Contents

Contents..................................................................................................................... 1
Introduction-...............................................................................................................2
Vision & Values...........................................................................................................4
Introduction of Aditya Birla Retail Ltd.........................................................................6
The grand takeover.................................................................................................... 7
Phasing out well known brands like Fabmall from market and replacing it by MORE- 8
Strategy behind the Acquisition-................................................................................9
Quality, Affordability and Convenience.....................................................................10
Strategy for quality and supply chain-......................................................................10
Attainment of an edge by ABG from acquisition of Trinethra -.................................12
A close observation of strategies and plans for the MORE supermarket in the form of
responses made by CEO of Aditya Birla Retail store.................................................13
Why foreign partners don't really add value in retail................................................13
STRENGTH:............................................................................................................15
WEAKNESSES:.......................................................................................................16
OPPORTUNITIES:....................................................................................................16
THREATS:............................................................................................................... 16
Porter’s 5 Forces Model allows the development of a competitive strategy.............17
Threat of new entrants..........................................................................................17
Barriers to new entrants........................................................................................17
The Bargaining Power of Suppliers........................................................................18
The Bargaining Power of Buyers............................................................................18
The Threat of Substitute products.........................................................................19
Rivalry among Existing Competitors......................................................................19
Making M&A the growth engine.......................................20
Wins for Aditya Birla Retail from Acquisition of Trinethra.........................................21
Steps for Acquiring Trinethra retail store.......................................21
Meeting the Challenge-.............................................................................................22
AWARDS AND ACHIEVEMENTS..................................................................................23
Organised retail continues to make headway.......................................................24
Economic slowdown serves as reality check for retailers......................................24
 Retailers with financial backing weather the storm...............................................25
India’s attractiveness stands over long term............................................................25
CONCLUSION:...........................................................................................................26
Bibliography-............................................................................................................27

Introduction-

The Indian retail industry is divided into organised and unorganised sectors. Organised retailing
refers to trading activities undertaken by licensed retailers, that is, those who are registered for
sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains,
and also the privately owned large retail businesses. Unorganised retailing, on the other hand,
refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner
manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors,
etc. India’s retail sector is wearing new clothes and with a three-year compounded annual growth
rate of 46.64 per cent, retail is the fastest growing sector in the Indian economy.

Traditional markets are making way for new formats such as departmental stores, hypermarkets,
supermarkets and specialty stores. Western-style malls have begun appearing in metros and
second-rung cities alike, introducing the Indian consumer to an unparalleled shopping
experience. The Indian retail sector is highly fragmented with 97 per cent of its business being
run by the unorganized retailers like the traditional family run stores and corner stores. The
organized retail however is at a very nascent stage though attempts are being made to increase its
proportion to 9-10 per cent by the year 2010 bringing in a huge opportunity for prospective new
players. The sector is the largest source of employment after agriculture, and has deep
penetration into rural India generating more than 10 per cent of India’s GDP.

Then comes the merger and acquisitions by larger firms of smaller firms to improve the further
functioning of retail store and it also enables the expansion of retail and other industry. One of
them is being the acquisition of Trinethra retail chain by Aditya Birla Group renaming the retail
stores chain as MORE and also bringing about a significant overall development in its total
number of branches, it’s customer services making customers happy and content, the variety of
products as per the needs and also their quality by updating and implementing new efficient short
term and long term strategies.

TRINETHRA SUPER MARKET LTD.

Trinethra Super Market ltd. is a multiple outlet retail store network founded in 1986, operating in
the twin cities of Hyderabad, Secunderabad and Vizag. It is in the business of retailing mainly
edible / FMCG products. Started as a partnership in 1986, the firm was reconstituted into a
Private Limited Company (1990) and subsequently converted into a Public Limited Company in
1998 under the name Trinethra Super Market Limited. . Trinethra Super retail Limited is a
leading supermarket and convenience chain with over 170 stores under the Trinethra and
Fabmall brands. Its operations span across the four states of Andhra Pradesh, Tamil Nadu,
Karnataka and Kerala. Trinethra has around 2500 employees and enjoys a strong consumer
franchise in all the states in which it operates. , Hyderabad based, Trinethra group, originally
founded by mr. Anjaneyulu Kakkera, is presently owned by India Venture Fund.

