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Case Study- Subhiksha: A Saga of Ups and Downs
Subhiksha: A Saga of Ups and DownsContents
Entering the retail market ten years ago:................................................................2 The expansion of the stores: ...................................................................................3Cut price strategy:...................................................................................................3 The triumphant journey of Subhiksha: ..................................................................... 3Risk in retailing and expansion ................................................................................4Supply chain woes bare Subhiksha shelves .............................................................5 Turndown began at Subhiksha: ................................................................................5References: ...........................................................................................................7
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 The views and opinions expressed in this Case Study are those of the author and donot necessarily reflect the views or opinions of any Retail Group India. The facts andfigures mentioned in this case may not reflect the actual figures of company. Thecase is meant solely for the purpose of academic use and study and not forcommercial use. For any info plc contact the author on Bindurathore@gmail.com.
Bindu Rathore
 
Case Study- Subhiksha: A Saga of Ups and Downs
“We are a golden egg laying duck, we are in trouble. We need their (
bankers and lenders
)support and upon getting it we will restart operations and repay all debt. It is not easy, but we have to make it happen,” says R Subramanian, Founder, Promoter, andManaging Director of Subhiksha Trading Services, which owns Subhiksha– theIndia’s largest (in terms of number of stores), food and grocery, small format,neighbourhood, convenience, discount retail chain. Subhiksha (prosperity) whichmeans prosperity in Sanskrit is on the verge of bankruptcy today, as on 2 Feb, 2009.
Entering the retail market ten years ago:
Subhiksha in Sanskrit means “the giver of all good things in life”.Subhiksha with a pioneering approach and giving new definitions to the retailingventured into the Indian retail industry. Since, their predecessors are already existedand doing well in the market, they had to come up with an innovative approach tocompete with them. They have made an extensive research on customer behavior and
Bindu Rathore
Subramanian wasn't thinking this big when he kickedoff Subhiksha-a retail value chain in 1996. In fact, hewasn't even thinking retail when he passed out of IIMAhmadabad in 1989. After a two-week stint at his firstemployer Citibank, Subramanian joined his mentor(late) S. Vishwanathan, who then ran Enfield Industries.At Enfield, Subramanian helped professionalize ahitherto family-run set-up and rope in Eicher as a buyer. After working for two years at Eicher, he startedhis first company called Viswapriya, and made profitsu to 25 crores, until the share market collased in 1995.
 
Case Study- Subhiksha: A Saga of Ups and Downs
found that
offering the branded goods at a lower price than their competitors couldmake them stand in the competitive retail industry.
He wanted to
"pioneer a new trend
" because of what he had found out about the retailindustry: that the No.1 retailer makes the most money, the No. 2 makes some money,while the third (and the others) has to eventually shut shop.In the year
 
1997, Subhiksha opened its first store at Thiruvanmiyoor in Chennai with aninvestment of around Rs 4-5 lakh, with the theme,”
why pay more when you can get itfor less at Subhiksha
”
The expansion of the stores:
By March 1999, Subhiksha started expanding rapidly. From 14 stores, it was expandedto 50 stores by June 2000. In the next 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 asignificant consumption market. Telecom companies are their role model. Theyemployed capable regional managers and expanded. In 2004-05, they decided to have420 stores in places like Gujarat, Delhi, Mumbai, Andhra and Karnataka by 2006. In2005, Subhiksha started recruiting people in various regions.Subhiksha is currently operating over 1,500 supermarket stores across more than 100cities selling food, grocery, drugs, and telecom products across INDIA
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 adeliberate strategy. Shops are located not on the main road, but just off it, to takeadvantage of vastly lower rentals. The catchment area of customers is rarely beyond atwo-km radius, since its customers usually come on two-wheelers or on foot.
The triumphant journey of Subhiksha:
Until little over two years ago, Subhiksha was only a local player with 150 stores(September 2006) operating mainly in Tamilnadu. The retailer began growing rapidlyoutside the state, soon after infusion of private equity capital by I-venture, the venturecapital arm of ICICI. I-Venture took 24 per cent stake in the company’s equity,which until then was primarily held by Subramanian and his associates.
Bindu Rathore
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B V Krishna Mohan

there is no bond between employee and employer

reply09 / 13 / 2010
nishantagr14

i want subhiksha case study with soloution

reply03 / 09 / 2010
siren5562

hi!!!!bindu good job...thanks

reply12 / 11 / 2009
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