Big Bazaar Challenges Ahead

Big Bazaar Challenges Ahead
Big Bazaar: Challenges Ahead
Members
Ambica Prasad Patnaik PGP/14/192

Gopi Krishna PGP/14/196
Naveen Kiran PGP/14/220
Pawan Jagnik PGP/14/224
Rajkumar Deegwal PGP/14/233
Satya Sekhar Babu.K PGP/14/240
Marketing Project, Section –D, Group-1 Page 1

Contents
Contents................................................................................................................ 2
Executive Summary...............................................................................................3
India as an attractive proposition for retail............................................................4
Pantaloon Retail (India) Limited (PRIL)...................................................................6
Future Value Retail Limited (FVRL)........................................................................6
Situational Analysis................................................................................................7
4 C’s Analysis......................................................................................................7
Market Opportunities...........................................................................................14
SWOT Analysis..................................................................................................14
Market Objective..................................................................................................19
Retail Market Growth in the World....................................................................19
Indian Retail Bazaar..........................................................................................20
Window Opportunity for India in Retail Market.................................................21
Sales Projections...............................................................................................22
Place................................................................................................................. 23
Promotion......................................................................................................... 27
Price.................................................................................................................. 28
Product............................................................................................................. 29
References........................................................................................................... 30

Executive Summary
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.
The origins of retailing in India can be traced back to the emergence
of Kirana stores and mom-and-pop stores. These stores used to cater to
the local people. Eventually the government supported the rural retail and
many indigenous franchise stores came up with the help of Khadi &
Village Industries Commission. The economy began to open up in the
1980s resulting in the change of retailing. The first few companies to
come up with retail chains were in textile sector, for example, Bombay
Dyeing, S Kumar's, Raymonds, etc.With the passage of time new entrants
moved on from manufacturing to pure retailing. Retail outlets such as
Foodworld and Big Bazaar in FMCG,Planet M and Musicworld in Music,
Crossword in books entered the market before 1995.
The retail industry is one of the biggest money spinners in the world,
notching up US$ 6.60 trillion in turnover (Source: Euromonitor Study).

India as an attractive proposition for retail
In India the sector is set to become a US $450 billion market by 2015 and
is set to expand to 14-18% by 2015.Despite its massive size, the business
is almost entirely controlled by the unorganised sector. While organised
retail makes up 70% to 80% of all retail business in developed countries,
in India it is pegged at a lowly 2% (Source: Crisis Report on India’s Retail
Industry).India has been rated as the most attractive retail destination in
the world by AT Kearney for the third year in a row; the company’s annual
Global Retail Development Index (GRDI) ranks 30 emerging countries,
selected from a universe of 185 countries, on a 100 point scale (based on
country risk, population size, and wealth) to find out the relative
attractiveness of these markets.

India is poised to become one of the hottest destinations in the world

because of following favorable economic growth
Big Bazaar
Big Bazaar is a chain of department stores in India, currently with 149

outlets, has presence in metros as well as small cities. 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. The first Big Bazaar store, with an area of about
24,000 square feet, opened on VIP Road, Kolkata in August 2001.Currently
Big Bazaar stores are located only in India. This large format store
comprise of almost everything required by people from different income
groups. It varies from clothing and accessories for all genders like men,
women and children, playthings, stationary and toys, footwear, plastics,

home utility products, cosmetics, crockery, home textiles, luggage gift

items, other novelties, and also food products and grocery. The added
advantage for the customers shopping in Big Bazaar is that there are all
time discounts and promotional offers going on in the Big Bazaar on its
saleable products. Shopping in the Big Bazaar is a great experience as
one can find almost everything under the same roof. It has different
features which caters all the needs of the shoppers. Some of the
significant features of Big Bazaar are:
• Food Bazaar which is a grocery store
• There is a games zone specially meant for the amusement of the

kids
• Furniture Bazaar which deals with furniture
• Electronics Bazaar which holds electronic goods such as TVs,

computers, wash machines, etc.
• FutureBazaar.com which is an online shopping portal wherein one

can shop any product of the Big Bazaar stable
Pantaloon Retail (India) Limited (PRIL)
Pantaloon Retail (India) Limited is a leading retailer with a turnover of Rs.

9786.94 crore for the financial year 2009-10. Headquartered in Mumbai,
the company operates through primarily the Lifestyle and Value formats
through multiple delivery mechanisms and lines of business — some of
them being, fashion, food, general merchandise, home, leisure and
entertainment, financial services, communications and wellness.
The company has about 591 stores in over 90 cities across the country,
constituting 13.9 million square feet of retail space. The company caters
to the Lifestyle ‘segment through its 48 Pantaloons Stores and 4 Central
Malls, as well as its other concepts. In Value‘ retailing it is present through
51 Big Bazaar hypermarkets, 53 Food Bazaars and 5 Fashion Stations, and
other delivery formats.
Future Value Retail Limited (FVRL)
Future Value Retail Limited founded in 2007 is a wholly owned

subsidiary of Pantaloon Retail (India) Limited. This entity has been
created keeping in mind the growth and the current size of the company’s
value retail business, led by its format divisions, Big Bazaar and Food

