retail business in india

RETAIL INDUSTRY IN INDIA AND IMPACT OF RECESSION

RETAIL INDUSTRY IN INDIA AND IMPACT OF

RECESSION

- NISHANT CHAUDHARY

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DECLARATION

I make an affirmative statement to the effect ‘The information contained in this project is authentic and is not plagiarized or copied albeit inclusive of some points from relevant journals, books and websites for which due references have been given of the respective sources.’

I take responsibility for the genuineness of the information furnished in this project.

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Ms. PRIYANKA KATYAL NISHANT CHAUDHARY MENTOR B.COM(H)IIIRD YEAR ROLL NO-08/410 MAHARAJA AGRASEN COLLEGE

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ACKNOWLEDGEMENT

I am grateful to our college, MAHARAJA AGRASEN COLLEGE, for providing an opportunity to prepare a project. I owe my indebtedness to Ms. PRIYANKA KATYAL, my mentor for providing her invaluable guidance, suggestions and encouragement, without which the project may not have taken the shape it finally, has.

I look forward to your valuable suggestions regarding this project.

NISHANT CHAUDHARY

B.COM (Hons) IIIrd Year

ROLL NO. – 08/410

MAHARAJA AGRASEN COLLEGE

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Table of ContentsAbstract............................................................................................................................6Introduction....................................................................................................................6

Chapter 1.........................................................................................................................7RETAILING.....................................................................................................................7

Introduction................................................................................................................7Types of Retail Sectors..........................................................................................8Different products involved in Retailing.........................................................9Marketing Decisions for Retailers.....................................................................9

Chapter 2.......................................................................................................................11RETAIL INDUSTRY IN INDIA...............................................................................11Indian Retail Industry...............................................................................................11

India Retail Market - Statistics.........................................................................11Retail formats in INDIA...........................................................................................12

Growth of Indian Retail........................................................................................13Major Retailors in India.......................................................................................15Challenges facing Indian Retail industry......................................................15

Chapter 3.......................................................................................................................18INDIAN RETAIL & RECESSION..........................................................................18

Impact of Recession – Retail and Other sectors........................................18India’s retail journey in recession...................................................................19Liquidity under pressure.....................................................................................21

Chapter 4.......................................................................................................................22Case Study I – BIG BAZAAR...................................................................................22

Introduction..............................................................................................................22Target Audience......................................................................................................24

Supply chain.........................................................................................................24BIG BAZAAR during recession..........................................................................26

Chapter 5.......................................................................................................................28Case Study II – SUBHIKSHA.................................................................................28

Introduction..............................................................................................................28SHUBHIKSHA’S life..............................................................................................29SUBHIKSHA and expansion of stores............................................................29Cut Price Strategy..................................................................................................30Risk in Retailing and expansion.......................................................................30

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SUBHIKSHA during recession..........................................................................30

Chapter 6.......................................................................................................................33CONCLUSION.............................................................................................................33BIG BAZAAR and SUBHIKSHA - Future...........................................................33OTHER RETAIL GIANTS: Takeovers and Alliances.....................................34

Bibliography.................................................................................................................35

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Abstract

The underlying aim of this report is to understand Indian Retail Industry, the growth that has been there over the years and what challenges does it face. Further, through 2 case studies of big Retail chains in India (namely, Big Bazaar and Subhiksha), we try to understand how Indian Retail Industry has stood up to Recession and what strategies they adopted and what its impact was.

Introduction

The organization of this report is as follows: Chapter 1 describes Retailing in depth and different types of Retail sector. After introducing to basics of Retailing we move on to Chapter 2, which discusses the Indian Retail Industry. This chapter enlists some statistics about Indian Retail Industry, different formats that are followed. Further, the later part of the chapter delves into the growth of Retail Industry in India and the challenges it still faces. Chapter 3 discusses the impact of recession on Indian Retail market. While Chapter 4 and 5 gives an insight into the steps taken during recession period and its impact, via case study of two giant Retail chains, namely Big Bazaar and Subhiksha. Chapter 6 discusses the impact of recession on other retail giants as well and summarizes the future of Retail sector in India under present recession scenario.

