Big Bazaar, Indias Hypermarket Chain: Can its Ambitious Future

Plans Succeed?

We started with our first store in October 2001 and have now crossed the hundred mark with three stores
opened on Tuesday in Pune, Cuttack and Delhi. Our plan is to increase the number of our stores to 300 by
end of the 2010-11 fiscal.
1


Rajan Malhotra, Big Bazaar Chief Executive Officer
Big Bazaar is a chain of shopping malls in India currently with 101 stores
2
, owned by Pantaloon Retail India
Limited (Pantaloon). Pantaloon ended fiscal 2007 08 with INR 50.48 billion in revenue.
3
Big Bazaar is a
hypermarket format, a part of Pantaloon and works on the same economy model as Wal-Mart and has had
considerable success in many Indian cities and small towns. The idea was pioneered by entrepreneur
Kishore Biyani (Biyani), the head of Future Group, of which Pantaloon is a flagship enterprise. Big Bazaar is
on the verge of achieving a unique milestone in the history of world Retail by being the first hypermarket
format in the globe to rollout 101 stores fastest in a short span of seven years. The Group is confident of the
Indian Retail Story. The Group has not slowed down its expansion plans despite the fiscal woes in the
economy present today. Big Bazaar plans to have 300 stores and the Pantaloon group is expecting
revenues of INR 130 billion by the year 2011. It remains to be seen if Big Bazaar would be able to achieve
this ambitious goal.
Indian Retail Scenario
Retail in India is on the growth track. In various global rankings, India has emerged as one of the most
favoured retail destination countries. The development of large, modern store chains has been accelerated
in the recent times by the investments made by the large-scale domestic and international players.
4
As of
end 2007, organized retail forms just 3% of India's retail industry which is roughly estimated at $330 billion
(approx. INR 13 trillion) and it is set to grow to 16% by 2015, according to estimates by Technopak
Advisors, a New Delhi-based retail consulting company.
5
To gain leverage in this growth trend, major
players such as Future Group, Reliance Industries Ltd, Tata Group, Aditya Birla Group, K Raheja Corp., and

1
Big Bazaar plans 300 stores by 2010-11, http://www.financialexpress.com/news/big-bazaar-plans-300-stores-by-
201011/367821/, September 30
th
2008
2
Big Bazaar reveals its plan to setup 300 retail stores by 2010-11, http://www.stockwatch.in/big-bazaar-reveals-its-plan-
setup-300-retail-stores-201011-21327,October 2
nd
2008
3
Biyani moves on with 4 new stores in 5 days, http://www.ibef.org/artdisplay.aspx?cat_id=379&art_id=20397&arc=show,
September 29
th
2008
4
The new science of retail, http://www.financialexpress.com/news/the-new-science-of-retail/367589/, September 30
th

2008
5
RETAIL SPECIAL | BRAND BEHAVIOUR, http://www.3isite.com/articles/brand_behaviour.htm

This Case was written by D. Devika Rani, Doris Rajakumari John and Chaganty Seshagiri Rao, IBS Research Center. It is
intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a
management situation. The case was compiled from published sources.

2009, IBS Research Center.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium
whatsoever without the permission of the copyright owner.


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309-360-1

Mahindra and Mahindra Ltd have announced mega investments in this sector. Ultimately, the response of
the Indian consumer will prove to be crucial to the success of the organized retail format.
6
The retailers have borrowed ideas from the organized western style retailing and have tried to offer a variety
of product mixes and store formats such as super markets, hyper markets, malls etc., to effectively address
the market needs.
7
While organized retail makes up 70% to 80% of all retail business in developed
countries, it is only 3% in India. This is by far the lowest in the world. In US, organised retailing accounts for
85% while in Japan it is 66%.
8
(Exhibit I)
Exhibit I
Share of Organised Retail in Selected Countries
Source: Retail Distribution in India, http://www.economywatch.com/business-and-
economy/retail-distribution-india.html
Retail as a whole can be broken into various categories, depending on the types of products serviced.