Bazaar.Big Bazaar and Food Bazaar constitutes about 62% of PRIL sales
and about 90% of FVRL sales The company operates 120 Big Bazaar
stores, 170 Food Bazaar stores, among other formats, in over 70 cities
across the country, covering an operational retail space of over 6 million
square feet.
Situational Analysis
4 C’s Analysis
Customers
The customer base of Big Bazaar consists of mainly the upper class and
the middle class. India’s National Council for Applied Economic Research
estimated that the nation’s middle class population consists of around 17
million households – 90 million people – with annual earnings ranging
between $4,500 and $22,000. An additional 287 million could be termed
as ‘aspirers’ or those who might come into the middle class segment in
the near future. Rising incomes are impacting retail growth in India as
these groups tend to spend more on upgrading and diversifying their
lifestyles.
Competitors
Reliance Retail

Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead

Reliance Group’s foray into organized retail. Since its inception in 2006,
Reliance Retail Limited (RRL) has grown into an organization that caters to
millions of customers, thousands of farmers and vendors. Based on its
core growth strategy of backward integration, RRL has made rapid
progress towards building an entire value chain starting from the farmers
to the end consumers.
In the last year, Reliance Retail Limited (RRL) continued to fulfill its
commitment of enriching Indian consumer’s shopping experience and
providing quality merchandise at an attractive value proposition. More
than 3 years into operation, RRL has now expanded its presence in more
than 85 cities across 14 states in India. RRL forged ahead with its
expansion plans and rolled out stores across the country. RRL’s footprint
now spans a network of more than 1,000 stores.
RRL operates several ‘value’ & ‘specialty’ formats. The ‘value’ formats
that RRL operates are: ‘Reliance Fresh’, a neighborhood concept,
‘Reliance Mart’, an all under one roof supermarket concept & ‘Reliance
Super’, a mini-mart concept. The ‘value’ formats offer a wide range and
assortment of products required for daily household needs. The ‘specialty’
formats are: ‘Reliance Digital’, a consumer durables & information
technology concept, ‘Reliance Trends’, an apparel & accessories concept,
‘Reliance Wellness’, a health, wellness & beauty concept, ‘iStore by
Reliance Digital’, an exclusive Apple products concept, ‘Reliance
Footprint’, a footwear concept, ‘Reliance Jewels’, a jewellery concept,
‘Reliance TimeOut’, a books, music & entertainment concept, ‘Reliance
AutoZone’, an automotive products & services concept and ‘Reliance
Living’, a home ware, furniture, modular kitchens, furnishings concept.
Aditya Birla Retail Ltd. (ABRL)
A US$ 29 billion corporation, the Aditya Birla Group is in the League of

Fortune 500. It is anchored by an extraordinary force of 130,000
employees, belonging to 40 different nationalities. In the year 2009, the
Group was ranked among the top six great places for leaders in the Asia-
Pacific region, in a study conducted by Hewitt Associates, RBL Group and
Fortune magazine. In India, the Group has been adjudged the best
employer in India and among the top 20 in Asia by the Hewitt-Economic
Times and Wall Street Journal Study 2007.
Over 60 per cent of the Group's revenues flow from its overseas
operations. The Group operates in 26 countries – India, UK, Germany,
Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Australia, USA,

Canada, Egypt, China, Thailand, Laos, Indonesia, Philippines, UAE,

Singapore, Myanmar, Bangladesh, Vietnam, Malaysia, Bahrain and Korea.
ABRL is among the top three supermarket chains in the retail business of
India. Till end-September 2009, ABRL had set up 640 supermarkets and
five hypermarkets. All the supermarkets are branded ‘More’ and the
hypermarkets are branded ‘More Megastore’. The company has around
11,000 employees and has a pan-India presence. ‘More’ supermarkets are
neighborhood stores with the core proposition of offering value,
convenience and trust to the customers and averaging 2,500 sq ft area.
The hypermarkets are self-service superstores offering value and range in
food and non-food products and services at a single location.
Spencer's Retail Limited
Spencer's Retail Limited is one of India's largest and fastest growing multi-
format retailers with 250 stores, including 36 large format stores across
66 cities in India. Spencer's focuses on verticals like food and grocery,
fruit and vegetables, electrical and electronics, home and office
essentials, garments and fashion accessories, toys, food and personal
care, music and books. Established in 1996, Spencer's has become a
popular destination for shoppers in India with hypermarkets and
convenient stores catering to various shopping needs of its large
consumer base.
The Spencer's Hyper-stores are destination stores, of more than 15,000

sq. ft in size. They offer everything under one roof. The merchandise
ranges from fruits & vegetables, processed foods (Ready to Eat, Ready to
Cook and FMCG products), specialty foods including international, sugar
free, organic foods, etc...groceries, meat, chicken, fish, bakery, chilled and
frozen foods, garments, consumer electronics & electrical products, home
care, home décor & home needs, office stationeries, soft toys. Besides,
the stores also comprise book & music retailing, electronic gadgets and IT
accessories. On an average, a Spencer's hyper stocks 70,000 SKUs across
35,000 items.
The Spencer's stores are neighbourhood stores ranging from 1500 less
than 15000 sqft. These stores stock the necessary range and assortment
in fruit and vegetables, FMCG food and non-food, staples and frozen foods
and cater to the daily and weekly top-up shopping needs of the consumer.