Trinethra(meaning three eyes), stands for the three friends, who are still on the board of
directors of the company, but for whom it would not have been possible to start. It also
represents the three religions of Hinduism, Christianity and Mohammedanism. In Indian
faith 3rd eye also represents intuition, knowledge and all those embodiments which
distinguishes a super man or a god from ordinary mortals. The third eye is probably what
gives one the vision for accomplishment of one’s mission. Your belief is first, research
can only give it a foundation and direction.

Vision & Values

Vision: "To consistently provide the Indian consumer complete and differentiated shopping
experiences and be amongst India's Top retailers, while delivering superior returns to all
stakeholders".

Values:

1. Integrity
2. Commitment
3. Passion
4. Seamlessness
5. Speed

Its vision is to set up 100 Retail Outlets within 3 years all over Andhra Pradesh and
achieve a turnover of Rs 300 crores within next three years. Its long-term vision is to
become the market leader in the household goods segment of the supermarket channel
and have service points not MORE than three kilometers away from any of its customers.
As a part of its vision to open premium outlet basing on the profile of the customers in a
particular area, It has opened two centrally air conditioned outlets, one in Hyderabad,
Jubilee hills and another at Dutt Island, Vizag. Both the above outlets are with a carpet
area of MORE than 6000 sq.ft.

Retail Outlets

Trinethra had single retail outlet for first four years. In the year 1990-91 it added 4 outlets
and today it has 49 outlets and an extension counter at Indian School of Business,
Hyderabad. Trinethra has 42 branches in the city of Hyderabad, Secunderabad and its
immediate vicinity and 7 are in Visakhapatnam. Trinethra has over 400000 bills per
month. in the current year.
The present combined floor area of all the retail outlets put together is 107030 sft. Thesmallest
outlet is of 800 sft while the largest one is about 6500 sft. All these outlets arestrategically
located with a view to cover a number of people cluster - be it residentialareas or business
localities

Central Warehouse

Trinethra has two Warehouses at Bairamalguda and Kothapet in Hyderabad with a total
space of 50000 sft. The warehouse at Bairamalguda also called Central Warehouse is a
well designed functionally laid out facility covering 35000 sft. It has separate sections for
storing various categories of items like Kirana stock, Kirana Processing, Finished Kirana items,
Oils, Branded Items etc. It has trucks and vans to deliver and pick up stock, labeledbays, bins
and racks for storage, handling and protective equipment are all in place. Over9000 SKUs are
stored in this warehouse at any given time.

A separate warehouse at Kothapet in Hyderabad takes care of procuring, grading, packing

and dispatching perishable items like fruits, vegetables, eggs, milk etc on a day-to-day
basis
Introduction of Aditya Birla Retail Ltd

About Aditya Birla Retail Ltd. Aditya Birla Retail Ltd is the retail arm of the Aditya Birla
Group, a US$ 24 billion corporation with a market capital of US$ 31.5 billion and in the league
of Fortune 500 companies. In May 2007, Aditya Birla Retail Ltd launched its first store, MORE
in Pune, and currently has over 500 stores across the country. With the acquisition of Trinethra
Super Retail, the company will increase its retail foothold to 300 plus stores with re-branding of
Trinethra and Fabmall stores in South India.
Aditya Birla Retail Limited is the retail arm of Aditya Birla Group, a USD 28 billion
Corporation. The Company ventured into food and grocery retail sector in 2007 with the
acquisition of a south based supermarket chain. Subsequently Aditya Birla Retail Ltd. expanded
its presence across the country under the brand "MORE." with 2 formats upermarket &
hypermarket. Supermarkets cater to the daily, weekly and monthly shopping needs of consumers.
The product offerings include a wide range of fresh fruits & vegetables, groceries, personal care,
home care, general merchandise & a basic range of apparels. Currently, there are over 600
MORE. Super markets across the country.

Hypermarket more megastore - is a one-stop shopping destination for the entire family. Besides a
large range of products across fruits & vegetables, groceries, FMCG products, MORE
megastores also have a strong emphasis on general merchandise, apparels & CDIT. Currently,
five hypermarkets operate under the brand MORE megastores in Mysore, Vadodara,
Aurangabad, Indore and Bangalore.

Club MORE. –their loyalty program, currently has a strong membership base of over 1 million
members. The company has a tie-up with 200 local farmers to provide green groceries, while it
has tied up with Apollo. ABRL’s vision is “to consistently provide the Indian consumer
complete and differentiated shopping experiences and be amongst India’s top retailers while
delivering superior returns to all stakeholders”.