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Chapter 1

RETAILING

Introduction

The word "Retail" originates from a French-Italian word ‘Retailer’, someone who cuts off or sheds a small piece from something. In general. the term “Retailing” refers to any activity that involves a sale to an individual customer. Retailing is the interface between the producer and the individual consumer buying for personal consumption. Irrespective of who sells, the distinction of retailing is normally made on the basis to whom the products are sold. For example, if a manufacturer sells direct to the consumers that also is retailing.Therefore, it is remarked, “If the buyer in a transaction is an ultimate consumer, the seller in the same transaction is engaged in retailing”. It includes

The physical movement and storage of goods The transfer of title to goods. The provision of information concerning the nature and use of goods. The standardization, grading and final processing of goods. The provision of ready availability. The assumption of risk concerning the precise nature and extent of

demand. The financing of inventory and the precise nature and extent of credit to

consumer.

Figure1. Figure showing relationship between Manufacturer and Retailer

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Manufacturers

Retailer


Types of Retail Sectors

Figure2. Figure showing the types of Retails

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Retail Agencies

On the basis of permanent Place of business

On the basis of size

Itinerant Retailers

Fixed shop Retailers

a. Hawkers & Peddlers

b. Market traders

c. Cheap jacksd. Street

traders

a. Street stall holders

b. Second handc. Goods dealersd. Specialty

shopse. General shops

Small - Scale

Large - Scale

a. Independent stores

b. Vending machines

c. Discount houses

d. Syndicate stores

a. Departmental stores

b. Chain/Multiple shops

c. Mail order houses

d. Higher -purchase and installments

e. Cooperativesf. Super marketsg. Hyper-markets


Different products involved in Retailing

Food Books & Magazines Fashion & Clothing Personal Care Optical Consumer Electronics Sport & Leisure Home Ware Footwear & Leather Toys & Games Jeweler & Watches Furniture Petrol

Marketing Decisions for Retailers

Retailers have to take marketing decisions in order to attract and hold customers. But there are several differences and similarities in their decisions. These differences and similarities are as follows:

1. Target Market decisions:

Retailer has to define his target market. Clear this definition of the target customers helps in taking decisions concerning product range, price level, advertising, etc. A retailer may focus on upper income, middle income or lower income customers. Within the target he may encourage more profitable customer and discourage less profitable customer.

2. Product assortment and services decision:

Retailers have to decide on three major product variables, namely, product assortment, service mix and store atmosphere. The product assortment must match the expectations of target customers in terms of breadth, depth and quality of goods. A retailer must also decide the services to be offered. Store atmosphere is very important in retailing.

3. Pricing decisions:

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A retailer’s price must be decided in relation to the target market, the product and service assortment and competition. He may have to choose between high markup low volume pricing and low markup high volume pricing.

4. Promotion decision:

A retailer must use personal selling and other promotional tools to support and reinforce his image.

5. Place Decision:

In retailing location is highly important. Mechanization and handling of goods is also important.

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Chapter 2

RETAIL INDUSTRY IN INDIA

Indian Retail Industry

The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually.

India Retail Market - Statistics

720 million Indians to join consuming age by 2010

55% of the Indian population will be under 20 years of age by 2015

32% rise in urbanization by 2008

10% annual growth in Retail market since 2000

7% of the population is engaged in retailing

A booming US$ 300 billion retail market in India 5.5 retail outlets per 1000 population, highest in the world 25-30% annual growth in retail loans and credit cards

The organized retail sector currently accounts for around 5 per cent of the Indian retail market.

Organized Retail is predicted to capture 15 – 20% market share by 2010. Over 100 malls of over 30 million sq feet of new shopping centre space are

projected to open in India between 2009 and end-2010.

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Retail formats in INDIA

Following are some of the different Retailing formats followed in India.

Hyper marts/supermarkets: A supermarket is a grocery store that sells food and household goods. They are large, most often self-service and offer a huge variety of products. People head to supermarkets when they need to stock up on groceries and other items. They provide products for reasonable prices, and of mid to high quality.