Some of these stores which have floor area of more than 10,000 sq ft
sometimes offer home care products; personal care products, bakery,
chilled and frozen food; baby care, basics in garments and limited range
of electronics and electrical.
Shoppers Stop
Shoppers Stop is one of the leading retail stores in India. Shoppers Stop
began by operating a chain of department stores under the name
“Shoppers’ Stop” in India. Currently Shoppers Stop has 33 stores across
the country and three stores under the name ‘HomeStop’. Shoppers Stop
has also begun operating a number of specialty stores, namely Crossword
Bookstores, Mothercare, Brio, Desi Café, Arcelia.
Shoppers Stop retails a range of branded apparel and private label under
the following categories of apparel, footwear, fashion jewellery, leather
products, accessories and home products. These are complemented by
cafe, food, entertainment, personal care and various beauty related
services. Shoppers Stop launched its e-store with delivery across major
cities in India in 2008. The website retails all the products available at
Shoppers Stop stores, including apparel, cosmetics and accessories.
E-tailing
E-retailing, most commonly known as e-tailing is nothing but shopping

through the Internet and other media forms. The Ecommerce market is
expected to touch 9210 Crore INR in 2007-08, E Tailing or E RE-tailing
market is only about 1150 Crore INR according to a survey conducted by
Internet and Mobile Association of India and Indian Market Research
Bureau (IMRB).
E Bay is heading the race of online retailers. In this race it has become
very difficult to determine the online retail store that makes the products
available at convenient and cheap rates. From this very difficulty has
cropped up comparison sites. Comparison is done on the basis of an index
which is constructed from the data available from different shopping sites.
The bechna.com and the ultop.com are such sites though many more
sites are entering this zone.
There are divergent views on the future of e-retailing in India. Some

experts are of the opinion that the giant, big brand retailers would
dominate the small ones due to their wider investment capacities. It would
be next to impossible for the small retailers and the kiranas to prove their
existence in the battlefield of online retailing. Another viewpoint is that
there would be an exponential growth in the online retailing business in
India.

Bharti Walmart Private Limited
Bharti Walmart Private Limited is a joint venture between Bharti

Enterprises, one of India's leading business groups with interests in
telecom, agri-business, insurance and retail, and Walmart, the world’s
leading retailer, renowned for its efficiency and expertise in logistics,
supply chain management and sourcing. The joint venture is establishing
wholesale cash-and-carry and back-end supply chain management
operations in line with Government of India guidelines. Under the
agreement, Bharti and Walmart hold a 50-50 stake in Bharti Walmart
Private Limited. The first wholesale cash-and-carry facility named “Best
Price Modern Wholesale” opened in Amritsar in May 2009.
Best Price Modern Wholesale store is a one-stop shop that meets the day-
to-day needs of restaurant owners, hoteliers, caterers, fruit and vegetable
resellers, kiranas, other retail store owners, offices and institutions. The
store offers an assortment of approximately 6,000 items, including food
and non-food items, which are available at competitive wholesale prices,
allowing retailers and business owners to lower their cost of operations.
More than 90 percent of these goods and services are being sourced
locally; thereby helping keep costs to a minimum, adding to the growth of
the local economy and creating job opportunities, with the cash and carry
store directly employing more than 200 local people. A typical wholesale
cash-and carry facility will stand between 50,000 and 100,000 square feet
and sell a wide range of fruits and vegetables, groceries and staples,
stationery, footwear, clothing, consumer durables, and other general
merchandise items.
Company
Big Bazaar is India’s first hypermarket chain launched in 2001. Big Bazaar
is not just another hypermarket. It caters to every need of your family.
Where Big Bazaar scores over other stores is its value for money
proposition for the Indian customers.
At Big Bazaar, the best products at the best prices are guaranteed. With
the ever increasing array of private labels, it has opened the doors into
the world of fashion and general merchandise including home furnishings,
utensils, crockery, cutlery, sports goods and much more at prices that will
surprise you.

Big Bazaar has tied up with ICICI bank to produce the ‘Retail Credit Card’
to provide a plethora of offers to the customers each time they visit the
supermarket.
Context
The retail scenario is one of the fastest growing industries in India over
the last couple of years. India retail sector comprises of organized retail
and unorganized retail sector. Traditionally the retail market in India was
largely unorganized; however with changing consumer preferences,
organized retail is gradually becoming popular. Unorganized retailing
consists of small and medium grocery store, medicine stores, subzi mandi,
kirana stores, paan shops etc. More than 90% of retailing in India fall into
the unorganized sector, the organized sector is largely concentrated in big
cities. Organized retail in India is expected to grow 25-30 per cent yearly
and is expected to increase from INR 35,000 crore in 2004-05 to INR
109,000 crore ($24 billion) by 2010.
According to the 8th Annual Global Retail Development Index (GRDI) of AT

Kearney, 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.
According to a report, the India retail industry is expected to grow to US$

