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BIG BAZAAR- THE CHANGE OF RETAIL INDPRESENTED BY GROUP 5

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Big Bazaar & Indian retail sector

Overview

Internal & External Analysis

Business & Corporate level Strategy

Conclusions

AGENDA

Group 5, Section C

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BIG BAZAAR- OVERVIEW

Started in 2001; Launched in 4 cities namely Kolkata,Indore , Bangalore and Hyderabad within 22 days

A one-stop destination for a wide range of categorieslike food, furniture, fashion, electronics, leisure etc.

Spread across more than 90 towns and cities

Aimed at providing local marketplace feel to theconsumers

Initially launched to sell goods in the fashion format,later a wide range of products were included in theportfolio

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3- C STRATEGY FOLLOWED BY THE GROUP

Consumption

Confidence

Change

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INDIAN RETAIL LANDSCAPE

Stands at USD 396 Billion; Likely to gro

Second Largest employer after agricultu

TRENDS

Emergence of Organized Retail

Spending Capacity of youth in India

Raising Incomes and purchasing power

Changing mindset of customers

Easy Customer credit

Higher Brand consciousness

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ORGANIZED RETAIL IN INDIA

Expected to be worth USD 175-200 Billion by 2016

Comprises only 3% of the total retail sector; rest 97%comprises of mom- and pop type shops

Delayed growth mainly due to lack of trained manpower, tax laws, Govt. regulations and entry restrictions

Expected to grow rapidly after change in the FDI policyin retail sector in 2012

FDI allowed upto 51% in multi-brand retail and 100%in single-brand retail

Can be categorized in different segments like food ,fashion and lifestyle, furniture, electronics etc

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EXTERNAL ANALYSIS- PORTERS 5 FORC

Competitive Rivalry withinIndustry

Reliance Retail

RPG Spencer Group

ABG's More Retail

Threat of Entrants

Huge Entrants once FDI is allowed

Ba

Threat of Substitutes

High

Bargaining power ofSuppliers

Low

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Product Differentiation- Strong brand identification & customer loyalty fo

Capital requirement- Large Investments create a barrier

Switching Costs- Low

Access to Distribution Channels & Govt. Policies

Threat ofEntrants

Differentiation of products & Switching Costs- products are diff. in form oprices which contributes to switching costs

Threat of Backward Integration- Not a likely threat

BuyersBargaining

Power

Dominated by large no. of players; scope to influence prices in less

Threat of forward Integration High threat as it easy for suppliers to mov

SuppliersBargaining

Power

Home Delivery, Credit Facility and E-retail are main substitutes

Trade-off of convenience and discount is already crossed by big bazaarThreat of

Substitutes

Industry Growth Has a growth of over 10.6%. Competition expected to drincrease

Exit Barriers High as investments involved is high

Threat ofRivals

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INTERNAL ANALYSIS- VRIO FRAME WO

VALUE

1.Trained Staff andTechnology

2. Brand Identity &innovation

3.Wide productrange

4. Aggressive Top

Mgmt.

RARITY

1. Motivatedworkforce

2. Customer Offers

3. High Service atlower costs

4. SchemeInnovation

IMITABILITY

1. 13 dayinduction for workforce

2. Point ofpurchasepromotions

3. DedicatedVisualMerchandize Dept. O

RGANIZATION

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VALUE CHAIN PRIMARY ACTIVITIES

INBOUNDLOGISTICS

Systems to keep tokeep track of vendorlogistics schedule

,scrap etc

OPERATIONS

High softwareautomation andtraining of workforcefor operations

OUTBOUNDLOGISTICS

Own system tohandle store tostore transfer,return of non-

salable items

MARKETING &SALES

Promotinal pricing

Differentiatedpricing

Bundling

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VALUE CHAIN- SECONDARY ACTIVITIES

FIRM INFRASTRUCTURE

Internal warehouse capacity is low

It is recommended to increase the warehouse capacity

HUMAN RESOURCE MANAGEMENTRetention Strategy

Customer Experience management model

TECHNOLOGY DEVELOPMENT

Uses software RayMedia HQ for chains of stores

Integrated analysis and consolidating real-time business information is done

PROCUREMENT

Sources from various manufacturing distributors & local suppli

Credit period varies from 3 -12 weeks depending on the produ

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BUSINESS LEVEL STRATEGY Follows a strategy of Cost- Leadership

Competitive price is the most important of the valueproposition of Big Bazaar 5 to 60% lower thanmarket prices

Follows 3 C Strategy

Segmented India into three groups

India One- Consuming Class

India Two- Serving Class

India Three- Struggling Class

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CORPORATE LEVEL STRATEGY

Diversification

Launched Food Bazaar & own jewelry lineNavaras

First group to introduce store-in storeconcept

Diversified into e-commerce & launchedpremium food chain Food Hall

Launched special credit card Shakti forHouse-wives

Offered value added services of cutting,grinding, roti making and vegetable cutting

Joint Ventu

Partenered with ICICI to laservices like ICICI Big Ba

JV with FutureBazaar.comshopping portal

Launched Exclusive rangeJV with Hidesign

JV with HUL for bakery anproducts

Parent company PantalooGenerali Group for Futurinsurance

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RECOMMENDATIONS

The forward strategy for Big Bazaar should consider tie-ups with different supplieexclusivity which in-turn would improve the delivery time between warehouses

Improved integration between warehouses and outlets and other systems

Large infrastructural improvements necessary in terms of IT, warehouses & vendofacilities; Collaborations to reduce costs

Pull Mechanism to be considered for distribution centres for order generation New Strategies to encourage buying in all categories of Indian and to shift the mind

from kirana stores

Consider diversification and change positioning to sophisticated stores to cater to

Offer more customized and convenience services to suit increasing expectations

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Quest

THY