Mom-and-pop stores: they are family owned business catering to small sections; they are individually handled retail outlets and have a personal touch.

Departmental stores: are general retail merchandisers offering quality products and services.

Convenience stores: are located in residential areas with slightly higher prices goods due to the convenience offered.

Shopping malls: the biggest form of retail in India, malls offers customers a mix of all types of products and services including entertainment and food under a single roof.

E-trailers: are retailers providing online buying and selling of products and services.

Discount stores: these are factory outlets that give discount on the MRP.

Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other small items can be bought via vending machine.

Category killers: small specialty stores that offer a variety of categories. They are known as category killers as they focus on specific categories, such as electronics and sporting goods. This is also known as Multi Brand Outlets or MBO's.

Specialty stores: are retail chains dealing in specific categories and provide deep assortment. Mumbai's Crossword Book Store and RPG's Music World is a couple of example.

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Growth of Indian Retail

India retail industry is the most promising emerging market for investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. It is also expected to reach 22% by 2010.

Some of the reasons to which we can attribute growth of Indian Retail sector are as follows:

1. Median age

Demographics favor growth of the retail sector in India as the size of consuming class or the people with the purchasing power is expected to increase. India currently has the youngest population in the world. The composition of the Indian population is shifting towards the age group of 20-49 i.e. the working population with purchasing power. The median age for India is 25 years as compared to 28 years for Brazil, 33 years for China and 38 years for Russia. As per a Mckinsey report, of the current 204 million households in India, about 13 million households have the income to prop up growth of organized retail and this consumer segment is expected to grow at over 20% annually in the next eight years.

Figure3. Graph showing the changing Demographic profile (2000 – 2020)

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2. Rising disposable income

India is the second fastest growing economy in the world. A larger number of households are getting added to the consuming class with the growth in income levels. The growing economy has provided new employment avenues and the same have resulted in increase in number of people in the earners category. Increasing instances of double incomes in most families coupled with the rise in spending power is further fuelling growth in consumption and in turn growth of the retail sector.

Figure4. Graph showing growing disposable income in India (2004 – 2008)

3. Urbanization

The share of the urban population has been gradually increasing from 23% in 1991 to 28% in 2001 (Source: IBEF, Census). The urban population is projected to increase to 40% of the total population by 2020 and incomes are simultaneously expected to grow in these segments. Urban population that represents nearly 30% of the total population accounts for 45% of the personal consumption. This consumer segment has further boosted the growth of the modern retail.

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4. Shopping convenience

Apart from the population that has desire and ability to spend, the other factors that have patronized modern retail or organized retail is the convenience of shopping and wide variety. While mom and pop stores display few hundred units, organized retail owing to the size and scale of operation can stock around 5,000 SKUs (stock keeping units). The time constraint and the convenience of shopping with multiplicity of choice under one roof are the major drivers of organized retailing in the country.

Major Retailors in India

Pantaloon Tata group RPG group Reliance A V Birla group

Challenges facing Indian Retail industry

Lack of adequate infrastructure facilities

Underdeveloped supply chains, lack of strong cold chains, poor warehousing facilities, bad roads, etc. have been contributing to increased logistic costs for the retailers. Globally, the logistics cost component to the total retail price is around 5 percent, while in India it is as high as 10 percent. Fragmented supply base

The supply base is highly fragmented with a large number of intermediaries squeezing the margins of all involved, which also includes the retailer. This not only has an adverse affect on the margins but also results in cases of mishandling, theft and increased instances of shrinkage.

Restrictions in Foreign Direct Investment

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Example: The organized retail space was expected to receive investments to the tune of USD 25 billion over the next 4-5 years. However, significant delays in retail real estate development and opposition to organized retail have resulted in delays in investment. A large number of retailers have not been able to meet their stated expansion plans. Currently, with higher cost of funds and a slowdown in demand, developers are likely to delay more projects in the near future.