Clothing & textiles dominate the market and account for 36% of total organised retailing, followed by
watches & jewellery, food & grocery and footwear which contribute 17%, 14% and 13% respectively.
Durables (10%), books, music and others (10%) contribute the least. (Exhibit II) This is indicative of the
opportunity for organised retail growth in these segments.
9
The proliferation of hypermarkets and
supermarkets has led to a growth in food and grocery retail. Value retailing
10
is seen to be gaining ground in
India. The other high growth verticals are apparel and durables. Impulse goods like books and music are
also gaining a larger share in the organised retail market, with players making stores more accessible to
consumers.
Indian retail or so-called unorganised retail or traditional retail is dominated by a large number of small
retailers consisting of the local kirana shops, owner-manned general stores, chemists, footwear shops,
apparel shops, paan and beedi shops, hand-cart hawkers, pavement vendors, etc. (Annexure I). The last
3-4 years have witnessed the entry of a number of organized retailers
11
who opened stores in various
modern formats in metros and other important cities (Annexure II). Still, the overall share of organized
retailing in total retail business has remained low. Exhibit III gives the category-wise growth of Indian retail,
total as well as the organized sector for F2004 to F2007. While total retail sales have grown from INR
6
RETAIL SPECIAL | BRAND BEHAVIOUR, op.cit.
7
The new science of retail, op.cit.
8
Impact of organized retailing on unorganized sector, http://siadipp.nic.in /policy/icrier_report _27052 008.pdf, May 2008
9
Retail: A look at the key verticals, http://www.equitymaster.com/detail.asp?date=6/13/2007&story=4
10
Value retailing is typically a low margin-high volume business (primarily food and groceries)
11
Organised retailing comprises mainly of modern retailing with busy shopping malls, multi storied malls and huge
complexes that offer a large variety of products in terms of quality and value for money.
2
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10,591 billion ($230 billion) in 2003-04 to INR 14,574 billion ($322 billion) in 2006-07 with a compound
annual growth rate of about 11%, the organised retail sales grew at higher rate about 20% per annum from
INR 350 billion ($7.6 billion) in 2003-04 to INR 598 billion ($13.2 billion) in 2006-07. As a result, the share of
organised retail in total retail grew, although slowly, from 3.3% in 2003-04 to 4.1% in 2006-07.
12
Exhibit II
India Retail - Share of Categories (per cent)
Different categories
% contribution to
organised retailing
Clothing, textile & fashion accessories 36
Jewellery & watches 17
Food & grocery 14
Footwear 13
Durables 10
Books, music & gifts 3
Others 7
Source: Retail: A look at the key verticals,
http://www.equitymaster.com/detail.asp?date=6/13/2007&story=4
Exhibit III
Growth India Retail - Total vs Organised
Source: Impact of organized retailing on unorganized sector in India,
http://siadipp.nic.in/policy/icrier_report_27052008.pdf, May 2008
12
Impact of organized retailing on unorganized sector in India, op.cit.
3
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The Indian retail sector has been most attractive over the last few years. India topped the A.T.Kearney's
Global Retail Development Index (GRDI) for two consecutive years 2006 and 2007 and for 2008 it is in
the 2
nd
position.
13
The attractive position of India in the GRDI rankings has triggered Indian as well as
foreign retail players to go on the merchandising track. Companies like The Future Group, Reliance,
Rahejas, and Tatas etc. have shown the way for others to enter. (Exhibit IV)
Exhibit IV
Top Players in the Retail Industry
Players Revenues
for
2006-07
in US$
millions
Retail Space
as on May
2007 (Sq.
ft.)
Format
Future Group (Pantaloon
Retail)
821.0 6,630,000 F&G, Specialty
Raheja Group (Shoppers
Stop)
219.7 1,590,000 F&G, Specialty
Tata Group (Trent, Infiniti
Retail)
145.2 880,000
Speciality Retail, Electronics, Hyper
Markets
RPG Retail 146.0 810,000 F&G, Specialty
A V Birla Group 61.0 890,000 F&G
Source: Retail, http://www.investmentcommission.in/retail.htm#top
According to reports, The Indian consumers are noted for their high degree of value orientation. Such
orientation to value has labeled Indians as one of the most discerning consumers in the world. Even luxury
brands have to design a unique pricing strategy in order to get a foothold in the Indian market.
