BIG BAZAAR- THE CHANGE OF RETAIL INDUSTRY

PRESENTED BY GROUP 5

AGENDA
Big Bazaar & Indian retail sector Overview Internal & External Analysis

Business & Corporate level Strategy

Conclusions

Group 5, Section C

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 categories like food, furniture, fashion, electronics, leisure etc.

Spread across more than 90 towns and cities

Aimed at providing local marketplace feel to the consumers Initially launched to sell goods in the fashion format, later a wide range of products were included in the portfolio

3- C STRATEGY FOLLOWED BY THE GROUP

Change

Confidence

Consumption

INDIAN RETAIL LANDSCAPE

Stands at USD 396 Billion; Likely to grow at 12 % Second Largest employer after agriculture

TRENDS
Emergence of Organized Retail Spending Capacity of youth in India Raising Incomes and purchasing powers 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 man power, tax laws, Govt. regulations and entry restrictions Expected to grow rapidly after change in the FDI policy in 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

EXTERNAL ANALYSIS- PORTERS 5 FORCES

Threat of Entrants
Huge Entrants once FDI is allowed

Bargaining power of Suppliers

Competitive Rivalry within Industry

Reliance Retail RPG Spencer Group ABG's More Retail

Low

Bargaining power of Buyers

Low

Threat of Substitutes High

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Threat of Entrants

Product Differentiation- Strong brand identification & customer loyalty for Big bazaar Capital requirement- Large Investments create a barrier Switching Costs- Low Access to Distribution Channels & Govt. Policies

Buyers Bargaining Power Suppliers Bargaining Power

Differentiation of products & Switching Costs- products are diff. in form of bundling & prices which contributes to switching costs Threat of Backward Integration- Not a likely threat Dominated by large no. of players; scope to influence prices in less Threat of forward Integration High threat as it easy for suppliers to move into retail

Threat of Trade-off of convenience and discount is already crossed by big bazaar Substitutes Threat of Rivals
Industry Growth Has a growth of over 10.6%. Competition expected to drastically increase Exit Barriers High as investments involved is high
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Home Delivery, Credit Facility and E-retail are main substitutes

INTERNAL ANALYSIS- RESOURCES AND CAPABILITIES

Employee Resource Knowledge based resource Product differentiation Infrastructure Facilities

Extensive Advertising and Innovative Schemes

Wednesday Bazaar

Maha Bachat & Great Exchange offer

INTERNAL ANALYSIS- VRIO FRAME WORK

ORGANIZATION
1.Trained Staff and Technology 2. Brand Identity & innovation 3.Wide product range 4. Aggressive Top Mgmt.

IMITABILITY

1. Motivated workforce 2. Customer Offers 3. High Service at lower costs 4. Scheme Innovation

1. 13 day induction for work force 2. Point of purchase promotions 3. Dedicated Visual Merchandize Dept.

RARITY

VALUE

1.Expliots resources to maximum extent 2.Employee retention is high 3.Strong emphasis on innovation

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VALUE CHAIN PRIMARY ACTIVITIES

INBOUND LOGISTICS
Systems to keep to keep track of vendor logistics schedule ,scrap etc

OPERATIONS
High software automation and training of workforce for operations

OUTBOUND LOGISTICS
Own system to handle store to store transfer, return of nonsalable items

MARKETING & SALES

Promotinal pricing Differentiated pricing Bundling

SERVICE
100 % replacement Issue of customer credit notes

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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 MANAGEMENT

Retention 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 suppliers Credit period varies from 3 -12 weeks depending on the product
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BUSINESS LEVEL STRATEGY

Follows a strategy of Cost- Leadership Competitive price is the most important of the value proposition of Big Bazaar 5 to 60% lower than market 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 line Navaras First group to introduce store-in store concept
Diversified into e-commerce & launched premium food chain Food Hall Launched special credit card Shakti for House-wives Offered value added services of cutting, grinding, roti making and vegetable cutting

Joint Ventures
Partenered with ICICI to lauch exclusive services like ICICI Big Bazaar gold Card
JV with FutureBazaar.com for opening online shopping portal Launched Exclusive range of bags Holii as a JV with Hidesign JV with HUL for bakery and confectionary products Parent company Pantaloons partnered with Generali Group for Future Generali Life insurance
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RECOMMENDATIONS
The forward strategy for Big Bazaar should consider tie-ups with different suppliers to get exclusivity 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 & vendor managed facilities; 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 mindset of buying from kirana stores Consider diversification and change positioning to sophisticated stores to cater to urbanized youth Offer more customized and convenience services to suit increasing expectations
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THANK YOU

Questions???