BuyMore Business Plan for Hub-and-Spoke Expansion

Team: The Casenovas
Team members: Sachin, Saurabh and Sidharth

Institute: Indian School of Business
BUYMORE
BUSINESS PLAN
BuyMore
Table of Contents
1) Executive summary 03
2) Retail Business Chain Overview 05
3) Market analysis and Customer segmentation 09
4) Expansion Strategies 17
5) Competitive analysis 22
6) Organizational Structure 49
7) Strategy and Implementation Plan 54
8) Operations Management, Sourcing and Supply Chain 59
9) Financial Statements 71
10) Appendix 93
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BuyMore
I. Executive Summary
BuyMore currently operates under Wholesale

Cash & Carry (WC&C) format. We propose a
Hub-and-Spoke model as the expansion plan
to integrate each existing WC&C (Hub, under
the brand name BuyMore) with 3-4 Hypermarts
(Spokes, under the brand name HyperBazaar)
and simultaneously building more such Hub-
and-Spoke models across the country. This will
result in increased:
1) Revenues: Enhanced customer base and
sales - WC&C format will target customers Expansion plan
Number of Hub-and-Spokes by year
~200
with businesses (B2B) and hypermarkets
will target value-conscious
customers/retailers (B2C). 2012 revenue of
BuyMore is roughly INR 2300 crore, and
~50
growing at an estimated CAGR of ~23% in
2
the period 2013-2022, it is expected to
2013 2018 2022
reach annual revenues of INR 95,000 crore
by 2022.
2) Profitability: Hypermarket format will
benefit from large sourcing strength of the
WC&C format that supplies goods
contributing nearly 60-70% of the
Hypermarket revenues. Additionally, WC&C
will enjoy benefits from economies of scale
from increased sales. It would be expected
to achieve a profitability of ~2.7%
USP: In both the formats, the company will rely on ‘Every Day Low Prices’ as its key
differentiator and will be able to attract value conscious customers by offering genuine, good
quality products at the lowest price vis-à-vis competition.
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BuyMore
Formats:
1) The WC&C format would have a customer base of ~6 million and would cater primarily
to 3 segments: Small Retailers, HoReCa (Hotel, Restaurants and Caterers) and SCO
(Small & Large Businesses Offices & Companies) targeted at contributing nearly 60%,
15-20% and 20-25% of the revenues respectively. Nearly 80% of the sales for the
format would be driven from FMCG segment consisting of Food and Non-Food
categories. Other categories put together contribute 20% of the revenue (Apparel,
general merchandise, consumer durables, stationery, etc.)
2) The Hypermarket targets the value conscious end customer. Nearly 60% of the sales
will come from FMCG segment with the remaining 40% from other categories put
together (Apparel, general merchandise, consumer durables, stationery, etc.)
Operational Efficiencies: BuyMore will benefit from large sourcing volume and operational
synergies between the two formats.
1) Increased Clout with Suppliers: It will be able to drive profitability by negotiating
increased margin support from suppliers (best in the industry).
2) Stable Supplies: It will work closely with its suppliers, train them and collaborate with
them to ensure high fill rates (95%+).
3) Reduced Inventory: With increased collaboration, inventory levels will reduce in the
system and the company would aim to achieve enviable inventory turns of nearly 8-9
times for the company.
4) Heavy Investment in IT systems: The company will invest heavily in IT systems. The
company will have a systems driven approach to operations and would use technology
to remove any inefficiencies in the existing system in order to achieve its objective.
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BuyMore
II. Retail Business Chain Overview
Company overview
BuyMore currently operates under the Wholesale Cash & Carry (WC&C) and is present
in various cities across India. BuyMore was established in 2004 and is a pure-play Indian
player.
Product offerings
BuyMore currently offers a wide and innovative assortment of approximately 20,000 food
and non-food Stock Keeping Units (SKUs). More than 90% of the products are locally
sourced. BuyMore offers a wide range of private labels. Below are the key products
offerings:
1) Key products in Food category:
a. Daily-use
b. Professional food lines for Hotels, Restaurants, and Caterers (HoReCa)
c. High-end food ingredients
2) Key products in Non-food category:
a. Daily-use
b. Apparel
c. Bed
d. Linen
e. Textiles
f. Luggage
g. Appliances
h. Office furniture & stationery
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BuyMore
Key customer segments
BuyMore‟s customer segments primarily constitute of the following categories, which are
in-sync with the overall customer segmentation of organized Wholesale Cash & Carry
(WC&C):
1) Hotels, Restaurants, and Caterers (HoReCa)
2) Retailers
3) Service, Companies, and Offices (SCOs)
The overall user base of BuyMore is currently estimated to be around 0.6 million people.
Presence of Wholesale Cash & Carry (WC&C) stores