14
Analysts
feel that Indian consumers have a high degree of family orientation.
15
This orientation in fact, influences the
extended family and friends as well. Brands with identities that support family values tend to be popular and
accepted easily in the Indian market. More and more consumers are selective on the quality of the
products/services.
This awareness has made the Indian consumers seek reliable sources for purchases such as organized
retail chains that have a corporate background and where the accountability is more pronounced. The
consumer also seeks to purchase from a place where his/her feedback is more valued. Indian consumers
are now more aware and discerning, and are knowledgeable about technology, products and the market.
They are beginning to demand benefits beyond just availability of a range of products that came from
trusted manufacturers. The Indian consumers are price sensitive and prefer to buy value for money
products. Taking advantage of this, Future Group launched Big Bazaar as a hypermarket offering value-for-
money products and services.
A typical Big Bazaar store offers over 160,000 products
16
across categories like apparel, general
merchandise, food, cosmetics, home needs, electronics, furniture, communications, books, music, gold and
pearl jewellery and services like consumer credit, beauty salons, gyms and travel. On any weekend
13
Emerging opportunities for global retailers, http://www.atkearney.com/shared_res/pdf/GRDI_2008.pdf,The 2008
A.T.Kearney Global Development Retail Index, 2008
14
PRODUCT MARKET STUDY: CONSUMER BEHAVIOR IN INDIA,
http://edms.matrade.gov.my/domdoc/Reports.nsf/svReport/2F841B9F6D04D5944825709000263441/$File/PMSChennai05-
ConsumerBehavior_1.doc?OpenElement, October 2005
15
Ibid.
16
Markets Achievement History,http://www.superbrandsindia.com/images/superbrands_book_2008/Big%20Bazaar.pdf
4
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evening, a Big Bazaar store attracts over 10,000 customers from mothers along with their demanding kids
to senior citizens with their grand children in tow.
Big Bazaars: Growth
Big Bazaar is a chain of shopping malls in India currently with 101 stores, owned by the Pantaloon Retail
India Limited. Biyani was born in August 1961 and completed his post graduate degree in marketing in
1983. He did not join his family business of textile trading at that point in time. Doing a job did not occur to
him. He rather extended the family business by getting into fabrics to supply to the garment industry. He
had a plot of land in Tarapur, where he started a factory, which manufactured yarns to make fancy fabrics.
Then over time he evolved from a garment manufacturer to a brand to a multi-format retail player. He
ventured into a lot of things franchise retailing, multilevel marketing, a department store in 1997, hyper-
marketing in 2001 and then into property funds.
17
Biyani led Future Groups foray into organised retail with
the opening of the Pantaloons family store in 1997. This was followed in 2001 with the launch of Big Bazaar.
It blends the aspects of Indian bazaars with the advantages of modern retailing like choice, convenience
and quality. This was followed by a number of other formats including Food Bazaar,
18
Central
19
and Home
Town
20
all operating under Future Group.
A staunch believer in the groups corporate credo, Rewrite Rules, Retain Values, Biyani considers
Indianness as the core value driving the group. Future Groups vision is to, deliver Everything,
Everywhere, Every time to Every Indian Consumer in the most profitable manner.
21
He recently authored a
book, It Happened in India that captures his entrepreneurial journey and the growth of modern retailing in
India. The book reflects his beliefs that retailers need to look into the heritage of the country for inspiration
and innovation, instead of looking beyond our borders. He also suggests that a look-west mentality is
inadequate to understand the needs of the local customer. His book also identifies the emergence of the
creative economy
22
as opposed to a knowledge economy
23
and the need for companies across industrial
sectors to adopt innovation to drive their business. One of the most amusing sentences was his Time Pass
Theory: I interpret life very differently and I have this belief that we all come to this world to kill time.
