final SM tm ppr (1)

8/7/2019 final SM tm ppr (1)

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ContentsContents ..................................................................................................................... 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

Porters 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 ......................................... 21Steps 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


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Retailers with financial backing weather the storm ............................................... 25

Indias 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


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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. Indias 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 Indias 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, its 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


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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 ones 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


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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


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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, MOREmegastores 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. ABRLs vision is to consistently provide the Indian consumercomplete and differentiated shopping experiences and be amongst Indias 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


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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 resonatedwith 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 ValueLimited, 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,


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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 companys commitment to offer consumers


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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 RetailLimited 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 aresult 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 MOREbenefits 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."
http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Aditya%20Birla%20Retail&datesel=2http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Aditya%20Birla%20Retail&datesel=2http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Aditya%20Birla%20Retail&datesel=2


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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 productsat 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.


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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 groups larger retail strategy.Trinethra may not fit perfectly into their (the Birlas) basket and not a match to the group. But

given Kumar Birlas 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 Pantaloons Food Bazaar and other retail ventures.


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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.

A close observation of strategies and plans for the MORE supermarket in theform 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%.

Attainment of an edge by ABG from acquisition of Trinethra -


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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.
http://search.rediff.com/imgsrch/default.php?MT=indiahttp://search.rediff.com/imgsrch/default.php?MT=india


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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 notthe 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:


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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 wil l 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.


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THREATS:

1.If the unorganized retailers are put together, they are parallel to a large supermarket with noor little overheads, high degree of flexibility in merchandise, display, prices and turnover.

2. Shopping Cultu re : 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.

Porters 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


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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 buyers product

5. Suppliers 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


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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 sellers 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


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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


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Making M&A the growth engine

Wins for Aditya Birla Retail from Acquisition of Trinethra

Steps for Acquiring Trinethra retail store

An immediate footprint across South India

Gain access to retail space with lower rentals

Got a head start over competition

Low cost organization structure

Most importantly, a head-start in the retail

learning curve

A top management team with capability &

experience in launching and running a super

market chain

An employee strength of 2,500

Vendor relationships -Private Label & FMCG

Manufacturers, Staples etc.

Distribution and Re-packing facilities inBangalore, Chennai and Hyderabad

Alliances with Credit Card & Promotion

organizations

Two functional IT systems: e-Retail and pilot

implementation of Navision


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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 Trinethras best practices in store size, catchment size, assortment

mix

Opportunity lost in validating business model that was being pursued by ABRL with

Trinethras data and test stores

Teams at Trinethra and ABRL were neither operated independently nor integrated

completely


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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 CEOs 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


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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


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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


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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.

Indias attractiveness stands over long term

Indias 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 IKEAs 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


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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 agrand success.


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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
http://www.business-standard.com/india/news/trinethra-gives-birlas-retail-edge/270196/http://www.business-standard.com/india/news/trinethra-gives-birlas-retail-edge/270196/http://www.moneycontrol.com/company-notices/trinethrainfraventures/notices/TIVhttp://www.adityabirla.com/media/features/trinethra_superretail.htmhttp://www.siliconindia.com/shownews/Aditya_Birla_Retail_acquires_%C3%ABfastestgrowing%C3%AD_TrinethraFabmall-nid-34555.htmlhttp://www.siliconindia.com/shownews/Aditya_Birla_Retail_acquires_%C3%ABfastestgrowing%C3%AD_TrinethraFabmall-nid-34555.htmlhttp://www.business-standard.com/india/news/trinethra-gives-birlas-retail-edge/270196/http://www.business-standard.com/india/news/trinethra-gives-birlas-retail-edge/270196/http://www.moneycontrol.com/company-notices/trinethrainfraventures/notices/TIVhttp://www.adityabirla.com/media/features/trinethra_superretail.htmhttp://www.siliconindia.com/shownews/Aditya_Birla_Retail_acquires_%C3%ABfastestgrowing%C3%AD_TrinethraFabmall-nid-34555.htmlhttp://www.siliconindia.com/shownews/Aditya_Birla_Retail_acquires_%C3%ABfastestgrowing%C3%AD_TrinethraFabmall-nid-34555.html

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