PowerPoint Presentation: Retailing Strategy @ To be presented by:- Abhijit, Abhishek, Harshvardhan, Koushik, Mohd. Zia, Raman Pathak Let us understand the Retailing… : Let us understand the Retailing… It is defined as a set of activities or steps used to sell a product or a service to consumer for their personal or family use. The word ‘retail’ is derived from the French word retailing , meaning ‘to cut a piece of ’ or ‘to break bulk’ . Indian Retail Industry: Size 2008 2010 % Change Estimated size of retail in India (in $bn) 353 416 18 Share of organized retail (%) in India 7 12 71 Size of organized retail in India (in Rs) 78,300 Cr 2,30,000 Cr 194 Source: http://www.indiaretailing.com/india-retail-report.asp Indian Retail Industry Existing Organized Retailing Formats in India: Existing Organized Retailing Formats in India Branded Stores Hyper Markets Super Markets Departmental Stores Specialty Stores Convenience Stores Shopping Malls Discount Stores PowerPoint Presentation: Retail Format Hypermarket Founded 2001 Headquarters Jogeshwari, Mumbai Industry Retail Promoter Kishore Biyani Parent Pantaloon Retail India Ltd. Punch line ‘ Is se sasta aur accha kahin nahin’ Beat the Rising inflation! Big Bazaar is the solution! Customer Segmentation: Customer Segmentation One stop shopping at discounted prices. Provides Best Products at the Best Prices. Targets price conscious majority segment of customers. Big Bazaar targets higher 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. Life Cycle: Life Cycle Decline Introduction Growth Maturity Sales Time Positioning: Positioning High Service High Price Low Price Low Service Retail Marketing Mix: Retail Marketing Mix Product Promotion Price Place Process People Physical Evidence 7 P s Product Mix: Product Mix Farm Products Chill Station Food Furniture Fashion & Jewellery Apparels Electronics Personal & Home Care Child Care & Toys Product Mix: Product Mix Various in-house brands are promoted. (Private Labels) Products of all the major brands are available at Big Bazaar Provides Best Products at the Best Prices. Big Bazaar sold over 300,000 pairs of jeans, 50,000 DVD-players and 25,000 microwave-ovens. In all, the fashion, electronics and travel segments made up about 70% of sales. Last year, these categories made up about 63%. Price: Price The tag-line is “Is se sasta aur accha aur kahin nahi”. They work on the model of economics of scale. There pricing objective is to get “Maximum Market Share”. The various techniques used at Big Bazaar are: - Value Pricing Promotional Pricing Low interest financing Psychological discounting Special event pricing Differentiated Pricing Time pricing Bundling Price: Price Value Pricing (EDLP – Every Day Low Pricing): Big Bazaar promises consumers the lowest available price without coupon clipping, waiting for discount promotions, or comparison shopping. Promotional Pricing: Big Bazaar offers financing at low interest rate. The concept of psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Big Bazaar also caters on Special Event Pricing (Close to Diwali, Gudi Padva, and Durga Pooja). Differentiated Pricing: Time pricing, i.e., difference in rate based on peak and non-peak hours or days of shopping is also a pricing technique used in Indian retail, which is aggressively used by Big Bazaar. Bundling: Selling combo-packs and offering discount to customers. The combo-packs add value to customer. Price: Price Differential Pricing Price: Price Differential Pricing Price: Price Psychological Pricing Price: Price Time Pricing Value Pricing Price: Price Bundling Pricing Place: Place 148 Stores in 70 cities across India, covering an operational retail space of 6 million square feet. High street area of cities & with approachable destination. Place: Place Supply Chain Management The food supply chain is complex and difficult to manage due to its perishable nature and short shelf life of the products as compared to other supply chains like electronics, home needs, consumer durables etc. It also requires a robust infrastructure of warehouses and transportation network connecting suppliers, manufacturers, distributors and retailers. The complexity of food supply chain increases further because of the below mentioned parameters. Food safety requirements Regulatory requirements Short shelf life of products leading to expiry and wastage Product recalls Product traceability requirements Effective handling of customer complaints High order frequency and low volumes Promotion: Promotion “Star Parivar Collection” Promotion: Promotion Promotion: Promotion Saal ke sabse saste 3/4 din ( 13 / 14 – 16 August and 23 / 24 – 26 January) Future Card (3% Discount) Shakti Card Brand Endorsement by M.S.Dhoni & Asin Exchange Offer – ‘Junk Swap Offer’ Point-of-Purchase Promotions Promotion: Promotion Big Bazaar launches ‘Sarodia Utsav’ Some special Big Bazaar offers for Pujo 2009: Shop for Rs 499/- & get reimbursement of your Up & Down Local Train Fare Shop for Rs.2999/- & get Timex Pair Watch of MRP 1490/- for 599/- Shop for Rs 999/- & participate in lucky draw Mega Prize- 2 BHK Flat in Greenfield city Bumper prize: 12 bikes Promotion: Promotion Big Bazaar’s ‘Sabse Saste 4 Din’ is back with ‘abundant’ deals The years most economical four days of shopping Many exciting offers across categories and price points Consumer to get ‘rock bottom prices, mega deals & discounts’ Big Bazaar presents ‘Super hits of 2009’ The Best of 2009 offers - A special festive reward for customers This is a final chance for customers who missed the bus on Big Bazaar’s most sought after offers Sabse Saste 3 Din, Mahabachat and Maha Exchange. Promotion: Promotion Bring anything old and get anything new’ at Big Bazaar's 'The Great Exchange Offer’ The value will be in the form of coupons, which can then be used by customers to get extra savings of 20-25% over & above the special offers running in-store. Big Bazaar introduced Family Centre This Family Center aims to build and nurture relationships with customers of multiple communities, be they Bengalis, Christians, Muslims, Marwaris…becoming the preferred shopping destination for their entire family. Promotion: Promotion Co-Branding – ICICI Bank Ltd. Exclusive Benefits No Finance charges on EMI Purchases at Big Bazaar. On a purchase of Rs.1500 and above in a single transaction, you can pay back the amount in 3 equal monthly installments, without incurring any financing charges. You also get 1 Reward Point per Rs 100 of EMI purchase (This scheme is optional and has to be availed before using the Credit Card for the purchase, at predestinated ICICI Bank terminals). Get Voucher worth Rs 250 to be redeemed against purchase of Rs.500 or more at any Big Bazaar Outlet on payment through the ICICI Bank -Big Bazaar Credit Card. Get 1 Kg sugar FREE per month. Promotion: Promotion Co-Branding – ICICI Bank Ltd. Exclusive Benefits 6 reward points on every Rs. 100/- spent at Big Bazaar (Except EMI Purchase) 1 reward point for all non Big Bazaar purchases. Special payment counters for Cardholders. Priority entry to Cardholders during high traffic. Special preview day during annual sale at Big Bazaar. Exclusive offer for Cardholders from time to time. Regular features of ICICI Bank Sterling Silver Card and facilities of Big Bazaar. All Rewards points earned can be converted into Big Bazaar Vouchers. Promotion: Promotion Co-Branding – ICICI Bank Ltd. Other Benefits Comprehensive Insurance for primary Cards upto Rs. 10 lakhs. Baggage insurance upto Rs. 10,000. Hospitalization Benefit policy upto Rs.25,000. Purchase protection of Rs.20,000. Comprehensive travel related insurance. Zero Lost Card liability. Dial a draft at 1% fee. Lifetime Balance Transfer offer: 0.75% for first 6 months (9% p.a.), followed by 1.49% (17.88% p.a.) thereafter. Comprehensive Travel Benefits. Accepted at over 22 million merchant establishments globally. Promotion: Promotion People: People At the senior management level, the group hired high profile executives from reputed organizations like Goldman Sachs , Coca-Cola India, PRIL also tied up with a few management schools to create a management talent pool for the lower levels. Well-trained staff, the staff employed by Big-Bazaar are well-suited for modern retail. Employ close to 30,000 people and employ around 500 more per month. Well-dressed staff improves the overall appearance of store. Use scenario planning as a tool for quick decision making multiple counters for payment, staff at store to keep baggage and security guards at every gate, makes for a customer-friendly atmosphere. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. Process: Process Big Bazaar has implemented SAP with an investment of $10 Million in keeping pace with the technology and it is currently in the process of setting up a SAP consultancy software. SAP will be helpful in building robust transaction management system. Multiple counters with trolleys to carry the items purchased. Proper display / posters of the place like (DAL, SOAP, etc.). Home delivery counters also started at many places. Process: Process Baggage Counter Inside the Store Take Trolley Selection of Merchandise Billing Counter Exit Process at Big Bazaar Store – From Entry Till Exit In addition, to facilitate the billing process, the store has numbers of check-out and Express counters. Process: Process Physical Evidence: Physical Evidence Big Bazaar stores are normally ‘U shaped’ and well planned & designed Stylized to provide