Therefore, we pick up some activity that we like doing and call it our profession. I call this the Time Pass
theory.
24
Biyani opened the countrys first hypermarket retail outlet in Kolkata (then Calcutta) in October 2001. In the
same month, two more stores were added one each in Hyderabad and Mumbai, thus starting on a sojourn
which began the chapter of organized retailing in India. Reminiscing the days of conceptualising the
hypermarket idea, Biyani said, We initially decided to name the format as Bazaar because we had
designed the store keeping the Indian mandi
25
style in mind. Since the size of the hypermarket was big than
an average mandis, the thought came to name it as Big Bazaar. However, we had freezed on the punch
line Isse Se Sasta Aur Achha Kahi Nahi (cheaper and better than this? nowhere else!) much before we
met the creative agency to design the final logo of Big Bazaar.
26
17
Property fund is a term concerning a mutual fund for investment in real estate
18
Food Bazaar is the grocery department and vegetable section of Big Bazaar.
19
Central town is a store which offers a range of national and international brands, books and music stores, lifestyle
accessories as well as food and grocery.
20
Home town offers a vast range of home solutions under one roof.
21
Company Vision Future Group, www.pantaloon.com
22
The Creative Economy is a term used to describe the aspect of our economy that hinges upon creativity and cultural
uniqueness.
23
Knowledge economy means economy based on creating, evaluating, and trading knowledge.
24
It Happened in India - the story of Big Bazaar and Future Group, http://www.mehtanirav.com/2007/06/27/it-happened-in-
india-the-story-of-big-bazaar-and-future-group, June 27
th
2007
25
The term mandi means shop
26
Big Bazaar Indias Real Retail Story, http://retailigence.wordpress.com/tag/big-bazaar, October 4
th
2008
5
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Rajan Malhotra, who is also the first employee of Big Bazaar, joining the organization in early 2001 adds,
Since beginning, we have kept Big Bazaar as a soft brand, which reflects the India and the Indianess. We
believed in growing with the society, participating and celebrating all regional and local community festivals,
giving customers preferences above everything else.
27
Every Big Bazaar is a small family by its own and
the head of the family Karta is the store manager. Biyani, had the habit of observing, understanding
customers behaviour,
28
in every employee of the group. Though Big Bazaar was started purely as a
fashion format including apparel, cosmetics, accessory and general merchandise, the first Food Bazaar
format was added as Shop-In-Shop within Big Bazaar in the year 2002.
29
Big Bazaar has been credited
with some of the biggest consumer campaigns in the history of Indian retail. The journey of Big Bazaar can
be divided into two phases one pre and the other post January 26
th
2005, with the introduction of the sales
campaign, Sabse Sasta Din(cheapest day). In just one day, a large number of customers all over India
shopped at various Big Bazaar stores in the country. In celebration of Republic Day, Big Bazaar created a
three-day shopping bonanza called Sabse Saste Teen Din (cheapest 3 days). This has now become a
national event that attracts millions of customers. In January 2008, the three-day event generated sales
worth over INR 240 crore (US$ 60 million) in 80 Big Bazaar stores.
30
Indias Independence Day, August 15
th
is billed as the Maha Savings Day
31
. So successful has this
become that the Big Bazaar stores in many cities stay open till midnight. Wednesday Bazaar is the Hafte ka
Sabse Sasta Din (weeks cheapest day). It was initially created with the intent of decongesting weekends
and driving footfalls on weekdays. As it transpired, most Big Bazaar stores now attract as many customers
on Wednesdays as they do on weekends. An event that offers special benefits and privileges to senior
citizens was built around the Senior Citizens Day. Further, through the kinds of products, services and the
innovative deals offered, expansion in tier II and tier III towns and the tie ups with branded merchandise to
offer exclusive goods and services to the customers, the chain reflected its understanding of the Indian
consumers.