BuyMore currently has a network of 15 stores present in over 10 cities of India. Below is
the distribution of stores by regions of India:
1) North zone: 43%
2) South zone: 36%
3) West zone: 14%
4) East zone: 7%
Market focus
BuyMore‟s Wholesale Cash & Carry (WC&C) journey began with establishing stores in
major cities of India. Upon stabilizing the processes, understanding the Indian market,
and identifying potential opportunities in other parts of the country, BuyMore expanded
its presence to tier-1 and below towns. This move is slightly different from other global
and Indian wholesalers, who have not established their presence in major cities of India
due to high capital expenditure and high operating expenses. Below is the distribution of
stores by city-type in India:
1) Mini-Metros: 36%
2) Tier I: 29%
3) Metros: 21%
4) Tier II and below: 14%
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BuyMore
Financial overview
BuyMore, in the year ending Dec 2012, has revenues of approximately INR 2,300
million. Current gross margins are ~7% with a total of 15 WC&C-format stores.
Service and programs

BuyMore offers various loyalty services and programs for its customers. Key service and
programs that fall in this category are listed below:
1) Silver and Gold members: Based on number and amount of purchase per month
BuyMore offers two loyalty programs – Silver and Gold. BuyMore offers various
benefits to its members. Some of the benefits are listed below:
a. Exclusive billing counter
b. Advance promotion information
c. Helpline and dedicated relationship manager
2) BuyMore closely works with its local traders to completely rearrange the store as well
as to streamline stock control, cash management and customer interaction skills. It
offers this service in the form of a custom-designed special service to help local
traders by transforming the store into a streamlined modern superstore. This program
is run on 50-50 basis, with the trader‟s investment returned in the form of product
discount.
3) BuyMore also assigns a customer consultant to grocery/kirana store owners to assist

them in multiple areas of improvement. Key areas of focus is closely analyzing the
demand and sales cycle of grocery/kirana store and helping them to stock the right
products in the right amount. This helps grocery/kirana store to maximize their profits
4) BuyMore specifically focus on the Hotels, Restaurants, and Caterers (HoReCa)

customers by providing dedicated key account managers, who help the customers to
assist in the following areas:
a. Providing them customize service that focuses on both high quality products
and discounted prices
b. Position and help BuyMore as a sustainable single-window solution for hotels,
restaurants, and caterers
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BuyMore
c. Knowledge sharing and training with the customer
5) Payment facilities: BuyMore accepts in either cash or through Visa, Master, American
Express cards. BuyMore also has strategic tie-ups with selected banks and thus
offers 0% EMI of select credit cards
6) Training: BuyMore offers multiple training to its customers in various areas to

establish long-term relationship with them by helping them to improve their
productivity and efficiencies. Key training programs are:
a. Health and safety training for the hospitality and catering industries
b. BuyMore provides training for the staff of its customers in the F&B segment, in
order to promote up-selling and suggestive selling that help drive profits up for
F&B outlets.
c. Exclusive training program to reach out to farmers and fishermen and train
them in techniques to ensure quality and help them access demanding
markets. Key target segments for the program in India include farmers,
fishermen, and sheep farmers
7) Membership details: BuyMore asks for valid identity proof from its customers to
validate their business entity. BuyMore issues maximum of 2 cards per business
entity.
8) Delivery charges: Based on the bill amount, BuyMore has a differential delivery
charge policy. Delivery charges start with approximately $0.7 and go as high as ~2.0.
For bill amount greater than $1,000, BuyMore charges for the whole vehicle.
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BuyMore
III. Market analysis and Customer segmentation
Overall market landscape of organized retail in India can be classified as follows:
Food and Grocery

