RETAIL INDUSTRY

Part 3 of Sector Specific SCM presentation Group 6

GLOBAL RETAIL

FACTSHEET
Worlds largest private industry

> US $ 8 trillion sales worldwide annually Accounts for almost 10% of GDP in most countries Major employer in most economies 16% in US 15% in Brazil 12% in Poland 07% in China

TOP RETAIL SALES: WORLD

Rank 1 2 3 4 5 6 7 Country U.S.A E.U Japan China U.K India Russia Sales (US $) $ 4 Tn $ 2 Tn $ 1 Tn $ 750 Bn $ 444 Bn $ 300 Bn $ 200 Bn

GLOBAL PLAYERS

CHANGING TRENDS

Six core areas to win in the changing environment

MVI (Management ventures Inc) in 2008

GRDI 2008 Market Attractiveness

ORGANIZED RETAIL (AS A %OF TOTAL SALES

INDIAN RETAIL

EVOLUTION OF INDIAN RETAIL

Historic / Rura l Reach Traditional / Perva sive Reach Government Supported Modern Formats / International

Exclusive Brand Outlets Hyper / Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop / Kiranas Weekly Markets Village Fairs Melas
Source of Entertainment Neighborhood Stores / Convenienc e Availability / Low Costs / Distribution Shopping Experience / Efficie ncy

MAJOR PLAYERS: INDIA

Future Group PRIL

TATA Group

RPG Group

Reliance Retail

AV Birla Group

Landmark Group

Source: Ernst & Young

Total Share Of Retail In India

Source : Datamonitor, 2009

Source India Retail Real Estate , The road ahead , ICICI white paper pg2 - 6

Retail store formats Store Format

Small/ Medium Size

Non store Format

Large scale Consumer Co-opDirect Mktg/Channel less Re Stores

bile Retailers, Hawkers. 1.Super Market. 2.Departmental Stores. nvenience stores. 3.Discount stores. 4.Manufacturers Showroom 5.Super stores. 6.Entertainment

1.Co-op stores. 2 .Sahakari Bhandars.

1.In home Selling. 2.Tele shopping . 3.Online retailing. 4.Vending Machine

cialty Stores

RETAIL OPTIONS
Strategic License Agreements

Cash and Carry

Distribution eg.International Cosmetic Brand

Franchisee route

Manufacturing

Joint Venture

ANALYSIS OF INDIAN RETAIL

POTERS 5 FORCES MODEL

Rivalry Amongst Competitors

Bargaining Power Of Buyers

Bargaining Power Of suppliers

P.E.S.T ANALYSIS OF INDIAN RETAIL

P.E.S.T - POLITICAL

P.E.S.T - POLITICAL
l l l l

FDI should be allowed in stages Initial stages: 26% FDI

l l l l

Establishment Phase: 49% FDI Mature Phase: 100% FDI

3 yrs. 3 yrs.

l l
l

No incentives needed to attract FDI; Market size and potential are sufficient

P.E.S.T - ECONOMICAL
Increasing disposable income Personal Consumption as a percentage of GDP

Plastic money becoming a big pie of credit

P.E.S.T - SOCIAL
Population as a growth driver

Growing working women population Adoption of nuclear family culture Baby boomer effect Growth in urban population 70% of organised retail is concentrated in 6 major cities. Of 300 million Indian middle class, only 15% live in these 6 major cities

P.E.S.T - TECHNOLOGICAL
ERP/SAP Bar-coding RFID Convenient Packaging Transportation ( reefer vans etc)

SWOT OF INDIAN RETAIL

29

STRENGTHS

Shopping convenience Wide range of retail formats to suit every consumer Plastic card revolution. Greater availability of quality retail space.