Till end-September 2009, the company had set up 640

supermarkets and five hypermarkets. All the supermarkets are
branded MORE. and the hypermarkets are branded MORE Megastore. The company has around
11,000 employees and has a pan-India presence. MORE supermarkets are neighbourhood stores
with the core proposition of offering value, convenience and trust to the customers and averaging
2,500 sq ft area. The hypermarkets are self-service superstores offering value and range in food
and non-food products and services at a single location. Hypermarkets are located in large
catchment areas and encourage mass consumption with discount prices and substantial depth of
assortment with an average store size of 55,000 sq ft shopping
area.

In May 2009 Aditya Birla Retail introduced a value proposition

for its supermarkets and encapsulated it into a promise of
giving its customers “Hamesha Extra” which has resonated
with the consumer. “Hamesha Extra” is the core essence of
MORE. It means customers will always feel that they have got
something extra while shopping at MORE.

Within a short span of less than three years, MORE has more than 1.6 million members as part of
its loyalty programme. MORE has also launched a huge range of private labels in food and
grocery, staples and apparel which have already obtained a significant share of category as well
as salience with the consumer

The grand takeover

On Januanry 3, Aditya Birla(AB Retail), an unlisted subsidiary of the Aditya Group,acquired a

majority stake in Trinethra Super Reatil Limited (Trinethra), marking the Group's entry into the
Indian retail sector [Vinay Kamath, Kripa Raman, "Aditya Birla group to take over Trinethra,"
AB Retail acquired 90% of the shareholding in Trinethra. The other remained with India Value
Limited, a private equity investment fund that had been the majority shareholder in Trinethra
before the acquisition. The financial aspects of the deal were not disclosed, but analysts
estimated the cost of the acquisition to be around Rs. 3.4 billion (approximately $76.7
million).The Aditya Birla Group, founded in the early 1840s by Seth Shiv
Narayan Birla, was one of India's biggest business houses. At the time of the acquisition,
Trinethra had already embarked on its plan of expanding aggressively into Tier-II cities
in South India, like Coimbatore, Tirupur and Mysore.

AB Retail acquired Trinethra as a part of its larger plan to enter multi-format retailing in
India. The company reportedly favored inorganic growth (as against setting up its own
stores), as the acquisition gave it ready access to the retail market and conferred several
other advantages "Trinethra super retail to invest Rs. 1 billion in expansion,"

"The acquisition demonstrates our intent to be one of the leading players in the Indian retail
industry. Going forward, we will commit the necessary resources in terms of funds, efforts and
people to build a long-term, sustainable and successful retail business. We look forward to
delivering an outstanding retail experience to Indian consumers," says Mr. Kumar Mangalam
Birla, Chairman, Aditya Birla Group.

Phasing out well known brands like Fabmall from market and replacing it by
MORE-
By this acquisition, company is able to have direct control over 300 Fabmall (brand of Trinethra)
stores and making it prominent player in the retail industry. After the acquisition Aditya Birla
Retail management believed that the brand Fabmall and Trinethra are not reflecting proper image
of the company. They started searching for the brand name that enhances the shopping
experience for consumers and convey message about the store offerings. Company conducted an
in depth marketing research to identify consumer views on shopping and merchandise they like.
On the basis of research company started offering wide range of product categories including
fruits and vegetables, staples, personal care, household general merchandising and dairy
products. In the marketing research, consumer expressed that quality, affordability and
convenience gets highest priority in getting retail experience.

Company found that integration of the Fabmall and Trinethra are necessary to have single brand
that help company to have unified communication strategies. Hence company changed Fabmall
and Trinethra name to ‘MORE’. The name reflects company’s commitment to offer consumers
MORE fulfilling retail experience. ‘MORE’ also means providing higher satisfaction to
consumer.

‘.MORE’ provides the solution to the shopping needs of the Indian housewife who wants a
modern and convenient retail store with an attractive and a consistent range of products.
‘.MORE’ assures consumers the best quality products at the best market price. ‘.MORE’ started
storing its own brands in the retail supermarkets. These products follow stringent quality norms
and are available in attractive packaging. Company is also improving its supply chain network. It
is building direct linkages with the farmers to get uninterrupted and quality supply of fruits and
vegetables. MORE also has its own label across value, premium and select ranges. The stores
have been designed by Fitch, the leading international retail design firm.