700 billion by 2010. By the same time, the organized sector will be 20% of
the total market share. It can be mentioned here that, the share of
organized sector in 2007 was 7.5% of the total retail market.
PEST Analysis for Organized Retail
Political factors
Barring the long overdue decision on FDI in 'single-brand retail', the

official economic policies have favored the retail sector. In January 2006,
the Union Cabinet approved a major rationalization of the policy on FDI in
retail to further simplify procedures for investing in India and to avoid
multiple layers of approvals required in some activities.
Till now, Government approval was required for FDI in wholesale cash-
and-carry trading and FDI beyond 51% in export trading. To facilitate
easier FDI inflow, instead of having to seek FIPB approval, FDI up to 100%

will now be allowed under the automatic route for cash and carry
wholesale trading and export trading.
The Cabinet has also allowed FDI up to 51% with prior Government
approval for retail trade in 'single brand' products with the objective of
attracting investment, technology and global best practices and catering
to the demand for such branded goods in India. Still, are restrictions on
FDI in retail continue, but the common channels for entry of foreign
retailers are through strategic licensing and franchising arrangements,
besides cash-and-carry wholesale trading.
Economic factors
The year 2009 saw a significant slowdown of GDP’s growth rate to 6.8%.
The GDP is expected to grow at 8.5% during the fiscal 2010-2011 as
stated recently by the Finance Minister. The non-banking finance
companies provide much needed funds for the overall growth of retail
sector. Their focus on the growing retail market and their experience in
managing the retail portfolio has helped in their performance. The
financing for the non-corporate sectors like trade is mainly from private
money markets which offer higher interest rates.
India has one of the youngest populations in the world with 54% of the
population below the age of 25 and strong growth is expected to continue
in this age bracket. Discretionary spending has seen a 16% rise for the
urban upper and middle classes and the number of high-income
households has grown by 20% year on year since 1995-96.
Social factors
The urban customers are undergoing drastic changes in their lifestyles.

This generation is starting to make exceptional amount of money at a
relatively younger age due to the overall growth of the IT sector in India.
The organized sector is expected to grow at a good pace along with the
GDP due to the changing lifestyles and burgeoning incomes.
Technological factors
It is estimated that over $2.5 billion will be spent on IT in the Indian retail
sector by 2010. Over 40% of this will be spent on software and services.
The supply chain managements systems have been improving at a fast
pace. The RFID (Radio frequency identification) and the Bar code
technology are being extensively used to fasten up the sales process at
the outlets. This has improved the operational efficiency through better
management of supply chain, inventory and store.

Market Opportunities
SWOT Analysis
Strengths
Big Bazaar’s success and continuous growth in the Indian organized retail
market can be attributed to a number of factors, some of which mimic the
strategies of large retailers in the west and others that have been
completely tailored to the Indian market.
1) Versatile Retailing
Big Bazaar’s policy of comprehensive experimentation has given it an
important advantage. Intentionally or unintentionally, Big Bazaar has
developed a versatile retail presence. Indian consumers see Big Bazaar as
an exclusive brand retailer, discount retailer, specialty retailer and food
retailer all at once. The company has managed to avoid retail stereotypes
and the insular strategies that result from catering to them. So while Wal-
Mart is seen as a discount store, Safeway is considered a food retailer and
Ikea is known as a furniture seller, Big Bazaar is all of these at once. While
this has proven to be a successful bet for the company, it is not entirely a
blind one. In a country where unorganized retailers, who have no co-
ordination between themselves, control 98% of the market, versatile
retailing might be the best way to go. Big Bazaar is essentially an
organized retailer in the disguise of a large number and variety of
unorganized retailers. This again represents the company’s unique
understanding of the Indian scenario.
2) Ground-up Development
Big Bazaar’s major advantage over current and new competitors in the
retail sector has been its unique understanding of the Indian organized
retail market with all its shortcomings and challenges. By creating a retail
business from the ground-up and expanding rapidly, Big Bazaar has
followed a Wal-Mart-sequel pattern of growth. It decided to experiment
with as many retail formats, 9 product-mixes and brands as was possible
in order to gain maximum knowledge about the uncertain Indian
organized retail sector and get a leg-up on any possible competition. In
fact, current entrants in the organized retail market not only have to learn
the opes of the unique Indian organized retail sector, but also have to find
a way to combat Big Bazaar’s dominant market share in almost all forms
of organized retail-an uphill task for any competitor, regardless of size.
3) Multiple Brands
Big Bazaar adopted itself to the Indian market rather than attempting to
copy a Macy’s or a Wal-Mart and follow a cookie-cutter model. It

experimented with a variety of products. From men’s wear the company

has moved on to experiment with retailing furniture, sportswear, kitchen
appliances, food, electronics and children’s apparel. Big Bazaar has also
gone a step further by experimenting with brands as well. It has
introduced a number of its own brands, a successful strategy that has
worked in stores like Target and Wal-Mart.
For example, it has experimented with launching clothing lines based on
famous Indian Bollywood movies. It has also introduced several clothing
lines of its own. Within the brand retailing space, Big Bazaar has also tied
up with some of India’s most popular brands like Gini, Puma, Adidas, etc
to sell them in their stores. Rather than attempt to compete with existing
popular brands the company has decided to partner with major Indian
brands and leverage the success of these brands in the ambiguous Indian
market. For whatever reason these brands have achieved success and a
loyal following; Big Bazaar’s move is sure to bring in more customers and
retain them. With the pace at which Big Bazaar is moving, it is likely by
the time new entrants figure out their strategy, Big Bazaar would have
made the several sectors of organized retail in India out of anybody’s
reach.
4) Winning Team
While Big Bazaar has achieved much of its success on the back of its
experimentation policy, it has also made some great recruiting decisions
that have put the right people in charge of the right departments (See
Exhibit 17 for Pantaloon’s Management Team and their diverse
experience). The company understood the absence of any real knowledge
or experience-base in the organized retail market. Instead of head-hunting
people with pure retail experience, the company has poached a number of
highly experienced managers and executives from a number of diverse
and successful Indian companies. Their knowledge about the Indian
business environment and supply-chain dynamics as well as experience of
launching products in the country and adapting strategies to the 10
unique tastes of the Indian consumer have been key to Big Bazaar’s
success. The company understood the core competencies required to
dominate in the untapped organized retail sector and made hiring
decisions accordingly.
Weaknesses
1) Inventory Management
One of the key weaknesses of Big Bazaar is Weak Inventory Management.

