Download - Big Bazaar
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About Big Bazaar
About Big Bazaar Hypermarket Chain of Departmental Stores
Outlet 100 outlets in IndiaLocated 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
Tag Line ‘is se sasta aur achha kahin nahi’
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Main FeaturesMain Features
Understanding needs of Indian ConsumersUnderstanding needs of Indian ConsumersTraditional bazaar ambienceTraditional bazaar ambienceCreate a Shopping experienceCreate a Shopping experienceLow Pricing of productsLow Pricing of productsValue for your MoneyValue for your MoneyCater to every possible retail need of a consumerCater to every possible retail need of a consumerEconomies of ScaleEconomies of Scale
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Products
Apparels
Food
Chill Station
Furniture
Other Services
Fashion and
Jewellery Electronics
Home and Personal
Care
Child Care and Toys
Farm Products
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PRIL Profit and Loss Statement
Fiscal Year Ending June 30
(USD millions)2001 2002 2003 2004 2005
Total Net Sales
Percent increase
41.65 65.80
58%
102.54
56%
151.78
48%
250.41
65%
EBITD 3.39 5.29 8.79 13.15 20.90
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PRIL Balance Sheet
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Walmart Statistics
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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
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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
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Traditional Retail
Traditional Outlets
Proximity toConsume homes
Low PricesCredit Facilities
Personal TouchFactors
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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.
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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
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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
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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.
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•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
STRUCTURE OF INDIAN RETAIL
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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
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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.
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• 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 BazaarIn 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.
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• Food BazaarFood 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.
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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 assure consumers that its prices are competitive.
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•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.
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“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.
Is Retail in India at the crossroads?
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•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
MANAGING SUPPLY CHAIN FOR PACKAGED CONSUMER GOODS AT FOOD BAZAAR
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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.
Aggressive growth –Food bazaar
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C & F AGENT
DISTRIBUTOR
Wholesaler Modern trade retailer
Large retailer
Small retailer
FACTORY
TRADITIONAL SUPPLY CHAIN-FMCG
•LOCAL ENTREPRENEUR•INTERFACE BETWEEN STATE
GOVT & MANUFACTURER•1% COMPANY SALES /TON•4.75% margin for
traditional retailer•Net margin of 0.5%
8% gross margin
15% gross margin
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•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 received1%-2%of sales – DISPLAY INCOME4 % - DISCOUNT FROM MANUFACTURE3% - DISCOUNT FROM DISTRIBUTOR
Adv of traditional supply chain for food bazaar
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•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
Shroff concern....
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Charting the Future
• Creator, Preserver & Destroyer
• SWOT Analysis
• Organizational Life Cycle
• Organizational / Customer Value Matrix
• 4P Market Mix
• Future Challenges . .
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SWOT Analysis of Big BazaarSTRENGTH
•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
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
WEAKNESS•Unable to meet store opening target so far•Falling revenue per square feet
WEAKNESS•Unable to meet store opening target so far•Falling revenue per square feet
OPPORTUNITY•Organized retail is just 4.15%of total pie of Indian retail market•Evolving Customer preferences in recent years
OPPORTUNITY•Organized retail is just 4.15%of total pie of Indian retail market•Evolving Customer preferences in recent years
THREAT•Competitors, global big players planning to foray into market•Unorganized retail market of India•Government policies are not well-defined in India
THREAT•Competitors, global big players planning to foray into market•Unorganized retail market of India•Government policies are not well-defined in India
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Life Cycle
SALES
INTRODUCTORY STAGE
GROWTH STAGE MATURITY STAGE
DECLINE STAGE
TIME
TOTAL MARKET SALES
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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
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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.
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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.
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4P Marketing Mix Contd..
• Promotional Pricing:
Psychological discounting (Rs. 99, Rs. 49, etc.)
Special Event Pricing (Close to Diwali, Gudi Padva, and Durga Pooja)
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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.
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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
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“Joona Do, Naya Lo”
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“Sabse Saste 3 Din” Republic Day Sales Images
25-26-27 Jan 2006
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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
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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
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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?