Figure5. Example of Pantaloon, showing delay in plans because of Investment delays

Rentals: Skyrocketing to all time high

As real estate prices skyrocketed, retail rentals also touched unsustainable levels eating directly into the profit margins of retailers. Until a few months back, store rentals were 300 to 400 basis points higher than even international levels. Retail rentals in Linking Road in Mumbai, South Extension in Delhi and Brigade Road in Bangalore have risen about 50 percent in the past 3 years.

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Figure6. Graph showing increasing Rentals and its impact

Some of the other reasons are as follows:

The tax structure in India favors small retail business High cost of real estate Dissimilarity in consumer groups Shortage of retail study options Shortage of trained manpower Low retail management skill

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Chapter 3

INDIAN RETAIL & RECESSION

Impact of Recession – Retail and Other sectors

In the past few years, India’s retail journey seemed picture perfect with the most attractive ‘stops’ still unexploited and under-penetrated. Favorable demographics, steady economic growth, easy availability of credit, and large scale real estate developments were fuelling the growth of India’s approximately USD 25 billion organized retail market. The opportunity was there for all to see and India was the destination of choice for top global retailers. In this environment, India’s own blue chip companies like Reliance, Bharti and RPG diversified to add retail to their sector portfolio4. All things considered, it was a good time for Indian retail.

This was the scenario till a few months ago. Enter the global meltdownand India did not find itself completely insulated from its harsh effects. As per the Cartesian survey, almost all key industries in India have been negatively impacted by the slowdown and retail is no exception.

Figure7. Graph showing industry wise impact of each sector

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India’s retail journey in recession

With the Q3 growth numbers of FY2008-09 at 10-12 % as against 35 % of previous year, the happy grins are fast turning into nervous smiles. While the sector is still registering decent growth, the heavy investments made during the boom period may weigh the retailers down.

Figure8. Graph showing the effect of Recession on Retail Penetration

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Disappointing Footfalls: According to KPMG‘s survey, 70 percent of the respondents stated that the slowdown has adversely affected their footfalls.

Figure9. Graph showing annual Net sales growth

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Liquidity under pressure

The slowing sales are resulting in lower inventory turnover and increasing working capital requirements for retailers. This in turn has resulted in liquidity pressures for many retailers. To free the cash that has been locked, a large number of companies have been trying to reduce the inventory on their books and shorten working capital cycles.

Figure10. Graph showing impact of liquidity pressure

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Chapter 4

Case Study I – BIG BAZAAR

Introduction

Big Bazaar is a chain of department stores in India.

It is owned by the Pantaloon Retail India Ltd, Future Group. It works on the same economy model as Wal-Mart and has considerable success in many Indian cities and small towns.

The idea was pioneered by entrepreneur Kishore Biyani, the CEO of Future Group. Currently Big Bazaar stores are located only in India.

Big Bazaar’s journey began in October 2001, when the young, first generation entrepreneur Kishore Biyani opened the country’s first hypermarket retail outlet in Kolkatta (then Calcutta). In the Same month, two more stores were added – one each in Hyderabad and Mumbai.

Mr. Kishore Biyani said, “We initially decided to name the format as “Bazaar” because we had designed the store keeping the Indian mandi style in mind. Since the size of the hypermarket was big than an average mandis, the thought came to name it as “Big Bazaar”. However, we had freezed on the punch line “Isse Se Sasta Aur Achha Kahi Nahi” much before we met the creative agency to design the final logo of Big Bazaar.”

Though, Big Bazaar was started purely as a fashion format including apparel, cosmetics, accessory and general merchandise, the first Food Bazaar format was added as Shop-In-Shop within Big Bazaar in the year 2002.

Today, Big Bazaar, with its wide range of products and service offering, reflects the aspirations of millions of Indians. The journey of Big Bazaar can be divided into two phases – one pre and the other post January 26th,

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2005, when the company rewrote the retail chapter in India, with the introduction of a neverbefore sales campaign “Sasbe Sasta Din”.

Big Bazaar is present today in 59 cities and occupying over 5 million sq.ft. retail space and driving over 110 million footfalls into its stores. The format is expecting the number of footfall in the stores to increase by over 140 million by this financial year.