As inventories are the least liquid form of the asset, a high inventory

turnover ratio is generally positive. In contrast, Big Bazaar’s inventory

turnover ratio declined from 4.2 times in FY2004 to 3.5 times in FY 2008.
Further, the inventory turnover days of the company increased from 86
days in FY2004 to 102 days in FY2008. Declining inventory turnover ratio
and increasing inventory turnover days indicates a slackening demand
and slower movement of goods on sale. Weak inventory management
increases the cost of holding inventory and negatively affects its margins.
Seeing the middle class of India growing at such a large pace, Big Bazaar
is not able to meet the targets of the number of opening of the outlets.
Lack of infrastructure facilities has been one of the main reasons for this
shortfall.
2) Political Factor
Political factor is also hindering its growth. The local person has much
better contacts with local representatives of the region and these local
vendors are the main competitors of these organized retail outlets. There
is a poor general perception among the people about the low value of
products sold in Big Bazaar. Many people consider the quality of Big
Bazaar products to be inferior. Big Bazaars are not able to generate the
revenues at the same rate as the expansion in the number of outlets.
Thus, a fall in the revenues per square feet has been observed.
Opportunities
1) Middle Class
The country’s staggering economic growth of around 8% over the last 2

years has resulted in major shifts in the Indian class structure with higher
incomes leading to the growth of the Indian middleclass. Like other
countries, the middle class in India has also become aware of the
standards of living. Unlike their forefathers they have decided to adopt a
“Spending” approach to improve their standard of living rather than a
“Saving” approach. With an estimated 400 million shoppers and growing,
organized Indian retail’s target population is larger than that of the entire
United States. India is expected to witness 7-8% growth in its retail sector
over the next few years.
2) Retail space to increase from 66 mn sq ft to over 300 mn sq ft

by 2011E
We expect the 315 mn sq ft of retail space to come up by FY11E, taking
modern retail to USD 70 bn. In the next 4-5 years, the country will have
over 1,000 hypermarkets and 3,000 supermarkets. Real estate players

have already announced big plans for development of close to 300-600

malls and shopping complexes all over the country.
An estimated investment of USD 25-30 bn (industry estimates) is
expected to be made in development of retail space by the large real
estate players to bridge this shortfall of space. In addition to the real
estate players, some retailers have also entered the land development
space.
3) Supply-Chain and Behind-the-Scenes Operations

For major retailers like Big Bazaar especially, that have established a
name and market presence through multi-format experimentation, the
next step is the improvement of the supply-chain and behind-the-scene
operations. These factors serve as the backbone of a successful organized
retail chain in the long-run. Big Bazaar cleverly ignored these aspects due
to the unique inadequacies of Indian infrastructure and rightly favoured
experimentation over organization. But, to continue to grow at the pace it
has over the last five years it needs to pay attention to its sourcing
network, transportation system and other logistics. By developing these
now, Pantaloon will also be able to gain a leg-up on its competitors.

4) Relative share of GDP to turnover of Future group is very low

(0.1%)
Threats
Big Bazaar has the upper hand on the most potential foreign and domestic
competition in the organized retail sector. However the same
characteristics that have made it an exclusive and versatile retailer can
find it a disadvantage.
1) Money: The Ultimate Differentiator

Much of Big Bazaar’s competition consists is either retail ventures of large
Indian industrial houses (Reliance Retail, Birla’s retail venture) or foreign
retail giants (Wal-Mart). In other words, Big Bazaar’s competition is rich,
very rich. While competitors may not have Big Bazaar’s large and diverse
experience and knowledge bank, they still have enough money bank to

potentially compensate for that. While the money versus experience

competition is yet to play itself out in the Indian organized retail sector, in
most industries money is a pretty good tool to compete with. Big Bazaar,
which is almost exclusively a retail body despite scattered efforts to
diversify its portfolio, might find it difficult to raise sufficient resources to
compete with the likes of Wal-Mart and Reliance
2) Connections and Relationships