Strategy behind the Acquisition-

Aditya Birla Retail Limited today announced the rebranding of the Trinethra grocery retail
supermarkets to MORE, a name reflective of its commitment to consumers. The rebranding
follows the acquisition of the Trinethra stores by Aditya Birla Retail Limited last year. As a
result of the integration process, 105 Trinethra stores in Andhra Pradesh will be rebranded and
12 new stores have already been launched under the umbrella of MORE the retail brand from the
Aditya Birla Group.

Speaking on the occasion, Mr. Sumant Sinha, CEO, Aditya Birla Retail Limited said, "With
today's launch the discerning customers of Trinethra will have multiple benefits. While
customers continue to enjoy the value benefits provided by Trinethra stores, they will
now benefit with the MORE, Advantage of even better quality with an enhanced in-store
experience. We have ensured that the customers get MORE benefits at no additional increase in
their spend. We are able to ensure this with our superior sourcing, efficient management of
backend and front-end operations and deploying technology extensively."
Quality, Affordability and Convenience

With the underlying objective to enhance the shopping experience for consumers, the new stores
will continue to be built around the proposition of Quality, Affordability and Convenience with
new in-store merchandise and a whole new retail experience. The MORE stores will offer a wide
range of product categories including fruits and vegetables, staples, personal care, home care,
household general merchandise and diary products and with Pharmacy and Bakery also in some
large size stores.

Mr. Andrew Denby, CEO, Supermarkets, added that Aditya Birla Retail's vision is to be among
the leading retail players in India. The launch of MORE Neighborhood supermarkets, will be
soon followed by destination hyper markets which will address monthly and event-based
shopping needs. The group already has stores in other parts of India and envisions having a pan
India presence covering Tier 1 & Tier 2 market distant future.

The MORE stores have been developed after in-depth research to understand the needs and
expectations of the Indian consumers. MORE is the answer to the shopping needs of the Indian
housewife who wants a modern and convenient retail destination in her neighborhood, with an
attractive and a consistent range of products. MORE assures consumers the best quality products
at the best market price.

Strategy for quality and supply chain-

MORE also has its own in-store label across value, premium and select ranges. The products
follow stringent quality norms and are available in attractive packaging. To ensure the freshest
supply of fruits and vegetables to customers, Aditya Birla Retail is building direct linkages with
the farmers. It is also investing in backend infrastructure to develop a robust supply chain
connecting households MORE directly with farmers.
The acquisition of Trinethra Super Retail would put the Aditya Birla group ahead of competition,
including Reliance, analysts tracking the development said.

Trinethra is an Indian Value Fund supermarket chain based in Hyderabad.

They believe the buyout will help the group to consolidate its position before its actual foray into
the retail sector.

“The Birla group can leverage the acquisition of Trinethra, a well established player, in its
expansion in south India. The buyout will give the group a headstart among all the new entrants
including Reliance that has already started its operations.

The group bought 90 per cent in Trinethra through Aditya Birla Retail – its unlisted retail arm –
for an undisclosed sum, while the remaining 10 per cent will stay with India Value Fund.

Dungarwal believes the acquisition is just a part of the group’s larger retail strategy.

“Trinethra may not fit perfectly into their (the Birlas’) basket and not a match to the group. But
given Kumar Birla’s passion for quality, the supermarket may get a completely different look
and styling,” he said.

However, the group was not forthcoming on its plans. “We may enter larger formats also and
have a pan-India presence. We are not eyeing any other acquisition for the moment,” a group
official said.

Despite the entry into the retail bandwagon of Reliance, Bharti, the Tatas and now the Birlas,
smaller retail players are confident of their existence.

“Many new entrants are opting for inorganic growth. Smaller retailers confident of doing well
and sustaining profits will not sell off. Only those who think they cannot compete with big
players will move out,” said Dippankar S Halder, CEO, Spinach – a food and grocery retail
chain.

On smaller retail chains becoming the targets of the biggies, he said, “It depends on how big is
your appetite. If you are satisfied with your wealth creation, you can sell off. Otherwise, you can
stay afloat.

Analysts said the group would be able to leverage the retail experience gained through group
companies – Birla Sun Life Insurance and Idea Cellular.

Birla group sources said Trinethra CEO Pranab Barua and MD George Thomas would continue
to look after the affairs of the retail chain. The chain would maintain its southern focus for the
time being, they added.

