PRESENTATION ON BIG BAZAAR

Presentation by -Gurdeep Singh -Pushpak Pandey -Shaleen Agarwal -Rohan Tandon -Richa Kohli

Agenda
Retailing : An overview Indian retail The change factor FDI in Indian retailing Why FDI ? How FDI ? Big Bazaar- Company Profile - Customer Segment - Vision and Mission - Swot analysis - BCG Matrix - Porter 5 Forces Model

Retailing: An overview


Retailing  Worlds largest private industry US$ 6.6 trillion sales annually Fortune 100  9 Retailers  Carrefour, Ahold, Home Depot, Kroger, Metro, Kmart-Sears, Target, Albertsons Indian Retailing  Largest employer after agriculture - 8%* of population  Highest outlet density in world Around 12 mn outlets  Still evolving as an industry Long way to go

An overview

Evolution of Indian retail

Historic/Rural Reach Traditional/Pervasiv e Reach Government Supported Modern Formats/ International

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas
Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency

Evolution of Indian retail



Informal retailing Sector  Typically small retailers.  Evasion of taxes  Difficulty in enforcing tax collection mechanisms  No monitoring of labor laws

Indian retail


Formal Retailing Sector  Typically large retailers  Greater enforcement of taxation mechanisms  High level of labor usage monitoring

Categories of Indian retail



Indian retail


Corporate Houses  Tatas: Tata Trent  RPG group: Food World, Health and Glow, etc  ITC: Wills Life Style  Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. Dedicated brand outlets  Nike, Reebok, Zodiac etc Multi-brand outlets  Vijay Sales, Viveks etc Manufacturers/ Exporters  Pantaloons, Bata, Weekender

Classifying Indian retail



Indian retail


Modern Format retailers  Supermarkets (Foodworld)  Hypermarkets (Big Bazaar)  Department Stores (S Stop)  Specialty Chains (Ikea)  Company Owned Company Operated Traditional Format Retailers  Kiranas: Traditional Mom and Pop Stores  Kiosks  Street Markets  Exclusive /Multiple Brand Outlets

Large Indian retailers



Hypermarket
   

Big Bazaar Giants Shoprite Star Lifestyle Pantaloons Piramyds Shoppers Stop Trent Fame Adlabs Fun Republic Inox PVR

Department store
    

Indian retailers

Entertainment
   

The changing Indian consumer



Indian consumer

Greater per capita income  Increase in disposable income of middle class households  20.9%* growth in real disposable income in 99-03. Growing high and middle income population  Growing at a pace of over 10%* per annum over last decade Affordability growth  Falling interest rates  Easier consumer credit  Greater variety and quality at all price points

From Euromonitor Retail Survey

The changing Indian consumer



The urban consumer  Getting exposed to international lifestyles  Inclined to acquiring asset  More discerning and demanding than ever No longer need-based shopping  Shopping is a family experience Changing Mindset  Increasing tendency to spend  Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education

Indian consumer

*Data from NCAER

Anticipated growth
Market size  Current market size is roughly US$ 286 bn*  96% of the 12 Million stores are less than 500 Sq. ft.  Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008  Sales from large format stores would rise by 24-49%**  Formal and modern format retailing would enjoy rapid growth

Anticipated growth

Industry dynamics


Low domestic competition  Because of fragmented nature of industry Lack of exposure to global best practices  Low entry barriers for unorganized retailing  Moderate entry barriers for organized retailing Wholesale system under-invested leading to 20-40% wastage Non level playing field issues  Wide differences in treatment of small and large retailers

Industry dynamics


Industry dynamics

   

Real Estate Costs Supply Chain Inconsistency Poor Infrastructure Lack of Skilled Manpower

issues

Growth factors

Growth factors

Growth determining factors  Government Policy  Infrastructure development  GDP growth  Employment generation and job creation In several new sunrise industries Implies greater purchasing power

The Indian advantage

India ranked 1st in the Global A.T Kearney Retail Development Index
  

Advantage India

India Russia China

THE SIZE OF THE OPPORTUNITY

Products Total Retail Rs. Billion 6422 980 554 415 364 351 115 1159 Total 10360 Organised Retail Rs. Billion Food & Grocery Textiles & Apparel Jewelry & Watches Consumer durables Pharmaceuticals Home Solutions Books, Music & Gifts Others 50 185 30 43 10 32 15 111 476 Organised Retail as % of Total 1 19 5 10 3 9 13 10 5

FDI in Indian retailing



FDI in Retail not permitted

Current Indian FDI Regime  FDI not permitted in retail trade sector, except in:  Private labels  Hi-Tech items / items requiring specialized after sales service  Medical and diagnostic items  Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator)  For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required)

