Why did Subhiksha failed ?

Retailing
Derived from the French word

retailer which means, to cut up".

It consists of the business activities

involved in selling goods and

services to consumers for their
personal, family, or household use.

Definition of Retailing
It is the last commercial
link in the

marketing channel and the point

where products finally reach their
users.
Retailing includes all activities
directly related to the sale of goods
or services to the ultimate customer
for personal non-business use.
Dictionary Definition: The selling of
goods to general public.

Retail Industry
The share of retail trade in the country's gross
domestic product (GDP) was between 810 per
cent in 2007. It is currently around 12 per cent,
and is likely to reach 22 per cent by 2010.

35 % Growth

6 % Growth

Indian Organized Retail

Industry

Indian Retail Industry

Commercial real estate services

company, CB Richard Ellis' findings

state that India's retail market is
currently valued at US$ 511 billion.
The Organized retail accounted for Rs

55,000 crore (about $12.4 billion) in the

year 2006 and still its just about only
4.6% of the total Indian Retail Value
that was about Rs 12,00,000 crore.

Prospects of Retail In
India
1
million new jobs in organized sector alone

in next 10 years.
India's overall retail sector is expected to
rise to US$ 833 billion by 2013 and to US$
1.3 trillion by 2018, at a compound annual
growth rate (CAGR) of 10 per cent.
Also, organised retail, which accounts for
almost 5 per cent of the market, is expected
to grow at a CAGR of 40 per cent from US$
20 billion in 2007 to US$ 107 billion by
2013.

The Case Study on

Subhiksha

Subhiksha-The
Introduction
Largest retail value chain in India with

1600 outlets started in 1997 .

From 150 stores in Sept 2006 all of which
were in Tamil Nadu the company grew
rapidly to over 1600 stores by Sept 2008
across the country.
The companys investors include Wipros
Azim Premji and
ICICI Prudential
Mutual fund apart from the ESOP Trust.

Business Vision &

Mission
Vision
To emerge as the largest retailer in
the 'Food Grocery Pharmacy' segment in all
the geographical regions we operate from.
Mission to deliver consistently better value

to Indian consumers, has guided Subhiksha

to deliver savings to all consumers on each
and every item that they need in their daily
lives, 365 days a year, without any
compromise on quality of goods purchased .

Product Portfolio
Supermarket:
The supermarket includes quality groceries,
packaged foods, cosmetics and toiletries,
household provisions, etc.
Fruits and Vegetables:
Includes fresh fruits and vegetables sourced
directly from farms on city outskirts by
Subhiksha and made available to the
consumers at very reasonable prices.
Consumers get fresh produce atbest prices.

Contd
Pharmacy:
Subhiksha stores generally have a in store
pharmacy which stores mostly basic
medicines. All medicines are made available to
consumers at a flat 10% discount.
Telecom:
Subhiksha is recently forayed into mobile
retailer business and offers handsets, recharge
cards and accessories from all leading cell
phone manufacturers at lower prices.

Retail Strategy
Subhiksha focuses on two factors for
its model.
These are called the two C's:
1. Criticality of Cost.
2. Convenience of Buying

Internal Analysis
Small Store/Cost Saving.
EDLP.
Lower Infrastructure Cost.
Centralized Purchasing.
Marketing Communication.
Introduction of Subshikham card.
Establishment of Home Delivery and

Online retail system.

In March 1997 opening of the first retail store in

Chennai,
with 5 lacs initial
investment.
March 99 14 stores in Chennai.
June 2000 50 stores in Chennai, ICICI ventures
joins Subhiksha.
June 2002 120 stores in whole of Tamil Nadu.
June 2006 420 stores in other big states in
India namely Gujarat, Delhi, Mumbai, Andhra
Pradesh and Karnataka.
Feb 2007500 stores across country
Dec 2007 1000 stores across India
October 2008 1600 stores across India

SWOT Analysis
STRENGTHS

Discount model
Strong Top management team
High Customer base
High Brand Value
Use of Information Technology

WEAKNESS
Lack of expertise in Indian
Retail environment
Low grade lower management
team
Strategy of debtled Rapid
expansion on a small equity
base
Long time taken in IT
Implementation

OPPORTUNITIES

THREATS

World's most lucrative retail

market
Heavy Investment industry
from FIIs and Venture Funds

Economic uncertainty and

Recession
Strong Competitors at National
and Regional Level
Price war and shrinking
margins

Huge No. of customers

Competitive Analysis
SR BRAND NAME
.
N
O

OUTLET
TYPE

LEVEL OF
OPERATION

OWERNSHIP

SPENCERS

SUPERMARKE
T

NATIONAL

RPG GROUP

RELIANCE FRESH

SUPERMARKE
T

NATIONAL

RELIANCE
GROUP

FOOD BAZAR

SUPERMARKE
T

NATIONAL

FUTURE
GROUP

MORE

SUPERMARKE
T

NATIONAL

ADITYA BIRLA

Comparison of Subhiksha
with other Retail
Product Range
Outlets
Positioning
Store Format
Strength
Price

Reasons for failure of

Subhiksha
Expanding the number of stores rapidly

without sufficient funds in hand.

Expansion of Stores without adequate

system control and IT Support.

Government Intervention.

Contd

Lack of strong HR policy and Staff.

Strong Competition.
Over confidence and Aggressiveness.

K
N
A
H

U
O
Y