However, Aditya Birla Retail will have group finance officer Sumant Sinha as the CEO. The
group has recently hired executives from Pantaloon’s Food Bazaar and other retail ventures.
The MORE chain of supermarkets is at convenient locations and with layouts that allow ease of
navigation. The product display is well organized and facilitates choice. The stores have been
designed by Fitch, the leading international retail design firm.

Demographic movements in India over the last two decades have made organized retail a
necessity. The rapid growth of this industry is confirmation that the idea of organized retailing
has taken root in India. The industry is today valued at around US$ 320 billion. Within the
organized retail sector, food & groceries account for around 14% of the total market with
potential to garner an even bigger share of the market.

Attainment of an edge by ABG from acquisition of Trinethra -

A close observation of strategies and plans for the MORE supermarket in the
form of responses made by CEO of Aditya Birla Retail store.

Why foreign partners don't really add value in retail

No business house wants to be left out of the retail party; the potential to make money even at
wafer-thin margins is huge given the low penetration of organised retailing at just 3%.
The Aditya Birla group wants its share of the pie and has started off by buying Trinethra, a
southern chain of stores covering about half a million square feet. Sumant Sinha, CEO, Aditya
Birla Retail, tells that Trinethra's doing well, but he's worried about high real estate prices.
Excerpts:

What have you learnt from the Trinethra experience? Does it make sense to acquire or
build from scratch?

I think there are merits to both. In our case, since we were starting without such a humongous
background in retail, it was sensible for us to make an acquisition to get started.

Having said that, an acquisition also comes with its own cost which is that you have to integrate
and over time you have to potentially change the stores that you acquire to what you want them
to be. That has its own costs and MORE than even costs, it's the time and effort of doing that. So
I think it's good to make one or two acquisitions to get the initial expertise but after that you have
to be careful about making acquisitions.

Why do you believe it's not necessary to team up with a foreign player?

Retail is mostly a local business. If you look at the elements of success you have sourcing,
supply chain, the stores, running the stores, the merchandising (which means an understanding of
the customer), people and real estate. You need to hire people mostly locally; wherever you need
to augment, you can hire from outside.

Real estate sourcing is entirely a local business, you need relationships with India [ Images ]n
developers and have to understand the dynamics here. So you can't get much help from a
foreigner. A lot of sourcing has to be done within India and you have to develop your own Indian
supply chain and vendor base. Foreign companies can't really help too much here.

Where they can add value to some extent is in the operation of stores but even there it's not a
benefit that you can't avail by hiring people from other parts of the world. Ultimately the
consumer you are selling to is an Indian consumer and we as an Indian group have a much better
intuitive feel and understanding of this consumer than anyone sitting in America or Europe.
What about economies of scale?

If you look at economies of scale as a potential benefit, those economies of scale typically tend
to work within the country.

Global economies of scale are not that critical for success in the retail business and various
studies have shown that. So you need to be large within the country rather than globally to get
the benefits of scale.

What will be MORE's USP? Why will I walk into a MORE store and not into a Fresh or a
Wal-Mart?

Well, you might walk into another store as well depending on whether it's close to your house or
not because convenience is an important factor. So our intention is to be fairly close to our
consumers and to the extent that we are closer to them than others, they will walk into our stores.

But the intention is to be very competitive in price. There can be different strategies; for instance,
an everyday low-price strategy without promotions or one can have low prices on some days.
What we're going to be offering is very competitive prices on all key items with lots of
promotions and excitement around the store.

The second is to give people the right merchandise: people don't necessarily want a huge variety,
what they want are the right products. But the idea is also to have multiple price points to cater to
people across socio-economic classes. This would call for a good understanding of what people
really want. We will also have innovative products that we will design in-house.

Do you feel that a model which builds in a higher proportion of store labels will fetch better
margins? What kind of margins have you built in?

Typically a higher share of store brands does bring in better margins, but then margins are not
the only thing. We need to get sales too. I'm afraid I can't disclose what kind of margins we're
looking at because it is very sensitive information.

SWOT ANALYSIS:
‡
A SWOT analysis of the MORE retail industry is presented below:
‡

STRENGTH:
‡
MORE is a "Technology-intensive" industry. It is technology that will help the MORE to score
over the unorganized retailers. MORE is successful today because it works closely with their
vendors to predict consumer demand, shorten lead times, reduce inventory holding and
ultimately save cost. ‡

1. As a consequence of high volumes, procurement will be direct from the

Manufacturer. Hence, merchandise can be offered at lower costs.
2. MORE have good brand awareness among the consumers.
3. MORE retail is a specialist in marketing expertise.