Kishore Biyani, the CEO of the Future Group, has a vast understanding of the consumer’s insight, has inculcated the habit of ‘observing, understanding customers’ behaviour’, in every employee of the group. Future Group is confident of the Indian Retail Story. The Group has not slowed down its expansion plans despite the fiscal woes in the economy present today. Future Group plans to have 300 stores and is expecting revenues of Rs 13,000 crore by year 2011.

It is the biggest and the fastest growing chain of department store. It is the destination where you get products available at prices lower than MRP, setting a new level of standard in price, convenience and quality.

Big Bazaar is not just another hypermarket. It caters to every need of a family. Where Big Bazaar scores over other stores is its value for money proposition for the Indian consumers.

Figure11. Figure showing Big Bazaar logo

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Target Audience

Big Bazaar targets Middle and upper-middle class customers. The large and growing young working population is a preferred

customer segment. Big Bazaar specifically targets working women and home makers

who are the primary decision makers

Supply chain

MANUFACTURING FIRM

C&F AGENTS

BIG BAZAAR

KIRANA STORES

END USERS

Figure12. Figure showing flow of Supply chain in Big Bazaar

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BIG BAZAAR – Product Range

ELECTRONICS BAZAAR

FASHION &

JEWELLERY

FURNITURE

BAZAAR

CHILDCARE &

BAZAAR

OTHER SERVIC

ES

TELEVISION SETS

FOOTWEAR BAZAAR

LIVING ROOM

KIDS WEAR MR.RIGHT

WASHINGMACHINES

BEAUTY CARE

BED ROOMTOY

BAZAARBAKERY

REFRIGERATOR

MEENA BINDRA

KITCHENSTATIONAR

YLOCK MART

PERSONEL CARE

NAVARADINNING ROOMS

CHILD CARE TULSI

m BAZAAR KIDS ROOMFUTURE MONEY

MICROWAVES BEEN BAGS

SMALL APPLIANCES

PAINTINGS

LAPTOPSDECORATIV

E ITEMS

COMPUTER ACCESSORIES

And many more products……

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BIG BAZAAR during recession

Why recession did not dent BIG BAZAAR???? Some of the reasons how big bazaar beat the recession and was able to maintain its customer base were the various marketing strategies which were adopted by it during that time.

WEDNESDAY BAZAAR

Big bazaar introduced a Wednesday bazaar concept,' hafte ka sabse sasta din” .The aim, according to the chain, is "to give home makers the power to save the most and even the stores in the city don a fresh look to make customers feel that it is their day".The Wednesday Bazaar offered clothes, accessories and fashion jewelry and personal care product

MAHA BACHAT OFFER

Big bazaar launched its special independence day offer of maha bachat for 5 days from aug 11 to 15 offering attractive offers on food items,garments,kitchenware, electronics, footwear,furniture, luggage etc.

The most striking offer was the accident insurance cover of Rs. 1 lakh for Rs. 99.The offers were launched to cater to the customer need and demands.

SABSE SASTE TEEN DIN (BIG DAYS)

Big Bazaar announced that its shopping event, ‘Sabse Sasta teen Din' on 26th jan,republic day across the 120 outlets and other group stores across 70 cities in the country. Rock-bottom prices, best possible discounts and mega offers were the highlights during these days. Over 50 lakh customers were expected to flock to the flagship Big Bazaar and Food Bazaar Stores and other Future Group retail formats. Special offers were created based on customer insights and past learnings.

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GREAT EXCHANGE OFFER

Big Bazaar, resorted to one of the age old techniques to spurn its sale. They announced a Great Exchange Offer, which was open from 14 February to 8 March 2009. Under the scheme old newspapers, clothes, footwear, plastics, etc. can be exchanged for a value against purchase of new products in their stores. The value will be in the form of coupons which can be used by customers to get a discount of 25% over and above any special offers that are offered by the store. This offer was valid on products like apparel, home fashion, utensils, toys, luggages and more.

SMS SCHEME

Big Bazaar also offered schemes to the prospective customer through SMS. The SMS would read like this: “Rs.200 disc at Big Bazaar on ……Bank Master Card ,Debit Card on min pur of Rs.800. Show this SMS at BB service Desk.” The recipient will have to show this SMS at the customer care desk and obtain 8 discount vouchers of Rs.25/- each against a purchase value of Rs.100/- per coupon.