32
As of October 2008, Big Bazaar occupied over 5 million square feet retail space covering 59
cities and recorded 110 million footfalls into its stores. The format is expecting the number of footfalls in its
stores to increase by over 140 million this financial year 2008.
33
Over the years, Biyani and Big Bazaar have
received awards both nationally and internationally. Biyani was awarded the Ernst & Young Entrepreneur of
the Year 2006 in the Services Sector and the Lakshmipat Singhania - IIM Lucknow Young Business Leader
Award by Prime Minister, Dr. Manmohan Singh in 2006. He was also awarded the CNBC First Generation
Entrepreneur of the Year 2006.
Rajan Malhotra, CEO of Big Bazaar says, What is important in our journey is not the number of stores, but
the customers faith in us. It is the India and the Indians, which have helped us, reach this feat in such a
short time span and today our country is creating a history in the World organized Retail.
34
Big Bazaar has
become the fastest (in the globe) to roll out 101 stores, in Hyper Market format, in just 7 years. The year,
2006 marked the evolution of Future Group, that brought together the multiple initiatives taken by group
companies in the areas of Retail, Brands, Space, Capital, Logistics and Media. The Future Group operates
through six verticals: Future Retail (encompassing all lines of retail business), Future Capital (financial
products and services), Future Brands (all brands owned or managed by group companies), Future Space
(management of retail real estate), Future Logistics (management of supply chain and distribution) and
Future Media (development and management of retail media spaces). The group's flagship enterprise,
Pantaloon Retail, is India's leading retail company with presence in food, fashion and footwear, home
27
Big Bazaar Indias Real Retail Story,Op.cit.
28
Ibid.
29
Kishore Biyani targets 300 Big Bazaar outlets by 2011 news, http://www.domain-
b.com/companies/companies_f/future_group/20080930_future_group.html, September 30
th
2008
30
Market Achievements History, op.cit.
31
Ibid.
32
Ibid.
33
Big Bazaar Indias Real Retail Story, op.cit.
34
Ibid.
6
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solutions and consumer electronics, books and music, health, wellness and beauty, general merchandise,
communication products, e-tailing and leisure, and entertainment.
35
The companys width and depth of retail and its ownership of multiple retail formats have helped it to
capture the consumption basket of the Indian consumer. Central a mall located in the heart of major Indian
cities has been launched by the company besides others like Collection I (home improvement products), E-
Zone (consumer electronics), Depot (books, music, gifts and stationeries), aLL (fashion apparel for plus-size
individuals) and Blue Sky (fashion accessories).
36
Some of the group's subsidiaries like, Home Solutions
Retail India Ltd, Future Bazaar India Ltd and ConvergeM Retail India Ltd, led the group's foray into home
improvement, e-tailing and communication products, respectively. Other group companies include, Galaxy
Entertainment and Indus League Clothing.
37
It has also entered into joint venture agreements with a
number of companies including ETAM group, Gini & Jony, Liberty Shoes and Planet Sports, a company that
owns the franchisee of international brands like Marks & Spencer, Debenhams, Guess and The Body Shop
in India.
38
Big Bazaar realised that the urban poor in one section of the city Ahmedabad cannot help them realise their
target and hence launched its ambitious luxury format Ethnicity, a family lifestyle store there to cater to the
cash rich consumers after closing the two outlets in Ahmedabad.
39
For any retail venture, the success rate
is mere 20-30%. So, I do not think that there are any issues with stores closing down, asserts Biyani.
Anand Adukia, zonal chief of Pantaloon Retail India Gujarat adds that there is room for every player in this
kind of market. You have to keep experimenting and create a category to click with your customer, he
says.
40
Sector analyst Harish Bijoor of Harish Bijoor Consults Inc. points out that under the present
circumstances change is the only constant. Big Bazaar operates on the cafeteria approach whereby the
retailer intends to convert footfalls for groceries to generate sales for other products like garments,
consumer durables, et al. However, considering Big Bazaar has not been able to sustain consumers
interest (in Ahmedabad) making it difficult for the company to continue with it, the group has decided to
focus on Ethnicity and Pantaloon that are niche categories.
