Section A PGDM 2013-15 Case Analysis: Big Bazaar Indian Retail Market Worlds eighth largest at $250 billion 12 million retail outlets Retail sales represented 33.3% of Indian GDP In 2005, modern Organized retail market had 3.5% share of Indian retail market
RETAIL FORMATS Value Retailing Big Bazaar (Discount Hypermarket) Food Bazaar (Food & Grocery) Lifestyle Retailing Pantaloons (Departmental Store) Central (Lifestyle Mall) Introduced in 1997 as High Fashion family department store Departmental store 16 stores across India Positioned as Preferred fashion destination for 15-35 age segment Various private label brands like John Miller, UMM, RIG Launched in 2004, operated as A mall without internal walls Seamless mall 3 stores by 2005 Apparels, Toys, Music, Books, Accessories Featured entertainment zones, food courts and restaurants Introduced in 2001 as a Hyper Market, designed to blend typical Indian Bazaar Discount hyper market Wide range of products including clothing, kitchenware, sporting goods, Luggage and jewelry
Launched in 2002 within Big Bazaar Store Six months within the launch, 42 outlets- 18 standalone 33 standalone food bazaar stores by 2005 Average of 7000 products , sold fresh produce, consumer packaged goods, staples, ready-to cook products alongside private label teas, salts and spices Sold to Aditya Birla Nuvo 13 stores 166 stores
43 stores Store Year of commencement Stores(as on date) Big Bazaar 2001 162 Food Bazaar 2002 31 Central 2004 22 Brand Factory 2006 26 Home Town +Ezone 2007 51 FBB 2008 27 Food Hall 2011 4+2 Planet Sports +aLL 2011 68 I am in 2013 3 Store Details Big Bazaar: 4 PS Product Apparels Home & Living Kitchenware Electronics & Appliances Beauty Footwear Toys & Games Price Value Pricing Time based Pricing Psychological Pricing Bundling Promotion Wednesday Bazaar Maha Bachat Joona do, naya lo Big Day Saal Ke Sabse Saste 3 Din Brand Endorsement- M.S. Dhoni Place Design to look crowded High traffic areas Potential Development areas Customer Perception POSITIVES
Large stores Variety Value for money Promotional Offers Quality High Volume, Low price
NEGATIVES
Costlier than neighbourhood store Long Queues No Credit Snob Effect FOOD BAZAAR Concepts borrowed from Western markets:
Convenience Cleanliness Hygiene Pre packaged commodities
Net Block 8.29 15.71 24.69 36.91 49.18 1 1.90 2.98 4.45 5.93 Work in progress 1.81 1.45 0.76 3.32 3.63 Investment 1.17 1.17 1.21 1.21 7.34
Assets Inventories 12.96 20.11 26.32 36.36 63.49 Total Current 19.05 30.38 38.24 52.92 92.93 1 1.59 2.01 2.78 4.88
Total Current Liabilities 6.16 10.84 15.29 16.9 33.32 1 1.76 2.48 2.74 5.41 Current Ratio 3.09 2.80 2.50 3.13 2.79 Figures In $ million 2001 2002 2003 2004 2005 Total Sales 41.65 65.65 102.36 151.48 249.43 1 1.58 2.46 3.64 5.99 Total Expenses 38.26 60.51 93.75 138.64 229.51 1 1.58 2.45 3.62 6.00 After Tax Earning 1.47 1.62 2.63 4.55 8.87 1 1.10 1.79 3.10 6.03 NET Profit margin (PAT/Sales) 0.035 0.025 0.026 0.030 0.036 ROCE (PAT/Equity+Loan) 0.060 0.043 0.054 0.060 0.076 Figures In $ million Findings: PAT rose from $1.47 mn in 2001 to $8.87 mn in 2005 Increase of roughly 6 times But Profit margin remained almost constant (3.5% to 3.6%)
Pantaloons marginally contributed to growth Sales increase of 6 times during 2001-2005 D/E ratio high in 2003 and 2004 signifying expansion
7 BB from 2001-03 while 12 from 2004-05 9 FB from 2002-03 while 24 from 2004 to 2005
SCM improved. Central warehouse in Nagpur Implementation of SAP