Unorganized retail
Market
Organized retail
Cash and carry Hard discounters Hypermarkets and Convenience stores

supermarkets
• Large Format stores Offers essential Wide variety and Offers a daily need
stocking multiple household items, various price ranges items with limited
categories and focus on low prices depending on the product range and
brands at wholesale and stocking most concept providing high
prices targeting popular brands quality product in a
Business to under no frills neighborhood
business selling environment location
• Focus on private
Bharti Walmart – Fair Price, Margin Big Bazaar, Vishal Reliance Fresh,
labels
Best Price Modern Free – major brands Hypermart, V Mart, Bharti Easyday,
Wholesale, Metro, offered at 10-15% Spar, Hypercity More, Spencers,
AV Birla More discount from MRP Nilgiris
Local, International Local, International Local, International Local, International

brands and Private brands and Private brands and Private brands and Private
Labels Labels Labels Labels
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BuyMore
Market size and trends:
1) The Indian Food & Grocery category regroups 7 categories which correspond to the
consumer‟s daily consumption needs. Cereals, pulses and spices are by far the
largest category (~45%), followed by milk & milk products (~19%) and Fruit &
Vegetables, and Meat, Fish & Poultry (12% each). F&G enjoys the largest „share-of-
wallet‟ across retail categories accounting for 42% of urban consumer spending &
58% of rural consumer spending.
2) Organized retail represents a mere ~2 % of the total market in 2012. It is projected to
represent 4% in 2016, however without significantly changing the current balance of
sub-categories.
3) Food and Grocery market in India is estimated to be US $ 350 Billion in 2012 with
YoY growth rate of 10-12%. It is expected to witness a similar growth in the near
future.
4) The market is still dominated by mom and pop stores. F&G represent 69% of the total
retail market in 2012, and is – and will remain – the least organized (2-4% in 2012).
5) Market growth is happening not only on account of increased consumption but also
on account of changing consumer outlook and recent proliferation of organized
retailers, focusing essentially on the value format, i.e. offer low prices combined with
a western-type of shopping experience.
6) The consumer‟s behaviors are a constraint to the fast development of organized
format, and will only change slowly. The loyalty of the Indian housewife for her
convenience kirana store, providing low price, good quality vegetables and very
flexible service will be difficult to break. Excellent store execution, choice and
promotions are possibilities for organized retailers to differentiate and capture more
customers.
7) The entry of Indian and International organized retailers in form of Cash and Carry
Stores, hypermarkets and Supermarkets will play an important role in driving the
growth of Food and Grocery market in India. However, market entry is still strongly
restricted for them which leave room for large Indian players to develop – the value
segments, especially grocery stores can grow quickly. Larger formats offer attractive
product diversity but there are only very few stores equivalent to international
hypermarts, and most retail formats with the exception of the leader Big Bazaar, have
not yet found their customer base.
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BuyMore
8) Operational challenges to organized retail are numerous: the diversity of Indian tastes
requiring complex assortment localization, the fragmentation of the supply base
limiting supplier collaboration opportunities, the immaturity of the supply chain and
lack of logistics infrastructure and the difficulty to rollout store level execution
efficiently. Many retailers are developing private label offers to increase margins but
also differentiate and boost customer loyalty, and try to fine-tune their model,
whereas a priority should be to concentrate on doing the basics right and focus on
execution and store attractiveness for their target customers.
A. Organized Wholesale Cash & Carry (WC&C) market and customers