41
Big Bazaars are the dollar stores of India, but
as competition in the mass category is huge, Future Group is learning from its experience and becoming
amoebic in its offering. It has not arrived at a format and depending on a city it is changing its approach,
42
he points out.
Future and Road Ahead
Big Bazaar plans to open 15 more stores by end of November 2008 at an investment of INR 15 billion to
INR 16 billion.
43
Big Bazaar's Chief Executive Officer, Rajan Malhotra reported that the stores would be set
up in places such as Mysore, Pune, Cuttack, Kolkata, Chandigarh, Agra, Faridabad, Surat, Nashik, Mumbai,
Delhi and Solapur. Mysore, Cuttack, Chandigarh, Faridabad, and Solapur are new markets for the company
and the company expects that these stores would perform well.
Big Bazaars march comes at a time when several new retailers are slowing expansion, reducing the
number of outlets, effecting layoffs, and even exiting businesses. Basmati exporter REI Agro has closed
35
HomeTown home improvement retail format from Future Group, comes to Ahmedabad,
http://www.pantaloon.com/hometown_launch_ahmedabad.asp
36
Kishore Biyani: New face of Indian retail, http://www.domain-
b.com/businessleaders/leaders_profile/kishore_biyani.htm
37
Ibid.
38
Ibid.
39
Big Bazaar: Great Indian retail story turning niche & premium,
http://economictimes.indiatimes.com/News/News_By_Industry/Services/Retailing/Big_Bazaar_Great_Indian_retail_story_t
urning_niche__premium/rssarticleshow/3644191.cms, October 27
th
2008
40
Ibid.
41
Ibid.
42
Big Bazaar: Great Indian retail story turning niche & premium, Op.cit.
43
Big Bazaar Plans To Invest Rs.1.5K Cr. On NewStores, http://www.nasdaq.com/aspxcontent/NewsStory.aspx?
7
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dozens of the more than 200 grocery stores it had opened; India bulls Retail Services Ltd has closed
several of its hypermarkets; Mumbai-based Hyper City Retail has abandoned plans to open 250 grocery
stores by 2012; Ludhiana textile firm Oswal Group has closed of its two-dozen-store-strong lingerie chain;
and Reliance Retail Ltd has fallen short of its September target of 2,000 stores of all formats by more than
half.
44
But even as other entrepreneurs who have made a mark on Indian retail such as Subhiksha Trading
Services Ltds R. Subramanian and Vishal Retail Ltds Ram Chandra Agarwal are slowing, Biyani is pushing
ahead.
In a September 22
nd
2008 research report to clients, Vandana Luthra, Manish Sarawagi and Anuj Bansal
analysts at Merrill Lynch wrote: We like Pantaloons speed in store roll-outs across formats, managements
long term focus on property lock-ins and industry-wide peaking of rent and salary costs. But they still had
an underperform rating on the company. Biyani, however, is unfazed by these ratings. He is not keen on
talking about Pantaloons financials or fund-raising plans. The Merrill Lynch report said: We forecast
Pantaloons interest cost to grow 2.7 times over financial year 2008-10 thus limiting bottom line growth to
sub-10%.
45
One question that has been raised in recent times is whether Biyani would partner with foreign retailers.
After companies such as Reliance Retail, Bharti Enterprises Ltd and Aditya Birla Retail Ltd announced their
entry into the business of organized retail, some of these firms, and some others, have formed partnerships
with foreign retail firms. The Tata group that owns retail firm Trent Ltd has a partnership with Tesco and
Bharti with Wal-Mart Stores Inc.
46
Biyani replied that they have no partnerships and do not intend to ally
with any global firm. He was confident of his brand and said that malls preferred Pantaloon as the anchor
tenant.
47
Biyani said real estate developers were keen to have his stores as anchor tenants because they
act as the glue to attract other tenants and shoppers.
48
The company is evaluating different possibilities such as internal accruals, debt and strategic investment
possibilities such as getting the funds from private investors and private equity players to fund expansion. In
fact, officials say that Big Bazaar could consider an initial public offer to raise the funds.