30

WEAKNESS
Policy related issues

Limited consumer insight Inadequate human resources

Taxation hurdle

Underdeveloped supply chain

Lack of adequate utilities

OPPORTUNITIES
Rapid economic growth The young India

OPPORTUNITIES

Emergence of India as a retail hub Potential untapped markets Sectors with high growth potential Abundant availability of skilled labour Low cost of operations

33

Opportunities
Rural retail Wholesale trading

E-retailing Retail franchising

34

Threats
Political issues. Social issues. Inflation. Lack of differentiation among the malls that are coming.

BIG BAZAAR BAZAAR

isse sasta aur accha kahi nahi

Big Bazaar Fact File..

Outlet Parent group Owner Founded Head quarter Industry 104 outlets Located in India Future group; Pantaloons Retail India Ltd. Kishore Biyani (CEO) 2001 Jogeshwari , Mumbai Retail

Store Type Business Model

Website Tag line

Hypermarket High Volume Low Price; WalMart Business www.bigbazar.com Model

Isse sasta aur achha kahin nahi.

Vision Statement

To deliver every thing, everywhere, every time to every Indian consumers in the most profitable manner.

Mission Statement

We share the vision and belief that our customers and stake holders shall be served only by creating and executing future scenarios in the consumption space leading to economic development

Big Bazaar The Big Pie of PRIL

As of Mar10

Big Bazaar Spread..

Big Bazaar Life Cycle

Big Bazaars Core Concept

Product Portfolio
APPARELS FOOD FARM PRODUCT CHILL STATION Denims and t- Staples Fruits shirts Ready to eat Vegetables Fabric and cut Ready to cook Imported piece International fruits Formals food Dairy Casuals Spices products Party wear Imported Ethnic wear bazaar Accessories Tea and Undergarment coffee s Night wear Dress HOME AND PERSONAL CARE Soft drinks Shampoo Packaged Detergents juices Soaps Milk items Liquid wash Frozen foods Creams Ice creams deodorants Home cleaners Utensils Plastics Crockery Sundries

Product portfolio
ELECTRONICS BAZAAR FASHION & JWELLERY FURNITURE BAZAAR CHILD CARE AND OTHER SERVICES TOYS

TV sets Footwear Washing machines Beauty care Refrigerator Star parivaar Personal care Small appliances Laptops Computer accessories Kitchen appliances

Living room bed room Kitchen Dining room Kids room Paintings Decorative rooms

Kids wear MR. RIGHT Toy bazaar stationary Bakery Child care Loot mart Tulsi Future money Future generally

Demand Forecasting @ Big Bazaar

Demand Forecasting Features

Look beyond the obvious seasonal rush by

Weekly Sabse sasta Din (Wednesdays) Sabse saste char din in January 5 days maha bachat in August Junk Exchange etc

Demand Forecasting Features

Half yearly basis for example:
Diwali season March Summer season- October

Weekly forecasts for perishables

Demand Forecasting Challenges

WHAT Scale of forecast???

Sporadic demand WHAT and HOW to introduce new goods

HOW to Change prices and promotions

Categorization of goods

Internal Constraints
Batch size Third party manufacturing

Methods of Demand Forecasting -I

Last 3 years data & growth rate of current year

Methods of Demand Forecasting -II

For a few other important products expert analysis is obtained

..Delphi Technique

Demand Forecasting Process

LOGISTICS and SCM @ Big Bazaar

Supply Chain @ Big Bazaar

Transportation of Goods

Transportation charges paid to the transporter are Rs 17500/month up to 1500 Kms If the distance is more than this then 4.50Rs per kilo meter

Warehousing @ Big Bazaar

Economic Functions

Operational Functions:

Consolidation

Receiving goods

Break-Bulk

Keeping records

Stockpiling

Proper handling; Quality Maintenance

Value-Added Services

Order receiving

Dispatching goods

Marketing intelligence

Types of DCs @ Big Bazaar

M.D.C. (Mother distribution centre) e.g. Tarapur warehouse R.D.C. (Regional distribution centre) e.g. Hassangarh warehouse

C.D.C. (Centre distribution centre) e.g. Mumbai warehouse

SCM Macro Processes @ Big Bazaar

Logistics @ Big Bazaar

Inward Logistics
Non Perishables Perishables

Outbound Logistics
General Reverse

Inward Logistics (Non-Perishables)

