Why did Subhiksha failed ?

Retailing
Derived from the French word

retailer which means, to cut up".

It consists of the business activities

involved in selling goods and services to consumers for their personal, family, or household use.

Definition of Retailing
It is the last commercial link in

the marketing channel and the point where products finally reach their users. Retailing includes all activities directly related to the sale of goods or services to the ultimate customer for personal nonbusiness use. Dictionary Definition: The selling

Retail Industry
The share of retail trade in the country's gross domestic product (GDP) was between 810 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010.

35 % Growth

6 % Growth

Indian Organized Retail Industry

Indian Retail Industry

Commercial real estate services

company, CB Richard Ellis' findings state that India's retail market is currently valued at US$ 511 billion.
The Organized retail accounted for Rs

55,000 crore (about $12.4 billion) in the year 2006 and still its just about only 4.6% of the total Indian Retail Value that was about Rs 12,00,000 crore.

Prospects of Retail In India new jobs in organized sector 1 million

alone in next 10 years. India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. Also, organised retail, which accounts for almost 5 per cent of the market, is expected to grow at a CAGR of 40 per cent from US$ 20 billion in 2007 to US$

The Case Study on Subhiksha

Subhiksha-The Introduction
Largest retail value chain in India with

1600 outlets started in 1997 . From 150 stores in Sept 2006 all of which were in Tamil Nadu the company grew rapidly to over 1600 stores by Sept 2008 across the country. The companys investors include Wipros Azim Premji and ICICI Prudential Mutual fund apart from the ESOP Trust.

Business Vision & Mission emerge as the largest Vision To

retailer in the 'Food Grocery Pharmacy' segment in all the geographical regions we operate from.

Mission to deliver consistently

better value to Indian consumers, has guided Subhiksha to deliver savings to all consumers on each and every item that they need in their daily lives, 365

Product Portfolio
Supermarket: The supermarket includes quality groceries, packaged foods, cosmetics and toiletries, household provisions, etc. Fruits and Vegetables:
Includes fresh fruits and vegetables sourced directly from farms on city outskirts by Subhiksha and made available to the consumers at very reasonable prices. Consumers get fresh produce atbest prices.

Contd

Pharmacy: Subhiksha stores generally have a in store pharmacy which stores mostly basic medicines. All medicines are made available to consumers at a flat 10% discount. Telecom: Subhiksha is recently forayed into mobile retailer business and offers handsets, recharge cards and accessories

Retail Strategy
Subhiksha focuses on two factors for its model. These are called the two C's:
1. Criticality of Cost. 2. Convenience of Buying

Internal Analysis
Small Store/Cost Saving. EDLP. Lower Infrastructure Cost. Centralized Purchasing. Marketing Communication. Introduction of Subshikham card. Establishment of Home Delivery and

Online retail system.

In March 1997 opening of the first retail store in Chennai, with 5 lacs initial investment. March 99 14 stores in Chennai. June 2000 50 stores in Chennai, ICICI ventures joins Subhiksha. June 2002 120 stores in whole of Tamil Nadu. June 2006 420 stores in other big states in India namely Gujarat, Delhi, Mumbai, Andhra Pradesh and Karnataka. Feb 2007500 stores across country Dec 2007 1000 stores across India October 2008 1600 stores across India

SWOT Analysis
STRENGTHS Discount model Strong Top management team High Customer base High Brand Value Use of Information Technology

WEAKNESS Lack of expertise in Indian Retail environment Low grade lower management team Strategy of debtled Rapid expansion on a small equity base Long time taken in IT Implementation
THREATS

OPPORTUNITIES

World's most lucrative retail market Heavy Investment industry from FIIs and Venture Funds Huge No. of customers

Economic uncertainty and Recession Strong Competitors at National and Regional Level Price war and shrinking margins

Competitive Analysis
SR. BRAND NAME NO OUTLET TYPE LEVEL OF OPERATION OWERNSHIP

1 2

SPENCERS RELIANCE FRESH

SUPERMARKET NATIONAL SUPERMARKET NATIONAL

RPG GROUP RELIANCE GROUP FUTURE GROUP

FOOD BAZAR

SUPERMARKET NATIONAL

MORE

SUPERMARKET NATIONAL

ADITYA BIRLA

Comparison of Subhiksha with other Retail Outlets Product Range

Positioning Store Format Strength Price

Reasons for failure of Subhiksha

Expanding the number of stores

rapidly without sufficient funds in hand.

Expansion of Stores without adequate

system control and IT Support.

Government Intervention.

Contd

Lack of strong HR policy and Staff. Strong Competition. Over confidence and Aggressiveness.

K N A H T

U O Y