Conclusion

It was the funds, the management skills and al the above mentioned innovative ideas which helped Big Bazar to sustain at such tuff times like 2009 recession period. Big Bazar was not only able to retain its sale at the recession time but also increase its footfall, by introducing such offers which consumers couldn’t refrain from. Further, Big Bazar also managed to open more outlets in various cities and hence manifold its sales. Infact, Big Bazar went one step ahead by introducing the concept of local stores, by opening K.B. Fair Price outlets.

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Chapter 5

Case Study II – SUBHIKSHA

Introduction

SUBHIKSHA was a chain of stores in INDIA The founder , Promoter and managing director of Subhiksha trading

services on the verge of bankruptcy was MR.R SUBHRAMANIAN SUBHIKSHA means “giver of all good things in life” Subhiksha is not just another supermarket. It caters to every need of a

family. Where Subhiksha scores over other stores is its value for money proposition for the Indian consumers.

Figure 13. Figure showing logo of Subhiksha

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SHUBHIKSHA’S life

SUBHIKSHA with pioneering and giving new definition to the INDIAN retail industry. When SUBHIKSHA entered the market there were already many big players in the retail industry, they had to come up with an innovative approach to compete with them

They made an extensive research on customer behavior and found that offering that branded goods at a lower price than their competitors could make them stand in competitive retail industry.

Basically SUBHIKSHA wanted to “pioneer a new trend” because of what they had found out about retail industry: that No.1 retailer makes the most money; the No.2 makes some money, while the third (and the others) has to eventually shut shop.

SUBHIKSHA and expansion of stores

In the year 1997, Subhiksha opened its first store at Thiruvanmiyoor in Chennai with an investment of around Rs 4-5 lakh/ with the theme, “why pay more when you can get it for less at SUBHIKSHA’S.

By March 1999, Subhiksha started expanding rapidly. From 14 stores, it was expanded to 50 stores by June 2000. In the next 2 two years, it had 120-130 stores across Tamil-Nadu. They decided to look at every part of India which is significantly literate and is a significant consumption market. Telecom companies are their role model they employed capable regional managers and expanded. In 2004-05, they decided to have 420 stores in places like Gujrat, Delhi, Mumbai, Andra and Karnataka by 2006. In 2005 , Subhiksha started recruiting people in various regions.

In the end Subhiksha operated over 1500 supermarket stores across more than 100 cities selling food, grocery, drugs and telecom across INDIA

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Cut Price Strategy

Opening a chain of no-frills stores-no air-conditioning, no fancy lighting and no touch-and-feel experience (customers have to ask for products at Subhiksha stores) - was a deliberate strategy. Shops are located not on the main road, but just off it, to take advantage of vastly lower rentals. The catchments area of customers is rarely beyond a two-km radius, since its customers usually come on two-wheelers or on foot.

Risk in Retailing and expansion

We are not mad risk takers. We are not producing movies. We do a lot of research before starting business in an area, and we have back-up plans in place. We work with very good people and if something goes wrong, we try to take corrective steps.

The big advantage we have is, we are not creating products, and there are no worries about whether it would succeed or not. Consumers are smart and they are all price-conscious and they want to finish work as fast as they can. They don’t go to a provision store for fun.

However, as it happens with many growth stories, the retailer could not keep pace with its growth postponing infusion of equity funds.

SUBHIKSHA during recession

Recession was the time when Subhiksha came to an end (2nd Feb 2009). The management had committed some eventual mistakes which led the company towards the downward position. The first and big mistake committed by the management of Subhiksha was expanding the number of stores rapidly without sufficient funds in hand. They thought of raising equity during 2008 September but the things had gone too far before they woke up. The global markets were stated collapsing and there were no possible chances of raising funds.

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“We got into trouble during the second half of last year, when we were unable to tie up funds for our ongoing operations. That slowly started choking and has lead to paralysis of operations completely now,” said Subramanian.