Front end team of particular department Data Category team of Central office Stock Transfer Out (STO) DC or WH Stock pick Start picking Stock Transfer Note Gate Pass Stock

real condition and number mentioned in the gate pass, delivery note Security in the logistics dept randomly checks the number of cartons

Information

ment member Cross-checks items in front of the particular dept team member by the stock-in

Damaged

Right goods

Details entered in sent back Inward Register & s entered in the Stock outward Register andthe Goods to the warehouse. goods stocked in th

Inward Logistics (Perishables)

Perishable Goods Vendor Logistics department Checks TAX; INVOICE; PURCHASE ORDER If all OK Goods Received Note is generated for particular dept Particular dept Collection of stock Highly Perishable: Shop Floor

Less Perishable: Internal W/H

Outbound Logistics
Home Delivery Store to store Transfer Inter Warehouse Reverse logistics

Reverse Logistics (RL)

Return of damaged or expired stock

Return of non saleable items

First retailer in India to apply reverse logistics

4 Reverse Logistics W/Hs

Average spending on reverse logistics for

Garments - 10 to 15% Furniture -20%

IT @ Big Bazaar

ERP/SAP @ Big Bazaar - Snapshot

WHEN AIM SOLUTION IMPLEMENTED BY PROJECT HEAD No. of users Time Taken Cost Of Implementation 2005 To deploy a robust transaction management SAP Retail Solutions system and (24) with the help SAP Team an enterprise wide platform to run its operations of Novasoft, Singapore Chief Information Technology Officer, Chinar 1200 Deshpande About six months Around $10 million

ERP/SAP Implementation @ Big Bazaar

Inventory Management @ Big Bazaar

Inventory Types

Inventory-Decision Making
The Store Manager is the boss.

He inspects
Stocks time to time Demands of Customer

He maintains Stock-in & Stock-out to decide on level of inventory.

Re-Order Points for Inventory

Orders placed as and when required (JIT)

Meeting Uncertain Demands

Strong Backward Integration

If more pieces/stock required

Ask other nearby Big Bazaar store

Transfer of interest: Divert customers to other store

Example: In apparels stock lasts ~45 days. In case of emergency transfer the interest to Pantaloons

Waste Management @ Big Bazaar

Assessment Process: Customer Satisfaction Surveys Audits

Customer Satisfaction Surveys

Customer Satisfaction Survey Process

Agency sends Mystery Shopper

Their experience is documented

Feedback is sent to Big Bazaar

Analysis is done for improvement

Advantages of CEM

In house Initiative Pragati

Head office operation team personnel visits the store and observes:

Store exterior ;Baggage window; Customer service Store ambience etc

Done on a quarterly basis

Encourages stores to improve performance on inhouse competition level.

Audits @ Big Bazaar

Casual Observations @ Big Bazaar

Trolleys are not easily available. Little attention to cleanliness. Inefficient In-house packaging. Crowded store interiors. Sign boards are not prominent.

Casual Observations @ Big Bazaar

Long Billing time Weak publicity of value added services Family crowd is evident. Youth only 10%. Food Bazaar efficiently managed. It is a bit over staffed but layout is very good.

Recommendations.

Improvement in supply chains Warehouse location Improvement in packaging Infrastructure Separate less paying billing counters Improvement in Cleanliness

Acknowledgement
Location: Chinchwad

Contact Person: Mr. Aushutosh Sathe (Store Manager) References:

Work Staff Customers Former SIIB Students (Tanya Grover; Mudit Murarka)

 Visit details:

No. of visits: 3
28th Dec 10: Zahid and Raj ( 3 pm- 4 pm) 2nd Jan 11: Divya, Sachin and Dhaval ( 1 pm- 3 pm) 10th Jan 11: Nitika, Rishika, Swati, Raj ( 4pm 6pm)

Thank You !!!