49
Future Capital
Holdings, the group's financial arm, recently raised $1.1 billion in private equity funds for investment in retail
real estate and consumer-related industries. Apart from asset management, Future Group also plans to get
into insurance, consumer credit and offer other financial products and services.
50
Pantaloon may also
increase its annual turnover to INR 130 billion by 2010-11, up from INR 36 billion during fiscal 2007, on the
back of its expansion. It has also gone on record saying that it would have another 35 stores by the end of
its fiscal in June 2009 to take the total number to 135. Pantaloon has achieved revenue of INR 50.48 billion
in the fiscal year 2008 and has formulated plans for reaching a figure of INR 130 billion by 2010-11 fiscal.
51
It has been reported that fashion contributes about 35% to the Big Bazaars profit margins. However, it
allocates 25% of its advertisement spend towards promoting fashion at Big Bazaar.
52
Although apparel has
the highest profit margins in the industry, the overhead costs and advertising costs are also high. Despite
these costs and retail slowdown will it be able to achieve its goals?
44
Biyani moves on with 4 new stores in 5 days, op.cit.
45
Ibid.
46
Ibid.
47
Anchor tenant means main tenant in a shopping center. It is often essential to have a lease commitment from an anchor
tenant before a shopping center can be financed.
48
Biyani moves on with 4 new stores in 5 days, op.cit.
49
Big Bazaar evaluating funding options for expansion, http://www.moneycontrol.com/india/news/ipo-upcoming-
issues/big-bazaar-evaluating-funding-options-for-expansion/20/18/323262, January 28
th
2008
50
Kishore Biyani: New face of Indian retail, op.cit.
51
Big Bazaar footprint explodes all around, http://economictimes. indiatimes.com /Features /Financial_Times
/Big_Bazaar_footprint_explodes_all_around/articleshow/3561496.cms, October 5
th
2008
52
Its fashion at Big Bazaar!, http://profit.ndtv.com/2008/07/10233439/its-fashion-at-big-bazaar.html?id=06f5b801-8f2c-
4ed5-a0b0-58e4a5e08aad, July 10
th
2008
8
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Annexure I
Unorganised Retail Universe 2006
The total number of traditional retailers is estimated to be 13 million by Technopak Advisers Pvt. Ltd. The
classification of the unorganized retail universe by category is shown below.
Categories of Traditional Retailers
Fruit and Vegetable Sellers - Sells fruits and vegetables.
Food Store - Reseller of bakery products. Also sells dairy, processed food and beverages.
Non -Vegetable Store - Sells chicken and mutton (supplemented by fish) or predominantly fish.
Kirana I - Sells bakery products, dairy and processed food, home and personal care and beverages.
Kirana II - Sells categories available at a Kirana I store plus cereals, pulses, spices and edible oils.
Modern Independent Stores - Sells categories available at a Kirana II store and has self-service. Operates
single or several stores (but not an organized chain of stores).
Apparel Sells mens wear, womens wear, innerwear, kids and infant wear.
Footwear Sells mens wear, womens wear, and kids wear.
CDIT (Consumer Durables & IT) Sells electronics, small appliances, durables, telecom and IT products.
Furnishing Sells home linen and upholstery.
Hardware - Sells sanitary-ware, taps and faucets, door fittings and tiles.
General Merchandize Includes lightning, stationery, toys, gifts, utensils, and crockery stores.
Source: Impact of Organized Retailing on the Unorganized Sector,
http://siadipp.nic.in/policy/icrier_report_27052008.pdf, May 2008
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Annexure II
Modern Retail Formats in India
Hypermarket
Typically varying between 50,000 sq. ft. and 100,000 sq. ft., hypermarkets offer a large basket of
products, ranging from grocery, fresh and processed food, beauty and household products, clothing
and appliances, etc. The key players in the segment are: the RPG Group's Giant (Spencers)
hypermarkets, and Pantaloon Retail's Big Bazaars.