Consequently, in the following month (October, 2008) the company ran out of enough funds to run the organization .Thereafter, Subhiksha has been continuously besieged by a set of problems from all sides.

1. Subhiksha Trading Services has come under fire from television channels for not clearing advertising dues that run around Rs 8 crore.

2. Subhiksha is believed to owe Rs 35 crore against goods, Rs 18 crore against wages, and Rs 20 crore against lease rents. The company, according to the report, is also carrying a debt of Rs 700 crore at an average interest cost of 12 per cent per annum.

3. Expansion of Stores without adequate system control and IT Support. That’s why there was a huge Audit and abnormal losses in the system. And when they have started implementation of SAP the time has gone for survival of Subhiksha.

4. Many wholesale suppliers in Azadpur subzi mandi, or vegetables market, have stopped supplying fruits and vegetables to Subhiksha’s outlets in the National Capital Region (NCR) surrounding the national capital. This comes in the wake of the company holding up payments for two to six months against normal credit period of one month.

5. Lack of strong HR policy and Staff--- Due to this Shubiksha was not able to retain the talent which he initially bring into Junior, Middle and high level management. Whatever was remaining with it is all family bound with no commitment policy.

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6. They were paying huge rentals for these stores, which was a huge drain on the company's finances. There are huge frauds while entering in to rental agreements by their own management people. There was no proper check and control on this cost though this is a very crucial part to defeat competitors and to gain profitability in future. This, coupled with less than-expected footfalls, drove the operational costs to unsustainable levels

7. The wrong assumption that telecom segment is a sound, and profit making segment. The CEO never looked in to system losses arise from telecom. No control on inventory of mobile accessories and there stock value and were unable to circulate the working capital.

8. Meanwhile, the company has closed around 90 grocery stores across the country over the last one month or so. The company has also significantly reduced the inventory levels in its mobile retail arm - Subhiksha Mobile stores.

Thus sinking into unprepared conditions Subhiksha has to compete with its high profile competitors like RPG, Reliance retail and Future group etc.

Reliance Retail has set up 700-odd stores in the past two years, almost at the rate of one store per day, FutureGroup has begun opening a new no-frills discount retail chain called KB’s Fair Price Stores, to a format that is similar in concept to Subhiksha stores. Reliance’s food and grocery format Reliance Fresh on the other hand is high-end in terms of display, ambiance and size. The raise of the company thus gradually started sinking down step by step and now stands on the verge of collapse. The management frankly admits that their over confidence and aggressiveness are the main reasons for their loss.They should have gone for an IPO when the things were well and good to prevent such downfall. If they had responded in right time they wouldn’t have been put through such bad phases.

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Chapter 6

CONCLUSION

BIG BAZAAR and SUBHIKSHA - Future

Future Group is planning to open about 850 to 900 KB’s Fair Price shops. The locations have yet not been finalized, but the retailer shall expand in the same market clusters it has a presence in. In an exclusive interview with India Retailing, Damodar Mall, group customer director at Future Group stated, "We will expand KB’s Fair Price shops in select towns. First, it will be a concentrated approach in the markets we are already present in — Delhi, Mumbai and Bangalore."

Denying recent media reports on closure of a number of KB’s Fair Price stores, Mall stated, "The report was incorrect. KB’s Fair Price is a business model where, we will keep churning old localities and getting into new ones. If we have closed one store in a locality, we have opened another in the same catchments."

"We have mapped 850 to 900 KB's Fair Price shops. The model is low-cost and revenues from these stores have been the highest among all the modern trade players in the neighborhood space. The model is viable and a part of our expansion plans," Mall informed.

Further informing on Future Group's plans on its format — Big Bazaar — Mall informed that the company is targeting a total number of 350 Big Bazaar stores, although the timeline is not yet decided. At present there are around 120 Big Bazaar stores in India, present across 67 cities of the country.

It is through the KB Fair price that Big Bazaar (Future group) has strengthened its market hold, by overtaking the Subhiksha, the local market and renaming the same as KB Fair Price

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OTHER RETAIL GIANTS: Takeovers and Alliances

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