Big Bazaar made the right decision by making supply-chain development
secondary to experimentation to gain dominance in the unknown
organized retail market. Its recent initiative to begin paying attention to
back-end-operations would be successful if it weren’t faced with
formidable competition. Companies like Reliance that do business in a
variety of sectors and locations in India might be better suited to
developing a strong supply-chain and back-end operation system.
Leveraging their diverse relationships across the board of Indian industry,
Reliance might be able to quickly develop a sourcing-network that is both
efficient and cheap. This scenario has the potential of robbing Big Bazaar
of the advantages it has enjoyed from its early presence and better
understanding of the market.
Market Objective
Retail Market Growth in the World
The retail industry is one of the biggest money spinners in the world,
notching up US$ 6.60 trillion (Rs. 2.64 Crore) in turnover (Source:
Euromonitor Study). In India the sector is worth Rs. 720,000 Crore (US$
180 billion) growing at between 11% and 12% annually (Source: CII-
McKinsey Report). Despite its massive size, the business is almost entirely
controlled by the unorganised sector. While organised retail makes up
70% to 80% of all retail business in developed countries, in India it is
pegged at a lowly 2% (Source: Crisil Report on India’s Retail Industry).This
is by far the lowest in the world and even far below comparable countries
in Asia. In China, organised retailing accounts for 20% of all business,
while in Indonesia it is 25%, in Philippines 35%, in Thailand it is pegged at
40% and in Malaysia it is reputed to be 50% (Source: Euromonitor Study).

Indian Retail Bazaar
Organized Retail captures only 3% of the retail market. Unorganized retail

is mostly family owned business that leverage unique selling point of
being close to the people’s homes.
Share in Spending- Rural Vs Urban

Rur Urba
al n
Entertainment 33 67
Consumer Services 44 56
Durables 50 50
Miscellaneous Consumer
Goods 57 43
Clothing & Foot wear 61 39
Food 64 36
The above figures show the scope for largely untapped market in the
organized retail industry. Moreover it is backed by the strong economic
growth, where India has witnessed a more than double growth in GDP in
10 years.
P&L For Big Bazaar

2002 2003 2004 2006 2007 2008
285.3 444.8 658.3 1,933. 3,668. 5,840.
Sales 1 3 1 67 56 54
Purchase of Trading 1,382. 2,729. 4,432.
Goods 100.6 175.8 368.4 18 94 42
Sales 18.36 14.54 24.51 106.68 234.68 380.39
Rent, Rates and
Wages 10.32 16.33 28.72 118.9 238.19 425.96
Advertisement 8.77 11.83 18.74 53.02 119.95 214.84
123.2 186.9 158.8
Other Expenses 9 5 9 128.64 113.38 30.39
Profit 23.97 39.38 59.05 144.25 232.42 356.54
India has been rated as the most attractive retail destination in the world
by AT Kearney for the third year in a row; the company’s annual Global
Retail Development Index (GRDI) ranks 30 emerging countries, are shown
below

Window Opportunity for India in Retail Market

Sales Projections
Assumptions for the Sales Projections of the Big Bazaar Sales:

1. The Pantaloon Retail India Limited (PRIL) has the Compound
Average Growth Rate (CAGR) of 34%
2. Big Bazaar Constitutes to 60-65% of the PRIL Sales, i.e. 62.5% is
taken for the calculation purposes
3. Percentage Shares of Value Retail, Life Style and Home Retail are
the average of the percentages. i.e. assumed to be constant
percentage of the Sales.
o Value Retail is 63, 60, 61, 59 percent of the sales for the years
2007, 2008, 2009, 2010 respectively
 The average percent sale=(63+60+61+59)/4=60.75%
o Life Style is 27, 24, 24, 25 percent of the sales for the years
2007, 2008, 2009, 2010 respectively
 The average percent sale=25%
o Home is 10, 16,16,15 percent of the sales for the years 2007,
2008, 2009, 2010 respectively
 The average percent sale=14.25%
2007 2008 2009 2010 2011 2012

3668. 11960 16027.
Sales 56 5840 6342 8926 .8 5
2292. 3963. 5578. 7475. 10017.
Big Bazaar Share 85 3650 8 75 53 2
2311. 3868. 5266. 7266. 9736.7
Value Retail 19 3504 6 34 21 2
990.5 1401. 1522. 2231. 1816. 2434.1
Life Style 11 6 1 5 55 8
366.8 1014. 1338. 258.8 346.87
Home 56 934.4 7 9 59 1
1. Value Retail is 63, 60, 61, 59 percent of the sales for the years
2007, 2008, 2009, 2010 respectively
2. Life Style is 27, 24, 24, 25 percent of the sales for the years 2007,
2008, 2009, 2010 respectively
3. Home is 10, 16,16,15 percent of the sales for the years 2007, 2008,
2009, 2010 respectively
Bar- Graph for Sales Growth

Marketing Plan
In order to withstand the future competitive challenges and maintain the

current market leadership, Big bazaar can use the efficient market mix
consisting of Product, Place, Price & Promotion.
Place
Since the first Big Bazaar was opened in VIP Road, Kolkata in October
2001, within a span of just seven years, Big Bazaar opened its 100th store
– marking one of the fastest ever organic expansions of a hypermarket
format store anywhere in the world. Currently, it has opened its 135th
store.
The location of Big Bazaar is of high importance as it is competing against

convenience stores which are easily accessible. Hence store location
should be in a prime business location. The size of the store can be
compromised for getting an effective location



E-commerce industry has touched 9210 crore, online classifieds: 820

crores, online travel: 7000 crores (30% jump from Rs 7,080 crore in ’07)
as per the survey conducted by the IAMAI and IMRB
• Online Travel Industry: growth rate of 30% to Rs 7,000 crore by end

