in order to maximize Store’s overall profitability.

Kolkata Retail Scenario

It’s a party time for the retail sector in Kolkata, as South City Mall is gets off and also the pan India network of more is also rolling out in the city. Subhiksa is also ready to open their 17 new stores. Kolkata is going to see a additional 5.5 million of new retail space in the near future and most of them are opening in suburban area So Kolkata is all set to notice a retail war in the years to come.

South City Mall, the largest mall in eastern India is already opened, This world class mall sprawl over 10 lakh sq. ft . and have provision for 134 outlets. This 650 crore shopping destination would generate a combined sale of 1000 crore.

Merchandise Productivity Analysis

Category Kids

Total Sales Rs.1, 69,600/-Sales % total 1.97Total sq ft 1600Sq ft % total 4.57 Sales per sq ft Rs. 106Total GM Rs. 67840GM % total 40 Space Productivity Index 8.75

: Analysis is been done for the period of three Big sale days only

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Shopper's Stop would set up its biggest outlet in the South City Mall. The 83,000 sq ft store would be the 25th outlet of the retail major's pan Indian presence and third in the city Retail tycoon Kishore Biyani's Pantaloons is also putting up a 71,000 sq ft anchor store inside the mall The mall would also don names of retail chains like Spencer's and Star mark

By the end of 2009 Kolkata will have another at least 17 new mall. Nearly six malls coming up at Rajarhat alone, according to Himon Sanyal, head, corporate (East), Jones Lang LaSalle Meghraj Some of the big upcoming shopping malls in and around Kolkata include Acropolis (Rajdanga), Lake Mall, City Centre II, Forum II, Terminus, and DLF among others.

Spencer’s, among the oldest names in retail sector, threw open the doors of its Hypermarket store on in Kolkata on the 1st February, 2008, the group patriarch R P Goenka opened the store.

The booming real-estate industry in around Kolkata, flourishing I.T sector and growing consumerism, it is all leveraging the growth possibility in Kolkata retail.

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