Cash-and-carry
These are large B2B focused retail formats, buying and selling in bulk for various commodities. At
present, due to legal constraints, in most states they are not able to sell fresh produce or liquor.
Cash-and-carry (C&C) stores are large (more than 75,000 sq. ft.), carry several thousand stock-
keeping units (SKUs) and generally have bulk buying requirements. In India, an example of this is
Metro, the Germany-based C&C, which has outlets in Bangalore and Hyderabad.
Department Store
Department stores generally have a large layout with a wide range of merchandise mix, usually in
cohesive categories, such as fashion accessories, gifts and home furnishings, but skewed towards
garments. These stores are focused towards a wider consumer audience catchment, with in-store
services as a primary differentiator. The department stores usually have 10,000 60,000 sq. ft. of
retail space. Various examples include: (i) Shoppers' Stop, controlled by the K. Raheja Group, a
pioneering chain in the country's organized retail; (ii) Pantaloons, a family chain store, which is
another major player in the segment; (iii) Westside, the department store chain from Tata Group's
Trent Ltd; (iv) Ebony, a department store chain from another real-estate developer, the DS Group;
(v) Lifestyle, part of the Dubai-based retail chain, Landmark Group; and (vi) the Globus department
and superstore chain.
Supermarket
Supermarkets, generally large in size and typical in layouts, offer not only household products but
also food as an integral part of their services. The family is their target customer and typical
examples of this retailing format in India are Apna Bazaar, Sabka Bazaar, Haiko, Nilgiri's, Spencers
from the RPG Group, Food Bazaar from Pantaloon Retail, etc.
Shop-in-Shop
There is a proliferation of large shopping malls across major cities. Since they are becoming a
major shopping destination for customers, more and more retail brands are devising strategies to
scale their store size in order to gain presence within the large format, department or supermarket,
within these malls. For example, Infinity, a retail brand selling international jewellery and crystal
ware from Kolkata's Magma Group, has already established presence in over 36 department chains
and exclusive brand stores in less than five years. Shop-in-shops have to rely heavily on a very
efficiently managed supply chain system so as to ensure that stock replenishment is done fast, as
there is limited space for buffer stocks.
Speciality Store
Speciality stores are single-category, focusing on individuals and group clusters of the same class,
with high product loyalty. Typical examples of such retail format are: footwear stores, music stores,
electronic and household stores, gift stores, food and beverages retailers, and even focused
apparel chain or brand stores. Some examples of these are Reliance Footprint a specialty
footwear store at Star City Mall, Mayur Vihar, New Delhi and Reliance Jewels another specialty
jewel store in Jayanagar, Bangalore. Besides all these formats, the Indian market is flooded with
formats labelled as multi-brand outlets (MBOs), exclusive brand outlets (EBOs), kiosks and corners,
and shop-in-shops.
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Category Killers Large Speciality Retailers
Category killers focus on a particular segment and are able to provide a wide range of choice to the
consumer, usually at affordable prices due to the scale they achieve. Examples of category killers in
the West include Office Mart in the US. In the Indian context, the experiment in the sector has been
led by The Loft, a footwear store in Powai, Mumbai measuring 18,000 sq. ft.
Discount Store
A discount store is a retail store offering a wide range of products, mostly branded, at discounted
prices. The average size of such stores is 1,000 sq.ft. Typical examples of such stores in India are:
food and grocery stores offering discounts, like Subhiksha, Margin Free, etc. and the factory outlets
of apparel and footwear brands, namely, Levis factory outlet, Nikes factory outlet, Koutons, etc.
Convenience Store
A convenience store is a relatively small retail store located near a residential area (closer to the
consumer), open long hours, seven days a week, and carrying a limited range of staples and
groceries. Some Indian examples of convenience stores include: In & Out, Safal, amongst others.
The average size of a convenience store is around 800 sq.ft.
Source: Impact of Organized Retailing on the Unorganized Sector,
http://siadipp.nic.in/policy/icrier_report_27052008.pdf, May 2008
11
309-360-1