FY08 (from 5500 crores in ‘07)
• Online Classifieds: reached Rs 820 crore by end FY08
• Online retailing/auction (eTailing): Rs 1,105 crore industries by end
FY08 (from Rs 850 crore in FY07.
• Digital downloads (i.e. downloading from Internet to mobiles using
wap phones or web) and paid content (research/exclusive
videos/articles etc) for the rest of 285 crores.
Source: IAMAI and IMRB Analysis Report
The major triggers of e-commerce in India are:
• Saves time and efforts

• Convenience of shopping at home
• Wide variety / range of products are available
• Good discounts / lower prices
• Get detailed information of the product
• You can compare various models / brands
In order to gain a competitive advantage Big Bazaar has already launched

a website www.futurebazaar.com which has to be revamped further as
it helps customers to orders products online which will be delivered to
their doorstep. This helps in saving a lot of time of its customers.

Promotion
The promotion should be consistent with the “positioning” of the Big

Bazaar brand which is: “Isse sasta aur achcha kahi nehi”. Big Bazaar is
going out of its way to make small town consumers feel comfortable with
the beast called modern retail.
Big Bazaar positions itself as a value-for-money hypermarket. With the

launch of “Fashion Bazaar” as its brand extension it should be positioned
as fashionable, trendy and affordable apparel in the middle class fashion-
savvy consumer. The Marketing Communications Mix to be used as
follows:
Public Direct & Events &

Advertisin Sales relationship & Interactive Personal Experien
g promotion publicity marketing selling ce
Sales
contest charitable presenatio
print Ad and games donations catalogs ns Festivals
Motion Premiums community telemarketi
pictures & gifts relations ng
fair and
trade company
posters shows magazine emails
leaflets coupons blogs
display TV
signs rebates shopping
The various promotion schemes to be used:

• “Saal ke sabse saste 3 din”
• Hafte ka sabse sasta din “Wednesday bazaar”
• Exchange Offers “Junk swap offer”
• Future card(3% discount)
• Shakti card
Fashion@Big Bazaar campaign led by cricket icon, MS Dhoni was one of

the largest initiatives taken by the company in recent times. The core
message of 'Des Badla, Bhes Badlo' gained significant traction among its
target audience as is evident in the increasing share of fashion in total
sales. The campaign has helped Big Bazaar transform into the preferred
and accessible fashion destination for the masses.

If any bollywood film becomes huge box office hit then big bazaar should
follow the fashion statement signaled by the film. New star has to be
signed in for brand endorsement Big Bazaar has to continue with the
similar catchy lines written on hoardings taking on biggies like Westside,
Shoppers stop and Lifestyle. They are:
· “Keep West- aSide. Make a smart choice!”

· “Shoppers! Stop. Make a smart choice!”
· “Change your Lifestyle. Make a smart choice!”
All the promotional offers should be prominently displayed in the stores.

Advertisements through local channels like print media and FM channels
should be placed for promotion. The Pentagon driven growth will give Big
Bazaar high volumes which are required in its low margin strategy.
Once these strategies start giving favourable result the triangle

parameters can also be strengthened. With higher bargaining powers the
suppliers can be pressurised to lower their margins. Efficient systems can
be used for CRM and other POS data which can be used to formulate
strategies based on consumption patterns.
Price
‘Sabse Sasta, Sabse Acha’ this tag line defines Big Bazaar’ s USP. Big
Bazaar has created a brand image among its customer by providing a
wide range of household products at the lowest possible market price. Big
bazaar has created a high value for same money for the customer by
providing more purchasing power and freedom in their hand.
The prime objective of pricing at Big Bazaar is to get “Maximum Market

Share”. It is based on the following techniques:
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 also used
to attract customers. Big Bazaar also caters on Special Event Pricing
(Close to Diwali, Id, New Year, Independence Day, Rakshabandhan and
Durga Pooja).

Differentiated Pricing: Differentiated 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.
E.g. Wednesday Bazaar
Bundling: It refers to selling combo-packs and offering discount to

customers. The combo-packs add value to customer and lead to increased
sales. Big Bazaar lays a lot of importance on bundling. E.g. 5 kg oil + 5kg
rice + 5kg sugar for Rs 599
Product
Big Bazaar offers a wide range of products which range from apparels,
food, farm products, furniture, child care, toys, etc of various brands like
Levis, Allen Solly, Pepsi, Coca- Cola, HUL, ITC, P&G, LG, Samsung, Nokia,
HP etc. The assortment of the merchandise should provide ample choice
to the customers. Also the intensity of high margin product should be
high.
Big Bazaar should expand their product line in the following areas – Home
Decor – as CAGR of this segment is as high as 71% more and more
branded products in this sector must be incorporated. There has to be
range in the items which should cater the needs of customers of all ages.
For example keeping study tables, computer tables, sofas,22 curtains, bed
sheets, etc. This will let other brands like Carmichael House, Bombay
Dying, KitchenAid, etc. to tie up with Big Bazaar to increase their sales
and will allow Big Bazaar to make good its reputation in the market as a
store of all the brands.
Food and Grocery – The CAGR in Hypermarket is 42%. Improvement has

