PREMIERE HYPERMARKET OF INDIA & ITS DISTRIBUTION NETWORK

A case study

FORE School of Management, WMG XV Submitted by: Kanika Singh 62022

Pratik Mehan - 62049

Shourya Asthana 62055 Meenu Gupta-62027 Vikas Srivastava-62063 Rukmani Nanda

BIG BAZAAR AT A GLANCE

TYPE: Hypermarket FOUNDED: 2001 INDUSTRY: Retail PRODUCTS: Department & Grocery Store PROMOTER: Kishore Biyani PARENT: Pantloon Retail India Ltd. Currently 101 Outlets all over India.

Turnover of Rs 3,600 crore in fiscal 2008 (ending June, 2008)

Targeting a turnover of Rs 5,000 (over US$ 1 billion)

BACKGROUND
State of Art Infrastructure the centralized AC plants and Schindler lifts are used in Big Bazaar to cosset and pamper the customers Lower Operating Cost- Bog Bazaar has been able to push down its operating cost to as low as 2% and introduce a lot of bargain deals Varied product portfolio and low prices- which has resulted in puling a lot of customer foot fall and traffic in their outlets

In store promotions and promotional offers on weekends- Such as sale and exchange of anything old like newspapers and get coupons issued in exchange has been a major deal
Advertising and promotional offers- that grab immediate attention of the customers and lures them to come to at least come for window shopping and hence convert that into sale as well Do it yourself mantra, giving customers the freedom, to choose

Tries to secure as much stock as possible, directly from the manufacturer

BACKGROUND cont
Aims at fulfilling the need of the entire household under one roof Works, towards, taking the consumer to bulk buying for monthly ration rather than going to nearby Kirana shop each week It works on low cost model price is the attraction for all the customers - Is se sasta aur achcha kahin nahin Offers discounts up to 50% off on MRP Secure stock directly from the manufacturer Fulfills the need of the entire household under one roof

Food retailing, which is mainstay of Big Bazaars current business, accounts for 40% of the value chains business

BRANDS @ BIG BAZAAR

In house brands of BIG BAZAAR

BRANDS @ BIG BAZAAR

Some other brands available at BIG BAZAAR

POSITIONING

TARGET AUDIENCE
Middle & upper class people Housewives and families that go out together and shop Such customers who are looking for good deals and bargains These are the shoppers who do not go to the up market department store Working women and home-makers who are primary decision makers

PRICING
Value Pricing (EDLP Every Day Low Pricing) Promotional Pricing Low Interest Financing Psychological Discounting Special Event Pricing (Diwali / Holi / etc) Time Pricing ( Todays Special offer / Wednesday Bazaar ) Bundling

PROMOTION
Saal ke sabse saste 3 din Future Card (3% Discount) Advertising (Print, TV, Radio) Brand Endorsement by M.S.Dhoni Exchange Offer (Junk Swap Offer) Point of Purchase Promotions.

INFORMATION FLOW AT BIG BAZAAR

Big Bazaar HO / Zonal Offices

BB National Warehouse @Mumbai

BB Local Warehouse

BB Zonal/Regional Warehouse

BB Retail Store + Store warehouse Flow Of Money

DISTRIBUTION LEVEL

0 to 2 level distribution Vender

National vender Regional vender Local vender

Warehouse
National warehouse. Regional warehouse Local or Store warehouse

In-house production

National Vender

Zonal/Regional Vender

Local Vender (Distributor/C&F)

BB Zonal/Regional Warehouse

BB National Warehouse @Mumbai

BB Local Warehouse

BB Retail Store + Store warehouse

HIGHLIGHTS OF DISTRIBUTION & LOGISTICS

Big Bazaar's claims that they are already going to the farm for some products, that's why they can sell potatoes at the same price, all the year round Big Bazaar is in the process of outsourcing its inventory management: it is exploring an option where the inventory will be owned by another group company but can be drawn on as and when required. It also has an arrangement with suppliers by which it buys centrally, but has them deliver locally, hence the replenishment and payment cycles are driven locally---BIG BAZAAR owns the inventory only when it is on the shopshelves

DISTRIBUTION & LOGISTICS, how it is poised.

Future Group, the parent organization, under, which BIG BAZAAR comes, has also launched Future Logistics initially aimed at handling the supply chain logistics of the group Is also, now looking to offer its services to its 1000-odd vendors, spread across consumer related goods, to reach a targeted turnover of about Rs.700 crore by 2010 The thrust at present will be on modes of surface transport like roads and rail only, however, at a later stage, sea and air modes might also be considered as per the requirement With more than 170000 products, the company maintains a strong supplier relationship in a partnership mode

DISTRIBUTION & LOGISTICS, how it is poised.

Future Group is working on the vendor network as well as the logistics network The company has identified up to 40 anchor vendors, each with turnovers of US$45 million, to achieve economies of scale. The group is also keen to ensure that its smaller vendors are able to reach turnovers of around US$1 million and a growth rate of 40% annually, to be able to pass on the benefits of scales

The company is also working towards bringing its 1,200 vendors online, like WalMart.

DISTRIBUTION & LOGISTICS, @ the Suppliers end vis a vis RETAIL

The servicing requirements differ from conventional retail As the inventory levels maintained by the hypermarts chains are much lower Hypermarts, require quick turnaround times on orders placed, so higher levels of servicing are required

SUCCESS FACTOR FOR BIG BAZAAR

State of Art Infrastructure the centralized AC plants and Schindler lifts are used in Big Bazaar to cosset and pamper the customers Lower Operating Cost- Bog Bazaar has been able to push down its operating cost to as low as 2% and introduce a lot of bargain deals Varied product portfolio and low prices- which has resulted in puling a lot of customer foot fall and traffic in their outlets

In store promotions and promotional offers on weekends- Such as sale and exchange of anything old like newspapers and get coupons issued in exchange has been a major deal
Advertising and promotional offers- that grab immediate attention of the customers and lures them to come to at least come for window shopping and hence convert that into sale as well Do it yourself mantra, giving customers the freedom

RECOMMENDATIONS
BIG BAZAAR, should build, more in house brands across categories as then the bargaining powers of giants like PnG and HUL, will be negated This step should be taken quickly, as the BIG BAZAAR brand is growing, and has mostly positive sentiments in the consumers mind Once the international giants come in, it would become more difficult It should team up with likes of HUL, PnG etc, to promote, new categories, where it is a win-win situation for both the players as well as the customer. HUL has already started, in this segment by promoting DEODERANTS, in a big way at hyper-marts as, unlike the kirana stores where the customer is not necessarily shopping for deodorants, the large-format self-service stores give the right service and environment for this category. Hyper-marts has thrown open opportunities for building new categories to attract a bigger base of consumers, who by far were no where in the picture till now