WEAKNESSES:

1. The consumers are not much satisfied of the offers introduced by MORE.
2. Heritage Fresh has better product range than MORE.‡
3. Reliance Fresh has better promotional schemes than MORE.

OPPORTUNITIES:

The Indian middle class is already 30 Crore & is projected to grow to over 60 Crore by 2010
making

India is one of the largest consumer markets of the world.‡

Organized retail is only 3% of the total retailing market in India. It is estimated to grow at the
rate of 25-30% p.a. and reach INR 1,00,000 Crore by 2010.
THREATS:
‡
1.If the unorganized retailers are put together, they are parallel to a large supermarket with no
or little overheads, high degree of flexibility in merchandise, display, prices and turnover.

2. Shopping Culture: Supermarket culture has not developed in India as yet. Even now
supermarkets are just a place to hang around with family and friends and largely confined to
window-shopping.

3.Cultural Variation leads to variation in merchandise in India at different geographical

locations.

4.Reliance Fresh and Heritage Mart are huge threats to More.

5.Reliance Fresh have greater acceptance among the consumers in comparison to More.

Porter’s 5 Forces Model allows the development of a competitive strategy

‡Suggests 5 main forces may be decisive in helping shape the outcome:
1. Suppliers
2. New Entrants
3. Substitutes
4. Buyers
5. Industrial competitors

Threat of new entrants

‡New entrants bring increased capacity to the industry. Example: low cost airlines.
Threat of new entrants: India is a big market experiencing significant growth in retail industry in
recent years. Strong economy, stable government, favourable government policies for foreign
investment and developing infrastructure, makes Inida a very attractive place to be in. But
at the same time the entry and exit levels are high and it is getting mature quickly and have low
profit margins.

New entrants can be deterred by barriers to entry

Barriers to new entrants

1. ‡Economies of scale
2. ‡Patents
3. ‡Product differentiation
4. ‡Capital requirement and specialised technique‡
5. Skills
6. ‡Access to distribution channels
7. ‡Government policy (ex- de-regulation)

The Bargaining Power of Suppliers

1. Suppliers exert power in the industry by threatening to raise prices or reduce quality
2. Powerful suppliers can squeeze industry profitability if firms are unable to recover cost
increases
3. Suppliers - likely to be powerful if Supplier industry is dominated by a few firms
Suppliers products have few substitutes
4. Suppliers’ product is an important input to buyer’s product
5. Supplier’s products have high switching costs
Threat from Suppliers: Because of the diverse product range that is distributed by retailers
there are many different suppliers. Suppliers include both domestic and international
manufacturers and as the products are more or less standardized in nature, retailers and
wholesalers have low switching costs, the powers of supplier are moderate to low.

The Bargaining Power of Buyers

1. Buyer competes with the supplying industry by:
2. Bargaining down prices
 3. Forcing higher quality
4. Playing firms off of one another
5. Buyer groups are likely to be powerful if Buyers are concentrated
6. They purchase a significant fraction of the seller’s goods‡
7. Products are undifferentiated‡
8. Buyers face few switching costs
9. Buyers present a credible threat of backward integration

Threat from Buyers: The consumers are now more sophisticated and mature. As said by
Carrefour, they want it now and they want it with the best service and the best quality.
Consumers enjoy increasing choice of products and increased price competition, and they
demand better and wider choices. They also exert pressure on manufacturers and retailers to give
more relevant product information.

The Threat of Substitute products

1. Products with similar function limit the prices firms can charge Keys to evaluating
substitute products:
2. Products with improving price/performance tradeoffs relative to present industry products
3. Examples: Overnight delivery Digital camera replaces the need for film Handy Cam
replaces need for digital camera

Threat from Substitute products: As the retail industry sells products of daily common use,
there are no direct substitutes; the only substitute products that can be threat are the products
from gray market, which can harm the sales of branded products. Department and discount stores
also faces stiff competition from specialized retail shops such as garments, electronics etc.

Rivalry among Existing Competitors

1. Intense rivalry often plays out in the following ways:
2. Price competition
3. Advertising battles
 4. Increasing consumer warranties and service
5. New product roll-outs Price competition often leaves the entire industry worse off

Integration as a way of doing business-

Acquisition Process Integration Process

 Acquisition selection requires skill, timing and taking risks.