to be done to amplify the sales. Various options that can be put into action
are: including local people to sell their food products (after necessary
tests to check its freshness, etc) under Big Bazaar. Also get the food
materials from the unorganized retailers (local shop owners) so as to sell
them in Food Bazaar.
Apparels and Fashion Accessories – There is a huge scope of doubling

the gains in this segment due to its high CAGR of 41%. Apparels sold in
the market must cater to each and every category of customer. For
example garments for expecting mothers, senior citizens who mostly wear
subtle colors, etc. must be included Eye level slots should be carefully

planned and stocked as they generate a significant amount of sale. The

way in which products are displayed should be aesthetic and pleasing.
The style and fashion of presentation of product is an important aspect of
overall ambience.
Big Bazaar should also continue to stock and promote a number of in

house brands like:
• DJ & C
• Tasty Treat
• Clean Mate
• Sensei
• Care Mate
• Koryo and 44 other brands
Recommendations
 Big Bazaar should go about their expansion strategy more

aggressively as the current modern retail market share just
represents the tip of the iceberg, the total retail market, which is
expected to grow up to $ 5.6 billion by 2011.This will provide a
competitive advantage over the incoming international players.
 In order to achieve more share of growing e-commerce market, Big

Bazaar should more pay more attention to attract more customers
for e-tailing. The look and feel factor of the website should be
improved so that there is high possibility that the visiting customer
is tempted to buy.
 The shop format can be changed to suit the requirements of smaller

towns. In the line of Kishan Seva Kendra, an initiative retail chain by
Indian oil, a hypermarket with small size and more product variation
can be adopted.
 They should invest more in the corporate social responsibility so as

to create more visibility in the eyes of the customer.
References
www.bigbazaar.com

www.futuregroup.com
www.pantaloonretail.in
www.Euromonitor.com
www.Wikipedia.com
www.authorstream.com
www.Google.com
www.slideshare.com

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Big Bazaar Challenges Ahead

Big Bazaar: Challenges Ahead

Ambica Prasad Patnaik PGP/14/192

Marketing Project, Section –D, Group-1 Page 1

Marketing Project, Section –D, Group-1 Page 2

Marketing Project, Section –D, Group-1 Page 3

India as an attractive proposition for retail

Marketing Project, Section –D, Group-1 Page 4

India is poised to become one of the hottest destinations in the world

Big Bazaar is a chain of department stores in India, currently with 149

Marketing Project, Section –D, Group-1 Page 5

home utility products, cosmetics, crockery, home textiles, luggage gift

• There is a games zone specially meant for the amusement of the

• Furniture Bazaar which deals with furniture

• Electronics Bazaar which holds electronic goods such as TVs,

• FutureBazaar.com which is an online shopping portal wherein one

Pantaloon Retail (India) Limited (PRIL)

Pantaloon Retail (India) Limited is a leading retailer with a turnover of Rs.

Future Value Retail Limited (FVRL)

Future Value Retail Limited founded in 2007 is a wholly owned

Marketing Project, Section –D, Group-1 Page 6

Marketing Project, Section –D, Group-1 Page 7

Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead

Aditya Birla Retail Ltd. (ABRL)

A US$ 29 billion corporation, the Aditya Birla Group is in the League of

Marketing Project, Section –D, Group-1 Page 8

Canada, Egypt, China, Thailand, Laos, Indonesia, Philippines, UAE,

Spencer's Retail Limited

The Spencer's Hyper-stores are destination stores, of more than 15,000

Marketing Project, Section –D, Group-1 Page 9

E-retailing, most commonly known as e-tailing is nothing but shopping

There are divergent views on the future of e-retailing in India. Some

Marketing Project, Section –D, Group-1 Page 10

Bharti Walmart Private Limited

Bharti Walmart Private Limited is a joint venture between Bharti

Marketing Project, Section –D, Group-1 Page 11

According to the 8th Annual Global Retail Development Index (GRDI) of AT

According to a report, the India retail industry is expected to grow to US$

PEST Analysis for Organized Retail

Barring the long overdue decision on FDI in 'single-brand retail', the

Marketing Project, Section –D, Group-1 Page 12

The urban customers are undergoing drastic changes in their lifestyles.

Marketing Project, Section –D, Group-1 Page 13

Marketing Project, Section –D, Group-1 Page 14

experimented with a variety of products. From men’s wear the company

One of the key weaknesses of Big Bazaar is Weak Inventory Management.

Marketing Project, Section –D, Group-1 Page 15

turnover ratio is generally positive. In contrast, Big Bazaar’s inventory

The country’s staggering economic growth of around 8% over the last 2

2) Retail space to increase from 66 mn sq ft to over 300 mn sq ft

Marketing Project, Section –D, Group-1 Page 16

have already announced big plans for development of close to 300-600

3) Supply-Chain and Behind-the-Scenes Operations

Marketing Project, Section –D, Group-1 Page 17

4) Relative share of GDP to turnover of Future group is very low

1) Money: The Ultimate Differentiator

Marketing Project, Section –D, Group-1 Page 18

potentially compensate for that. While the money versus experience

2) Connections and Relationships

Retail Market Growth in the World

Marketing Project, Section –D, Group-1 Page 19

Indian Retail Bazaar