ample space to move around the store lay out has been designed to give a very contemporary and international look with wide aisle for easy movements. Products are displayed and highlighted with customer friendly signage's, lighting and fixtures to enable hassle-free shopping for all. Products in Big Bazaar are properly stacked in racks. Throughout the store there are boards/written displays put up which help in identifying the location of a product. appropriate racks. Physical Evidence: Physical Evidence Physical Evidence: Physical Evidence Strategies @: Strategies @ Influence of Sarvana Stores Located in Theyagraya Nagar, Chennai Many people think that Big Bazaar was inspired by Wall-Mart but the truth is that Kishore Biyani and his team members are neither inspired by US ways of doing retailing nor they have been to US much. The credit for foundation and inspiration goes to Saravana Store, a family-run 25-years-old store, whose philosophy was – low margin, high turnover. In that store, food, groceries, clothes, everything had a separate section. It had around 120 people just to manage crowd. The single shop was doing business of more than INR 200 Crore per year. This shop was the template for Big Bazaar. Strategies @: Strategies @ Right Product Mix: To overcome lower gross margins of 10 to 12% on Food & Grocery (F&G), retailers are trying to optimize the product mix of F&G and General merchandise. A product mix comprising 40% food and 60% of non-food could enhance gross margins to a respectable 18-19%. Big Bazaar is able to do even better with 63% of non-food. More Non-food Display: Higher non-food sales are achieved by allocating higher shelf and display space. Food display space is restricted to around 20%. This works, because shoppers, in any case, are there to shop for food items. Strategies @: Store Labels: Hypermarkets are also working hard to discourage sales of branded products. They are promoting their own labels, though, it is not easy to promote them beyond a point due to strong customer brand loyalties for a class of goods, such as, FMCG. Big Bazaar has been able to touch only 15%. Increased Volumes: “ Suppliers themselves are willing to give away more if the volumes are high enough ”. Bypassing Middlemen: Big Bazaar is also striving hard to keep costs in check by improving sourcing efficiencies. By pruning on the middleman and reaching farm gates, Big Bazaar is able to improve margins. “ There are too many middlemen ” says Mr. Kishore Biyani. Strategies @ Strategies @: Real Estate Game: For a retailer, location is one of the most important things. According to Kishore Biyani, real estate cost should be less than 5% of total sales of store in order to provide maximum benefits to customer. The strategic decisions to secure spaces before other retailers join in have resulted in cost-saving. Also, it has created early presence in market. Nurturing Relationships: Kishore Biyani follows strategy to develop trust and nurture relationships with suppliers. This trust led to strategically correct decisions most of the time. Whoever works with Future Group, either leaves in initial deals or continues forever. Back-end Operations, Supply Chain : Harvard Business School just did a case study on Future Group’ Supply Chain and it says that Future Group’ is the most cost-effective supply chain in the world. India may not have a modern supply chain but it definitely has a cost-effective one. Strategies @ Brick and Click Model: Brick and Click Model Guerilla Marketing Strategy: Guerilla Marketing Strategy Future Group have come up with 3 catchy/cocky and cheeky ad campaigns which surely do catch our eyes and surely one can’t resist appreciating the same. Keep West-aSide. Make a smart choice! Change Your Lifestyle. Make a smart choice! Shoppers! Stop. Make a smart choice! Guerilla Marketing Strategy: Guerilla Marketing Strategy Conclusion: Conclusion Over emphasize on promoting private labels (Big Bazaar) could prove counterproductive. Changes in pricing strategy has vital role in retailing. Proximity & Location of the Store affects the overall performance of a retail outlet. Supply Chain Management is the key of success in retailing. Indirectly or Directly Co-Branding also gives the benefits. Process should be such that reduces the transaction time. Cost of Real Estate & Employees has to be controlled. Recommendations: Recommendations Big Bazaar should try and increase the current market penetration.` The Big Bazaar needs to have a robust supply chain network; the big bazaar should concentrate in enhancing its edge on supply chain network. It should try to develop robust home delivery mechanism in its current area of operation. 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