 Integration competency completes the process by translating strategy and vision into
realized value
 Making M&A the growth engine

Wins for Aditya Birla Retail from Acquisition of Trinethra

An immediate footprint across South India An employee strength of 2,500
•Gain access to retail space with lower rentals
•Vendor relationships -Private Label & FMCG
•Got a head start over competition
Manufacturers, Staples etc.
•Low cost organization structure •Distribution and Re-packing facilities in
•Most importantly, a head-start in the “retail Bangalore, Chennai and Hyderabad
•Alliances with Credit Card & Promotion
learning curve”
organizations
•A top management team –with capability & •Two functional IT systems: e-Retail and pilot
experience in launching and running a super implementation of Navision
market chain

Steps for Acquiring Trinethra retail store

Major Challenges in Integration-

 Mismatch in Organization Structure

 Difference in designations for similar roles and compensation structures

 Trinethra top management was not pro-actively involved in decision making

 ABRL did not absorb Trinethra’s best practices in store size, catchment size, assortment
mix

 Opportunity lost in validating business model that was being pursued by ABRL with
Trinethra’s data and test stores

 Teams at Trinethra and ABRL were neither operated independently nor integrated
completely
  Accounts & Finance and Management Information System were not integrated for the
two organizations for long time

Meeting the Challenge-

 A common customer value proposition was defined with shared vision and mission
statements

 Zone based organisation structure was implement across both the organisations with
clearly defined roles & responsibilities

 Single set of Retail Best Practices rolled out

 Aditya Birla Group Values have been adopted uniformly across the two organizations

 Resources have been moved across the two organisations not only in similar roles but
also into new roles

 Single Performance Management System and common MIS formats

 All communication from CEO’s desk and HR communication are uniform across the
organisation with Trinethra being run as a region of the integrated organization

 All South store operating costs have been benchmarked for implementation across
network

AWARDS AND ACHIEVEMENTS

Reid & Taylor Awards 2011

Aditya Birla Retail ltd. was awarded the Reid & Taylor Award for Retail Excellence for
"RETAIL BEST EMPLOYER OF THE YEAR" with mr. Thomas Varghese being awarded the
Prestigious “RETAIL ICON AWARD” by the Global Jury of Asia Retail Congress 2011.

Retail Icon Award 2011

Mr. Thomas Varghese, CEO - ABRL, has been presented with the prestigious "Retail Icon
Award" at the Reid & Taylor Award for Retail Excellence by the Global Jury of Asia Retail
Congress 2011.

Most Admired Retailer in India for the Food & Grocery Segment

Mr. Thomas Varghese , CEO - ABRL, was honored with the Coca-Cola Golden Spoon Award
for being the "Most Admired Retailer in India, for the Food & Grocery Segment" , at the Images
India Food Forum held in March 2010

Aditya Birla Group ranked the No. 1 Best Employer by the Hewitt - Economic Times
Survey 2007.

The US $ 24 billion Indian conglomerate, Aditya Birla Group, was ranked number one in India
and among the best in Asia by The Hewitt - Economic Times and Wall Street Journal in their
Best Employers Survey 2007.

INDIAN RETAIL INDUSTRY ANALYSIS:

Indian retailing industry has seen phenomenal growth in the last five years (2001-2006).
Organized retailing has finally emerged from the shadows of unorganized retailing and is
contributing significantly to the growth of Indian retail sector. “India Retail Sector Analysis
(2006-2007)” report helps clients to analyze the opportunities and factors critical to the success
of retail industry in India.

Euromonitor International's Retailing in India examines whether recent high growth rates can be
sustained in an economic downturn. Growth has been boosted by richer consumers spending
more and some companies' decision to sell a wider range of non-food products. Rising sales have
supported expansion into new markets, new store formats and moves into private label products.
However, the economic downturn has set some of these strategies back, this analysis looks at
whether grocery retailers will continue to enjoy similar rates of growth in the future.

Organised retail continues to make headway

Despite the global economic recession and a consequent slowdown in the Indian economy,
organised retail continued to make headway although at a slower pace in 2009. Nonetheless, if
the current retail landscape is compared with that of 2004, it has undeniably become a much
larger environment. Retail stalwarts such as Wal-Mart, Tesco and Marks & Spencer have already
made inroads into the Indian retail industry and with multi-billion dollar investments by major
domestic players such as Reliance retail, Aditya Birla group the market is expected to go from
strength to strength, as Indian retailing has embarked on a long-term growth trajectory.