FDI in Indian retailing



Metro Group of Germany  Cash-and-carry wholesale trading  Proposal faced strong opposition Entities established prior to 1997  Allowed to continue with their existing foreign equity components.  No FDI restrictions in the retail sector pre1997  Foodworld  51:49 JV between RPG and Dairy Farm International,  Leading food retailer in India now  Mc Donalds

Current FDI

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Hypermarket The chain of retail stores of the Pantaloon Retail (India) Ltd. 89 outlets in India Headquarter in Mumbai Focusing on Value of Money

COMPANY PROFILE
Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of Indias leading business houses with multiple businesses spanning across the consumption space. While retail forms the core business activity of Future Group, group subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment, brand development, retail real estate development, retail media and logistics.

Led by its flagship enterprise, Pantaloon Retail, the group operates over 12 million square feet of retail space in 71 cities and towns and 65 rural locations across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30,000 people and is listed on the Indian stock exchanges. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail chain and Central, a chain of seamless malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of Indian bazaars with the choice and convenience of modern retail.

In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic expansion of a hypermarket. The first set of Big Bazaar stores opened in 2001 in Kolkata, Hyderabad and Bangalore. The groups speciality retail formats include, books and music chain, Depot, sportswear retailer, Planet Sports, electronics retailer, eZone, home improvement chain, Home Town and rural retail chain, Aadhaar, among others. It also operates popular shopping portal. Future Capital Holdings, the groups financial arm provides investment advisory to assets worth over $1 billion that are being invested in consumer brands and companies, real estate, hotels and logistics. It also operates a consumer finance arm with branches in 150 locations.

Customer Segment
Big Bazaar target to upper middle class and higher customers. The large and growing young working population is a preferred customer segment. Big Bazaar specially target working women and home maker who are the primary decision maker.

Mission & Vision

Future Group shall deliver Everything, everywhere, every time for every Indian Consumer in the most profitable manner. We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development

SWOT ANALYSIS
STRENGTHS
EVERY DAY LOW PRICING GOOD INFRASTRUCTURE CONSUMER PREFERENCES DIVERSE MARKET COVERAGE AWRENESS ABOUT THE BRAND HIGH AMONG MASSES SUB URBAN UNTAPPED MARKET ONE STOP CONCEPT UNKNOWN YET EVOLVING CONSUMER ORIENTATION CO BRANDING AND FRANCHISING FOR FASTER GROWTH

OPPORTUNITIES

SWOT ANALYSIS
WEAKNESS
LOW PERCEPTION AMONG CONSUMERS LESS AVAILABILITY OF STORES SUPPLY CHAIN BOTTLENECKS(FRAGMENTED MARKETS)

THREATS
NEW ENTRANTS AND FOREIGN PLAYERS UNORGANISED RETAIL MARKET

5 FORCES PORTER MODEL

RIVALRY AMONG COMPETITORS
RELIANCE,MORE,VISHAL,NEXT,SPENCERS

NEW ENTRANTS
WALMART,CARREFOUR,METRO,IKEA FOREIGN PLAYERS ALLOWED TO SOME EXTENT

BARGAINING POWER OF SUPPLIERS

SUPPLIERS HAVE A HUGE UNORGANISED SECTOR TO CATER TO

Contd
BARGAINING POWER OF CONSUMERS
PRICE SENSITIVE CONSUMERS MORE AVAILABLE CHOICES

THREAT OF SUBSITUTES
UNORGANIZED RETAIL

BCG MATRIX

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MARKETING
7 Ps ANALYSIS

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PRICING
iValue Pricing (EDLP) i Promotional Pricing Low Interest Pricing Psychological Pricing Special Event Pricing (Republic Day) i Differentiated Pricing Time Pricing i Bundling

PRICING COMPARISION

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TIME PRICING

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LOW INTEREST FINANCING

PSYCHOLOGICAL PRICING

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PROMOTION

SAAL KE SABSE SASTE 3 DIN FUTURE CARD (Discount Upto 3%) SHAKTI CARD JUNK SWAP OFFER BRAND AMBASSADOR: M.S. DHONI ADVERTISMENT (Print Ads, T.V., Radio) POINT OF PURCHASE PROMOTION GIFT TO EVEY 100th CUSTOMER (Seaso

BANNERS AND POSTERS

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PEOPLE
People Are The Customers Which Are The Biggest Asset Of A Company. Well Trained Staff. Appearance. Presently Around 10000 Workers Are Working And Around 500 Workers Are Recruited Every Month. High Security For Safety Of Customers.

Problems ahead
Reduction in consumer spending Slow construction of malls Difficulty in raising working capital High rentals Lowering margins New emerging competitors

THANK YOU