Economic slowdown serves as reality check for retailers

The global economic crisis and its impact on India resulted in a slowdown of the Indian economy
in 2009. This caused consumers to tighten their purses, and the availability of financial support
for retail expansion dried up. This put a halt to the unprecedented expansion seen over the review
period. Lower consumer confidence resulting from the recession, as well as job losses, resulted
in fewer visits to retail stores, and consequently sales plummeted for major retailers. With
consumers becoming highly discretionary, spending on non-essential items such as lifestyle
goods was highly impacted, making it one of the worst performing categories.

Retailers with financial backing weather the storm

Credit from banks and other lenders has been difficult to obtain in the current environment, and
retailers have suffered severely as a result. Some retailers are unable to pay rental fees because
all lines of credit have dried up. In such a tough operating environment, retailers under the
umbrella of a diversified holding company with access to internal funds are faring better than
other players. For example, Reliance Retail and Aditya Birla Retail emerged relatively unscathed
compared with smaller players such as Subhiksha and Heritage Retail.

Internet retailing grows at phenomenal pace

Due to the increased penetration of credit cards and availability of computing facilities to a wider
population, Internet retailing is witnessing stellar growth. Internet retailers offer products at
discounted prices to consumers compared with store-based retailers and bargain-hunting
consumers are latching on to this fact. This has become even more pronounced in light of the
economic downturn as consumers have become increasingly sensitive to price.

India’s attractiveness stands over long term

India’s burgeoning middle class offers considerable promise for organised retailing, which is
expected to remain attractive to organised retailers over the long term. Liberalization and
financial reforms would remain a key factor in the expansion of the organised retail environment.
Currently, foreign direct investment is not allowed in single brand retail, and it proved a major
hurdle in IKEA’s billion-dollar plans in mid-2009 to enter the organised retail environment.
However, with a stable government in place at the centre and reform-averse left parties out of the
government, retailers are optimistic that progressive reforms will occur over the forecast period.

Key Findings

- Organized retail will form 10% of total retailing by the end of this decade (2010).
- From 2006 to 2010, the organized sector will grow at the CAGR of around 49.53% per nnum.
- Cultural and regional differences in India are the biggest challenges in front of retailers. This
factor deters the retailers in India from adopting a single retail format.
- Hypermarket is emerging as the most favorable format for the time being in India.
- The arrival of multinationals will further push the growth of hypermarket format, as it is
the best way to compete with unorganized retailing in India.

Key Issues and Facts analyzed

The research report also addresses the issues and the facts that are critical to the success of indian
retail industry in general & organized retail industry in particular.

- Evaluation of current market trends.

- Profile discussion of key players in this sector.
- Analysis of various challenges and opportunities before the industry.

Key Players Analyzed

This section covers the key players currently operating in the Indian retail industry including
Reliance group, Heritage group, Future Group, RPG Enterprise, I.T.C. Ltd, and DCM - Hariyali
Kisaan Bazaar.

CONCLUSION:

The strategies of Aditya Birla Group seem to be very clear and goal oriented which is helping
them to attain and at same time meet the mission and vision set by them. Their innumerable
awards and achievement over a period of time gives a clear picture of their smart performance in
the retail sector. Global economic slowdown of 2009 did put the retail sector in slow
development curve as people tightened their purses but then retail sector with the help of better
government policies outperformed the external factors and sooner gained its pace.

Aditya Birla Group was totally found to be in a win-win situation after the acquisition of
Trinethra retail chain due to the efficiencies of the later. Apart from these Aditya Birla Group
initially faced many challenges to efficiently operate the newly acquired Trinethra retail store but
sooner they came out with different short term and long term strategies to make the integration a
grand success.
Bibliography-

http://www.business-standard.com/india/news/trinethra-gives-birlas-retail-
edge/270196/

http://www.moneycontrol.com/company-notices/trinethrainfraventures/notices/TIV

http://www.adityabirla.com/media/features/trinethra_superretail.htm

http://www.siliconindia.com/shownews/Aditya_Birla_Retail_acquires_
%C3%ABfastestgrowing%C3%AD_TrinethraFabmall-nid-34555.html