To get more in-depth analysis of BuyMore that operates under the Wholesale Cash &
Carry (WC&C) and is present in 3 cities in India (Mumbai, Bangalore, and Delhi), we
have tried to understand the whole market of Wholesale Cash & Carry (WC&C) in India.
Our analysis is based on various secondary and primary research conducted.
Below is the list of major Wholesale Cash & Carry (WC&C) operators in India:
1) Metro Cash & Carry India
2) Carrefour WC&C India
3) Booker India
4) Reliance Market
Below is the list of various business users of Wholesale Cash & Carry (WC&C) format:
2) Retailers
4) End Consumers
Following section will provide business chain overview of WC&C market:

What is organized Wholesale Cash & Carry (WC&C)?
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BuyMore
Organized Wholesale Cash & Carry (WC&C) is a business format that is exclusively
designed for B2B (Business-to-business) market. Only business can make purchase
from
Wholesale Cash & Carry (WC&C). There could be three purposes for any B2B
transaction associated with Wholesale Cash & Carry (WC&C): a) Re-selling of products
b) Further processing the product c) Consuming the product in the running course of
business
Organized Wholesale Cash & Carry (WC&C) by this way smartly replaces the traditional
distributor and wholesaler present in the retail value chain.
Wholesale Cash & Carry (WC&C) format, in this way, acts as a warehouse for retailer by
providing/supplying required all products (various brands, pack sizes) at one single place
that makes the experience convenient for retailers. Additionally, due to large volumes,
Wholesale Cash & Carry (WC&C) format is typically also able to provide good prices.
This serves as an additional benefit for retailers to facilitate transactions with Wholesale
Cash & Carry (WC&C).
Organized Wholesale Cash & Carry (WC&C) in India can be classified as a nascent
market. Organized Wholesale Cash & Carry (WC&C) is estimated at US$ 1.7 Bn in 2012
and is expected to witness a healthy growth rate of 40% (Compounded Annual Growth
Rate: CAGR of ~40%) to reach a market size of approximately US$ 9.1 Bn in 2017. Key
market sizes for organized Wholesale Cash & Carry (WC&C) in India can be visualized
from the following estimated figures:
a) 2007: Market size US$ 0.1 Bn
b) 2012: Market size US$ 1.7 Bn
c) 2017: Market size US$ 9.1 Bn
Personal consumption is estimated to account for around 30-40% of the organized
Wholesale Cash & Carry (WC&C) market in India. (Kindly refer to Table1 in Appendix
section)
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BuyMore
SWOT Analysis of Organized Wholesale Cash & Carry (WC&C)
1) Strengths:
a. Availability of a wide range of products
b. Convenience - One stop shop
c. Assurance of product quality (genuine products)
d. Transparent pricing
e. Competitive pricing vis-à-vis wholesalers
f. Quality customer service with key accounts manager and customer service
desk
2) Weakness:
a. Absence of credit facilities to customers
b. Low fill rates affect product availability
c. Slow decision-making process to address needs and requirements of bulk
orders
d. Large cost of operations on rent and manpower
3) Opportunity:
a. Direct distribution across categories is low
b. Nascent organised WC&C market in India with only 0.5% of the market
captured
4) Threat:
a. Low customer loyalty – customers source from multiple suppliers
Advantages of Organized Wholesale Cash & Carry (WC&C)

1) Consolidated suppliers: WC&C makes business simpler by helping reduce the
number of suppliers to 5-6. Retailers (kirana stores) usually source goods from ~ 20-
25 suppliers across food, toiletries, etc.
2) Assured Product Availability: Organized WC&C assures product availability at
most of the times vis-à-vis traditional wholesalers. Overall FMCG fill rates are low
for traditional retailers
3) Transparency in Pricing: WC&C provides increased transparency in prices in
comparison to traditional wholesale market where price varies from retailer to retailer
based on the size of the expected order
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BuyMore
4) Complete Discretion in Purchase: Organized WC&C allows retailers to pick the
products they want enabling control on cash flows. In traditional wholesale, products
are “pushed” on retailers if they want fast-moving merchandise
5) High Margin Availability: Organized WC&C provides higher margins to retailers in
comparison to traditional wholesalers. However traditional wholesalers provide credit
in lieu of lower margins
6) Good customer service: Organized WC&C provides good customer service
irrespective of the ticket size unlike traditional retailers
B. Hypermarket customer analysis
Key consumer characteristics:

1) The key decision maker for Food & grocery shopping for the household still remains
the housewife; she is the decision maker on what to buy and where to buy in 90-95%
of the cases
2) Consumer‟s loyalty to brand and store is strong in this category - getting housewives
to switch to another product/ brand is among the biggest challenges that marketers
face
3) Consumers value convenience : therefore store location and infrastructure like
parking space availability are key
4) Availability of Food & Grocery products is required by consumer
5) Freshness of product, and quality of products particularly fresh and private labels are
important to the consumer and critical differentiators
6) Preference of majority of the consumers still remains with neighborhood Kirana
outlets particularly for their daily needs – milk, vegetables and other perishables,
however is slowly shifting to modern supermarket/Organized formats
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BuyMore
Key drivers of shopping from organized retail:
1) Enhanced shopping experience: Organized retail has created an environment for the
consumer to feel and experience products that are being purchased. This has caused
a shift in the loyalty of consumers from the traditional over-the-counter purchase to
the organized retail.
2) Choice & ability to choose from wide variety of products, qualities and brands
3) Discounts available on various product categories
Key drivers of shopping from unorganized retail:

1) Convenience: Store location and home delivery
2) Product Quality: Particularly in fresh products is considered to be superior than
unorganized retail
3) Trust with retailers
Key challenges for organized retail from consumer viewpoint:

1) The consumer is loyal – and it is therefore difficult to divert him/her from the
relationship and trust which has been established with kirana shop owners.
2) Unlike in apparel and lifestyle categories where younger members of the family
participate in or lead the purchase decision, the decision maker for food and grocery
remains the housewife. Stability, less eagerness to change of the decision maker is a
constraint.
3) The consumer seeks convenience – kirana stores are better positioned – dense
network, proximity – whereas organized stores (especially super / hypermarkets
which do not have a parking) are not always easy to access or simply not convenient
for a number of Indian families who do not own a car
4) The consumer looks for freshness and quality, especially in F&V where many players
have not been able to create a good, consistent quality offer.
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BuyMore
Steps to mitigate above mentioned key challenges:
1) Pay special focus on the quality and freshness of fruits and vegetables, and in the
quality of customer service delivered by store associates, to build the necessary trust
with their consumer base
2) Focus on enjoyable shopping experience – supported by wider offers, the possibility
to see and chose the product, quick check-outs, clean shopping environments, some
newness and animation.
3) Showcase the value proposition and generate traffic with promotions and special
offers
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BuyMore
IV. Expansion Strategies
Despite the relative slowdown in economic growth in recent years, the Indian retail
market is expected to continue to grow over the next several years as more and more
people enter the „consuming classes‟. Organized retail, a relatively new phenomenon in
India is expected to further fuel this phenomenon as it lures more shoppers into moving
their shopping visits from the local kirana stores to organized retail chains.
The growing middle class in India is an important contributor to the growth of the
organized retail sector. By 2030, the number of middle class households in India will be
close to 91 million, as compared to 21 million middle class households today. Also, by
2030, the urban population in India is expected to rise to 570 million, further increasing
demand for organized retail. By 2015, organized retail chains in India are expected to
have a customer base of over 300 million consumers.
India‟s consumption levels are expected to double to US$ 1.5 trillion from the current
level of US$ 750 billion. Given the huge potential presented by the retail segment, it
makes sense for BuyMore to exploit it by entering the retail market in a big way, and
build upon its strengths in its existing wholesale cash and carry (WC&C) format.
The broad-level strategic objectives of BuyMore‟s expansion are going to be four-fold:

1. Increase revenues substantially
2. Achieve operational efficiencies to improve profitability
3. Improve Brand value and brand recognition
4. Issue IPO to fuel further growth
BuyMore plans to achieve these objectives through a three-step approach. First

consolidate in its stronghold areas – existing markets and existing customer segments
that is Small Retailers, HoReCa (Hotel, Restaurants and Caterers) and SCO (Small &
Large Businesses Offices & Companies) – maximize market share and operational
efficiencies. Once these markets and customer segments have been completely
penetrated and are close to saturation, extend the scope of the existing business to
similar new geographies (E.g., replicate existing business in Bangalore to a similar
business model in Gurgaon), new products (E.g., newer brands/ SKUs, etc. within the
existing product segments offered to meet the requirements of larger numbers within the
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BuyMore
existing customer segments). Finally, diversify strategically, including entering a new
retail format – hypermarkets, expanding geographically into not just metros, but also Tier
II and Tier III cities, targeting different customer segments.
Growth levers: BuyMore would need to focus on each of the constituents of its expansion
strategy with respect to the following growth levers:
1. Geography
2. Product offerings
3. Target customer segment(s)
4. Format/Channel
Addressing the expansion strategy constituents one at a time:

1. Strengthen/ Consolidate current business scope: capture more customers and
consequently revenues within the existing customer segments, which is Small
Retailers, HoReCa (Hotel, Restaurants and Caterers) and SCO (Small & Large
Businesses Offices & Companies), through more effective market positioning.
a. Geography or Location: BuyMore will initially focus on fully penetrating the
markets it is already present in. The objective will be to achieve maximum
possible market share by focusing on customer requirements as discussed in
the subsequent points
b. Product offerings: BuyMore plans to address the hitherto unsatisfied
requirements of the captured customer segments – higher customer
satisfaction levels means repeat customers, word-of-mouth marketing to
achieve new customers, and consequent higher turnovers. BuyMore will focus
on meeting the needs of more Small Retailers, HoReCa (Hotel, Restaurants
and Caterers) and SCO (Small & Large Businesses, Offices & Companies)
c. Target customer segments: The focus will be to build and maintain customer
loyalty and satisfaction among the existing customer segments through
marketing and loyalty programs.
d. Format/Channel: The focus in this part of the strategy will be to consolidate the
existing channel that is Wholesale Cash & Carry (WC&C).
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BuyMore
2. Extend scope of existing business :
a. Geography: As part of this constituent of the strategy, BuyMore will expand to
newer geographies to reach more customers in the currently targeted
customer segment. This would mean expanding the existing Wholesale Cash
& Carry business to similar cities as the ones BuyMore currently operates in.
Expansion would begin with Tier 1 Indian cities like Delhi NCR, Mumbai,
Chennai, Kolkata, and Hyderabad, where BuyMore would be using an
operating model similar to the one it has been using for its existing stores. The
focus would be to gain the early mover‟s advantage in the Wholesale Cash &
Carry format in these markets by being one of the first players to enter the
segment in the cities and capture customer attention through marketing and
promotion efforts.
b. Product offerings: Since the markets being catered to be more or less the
same, the customer segments will also remain pretty much the same - Small
Retailers, HoReCa (Hotel, Restaurants and Caterers) and SCO (Small &
Large Businesses Offices & Companies). However, the requirements may be
of slightly different brands and / or product lines, which will need to be taken
care of by BuyMore as part of its procurement and supply chain strategies.
c. Target customer segments: The focus will be to build customer loyalty and
satisfaction among Small Retailers, HoReCa (Hotel, Restaurants and
Caterers) and SCO (Small & Large Businesses Offices & Companies) through
marketing and loyalty programs in the newly entered geographies.
d. Format/Channel: The focus in this part of the strategy will be to propagate the
existing channel, that is Wholesale Cash & Carry (WC&C) in new geographies,
and establish a sustainable business model and supply chains so as to be
able to sustain the next constituent of the overall growth strategy, that is
setting up hypermarts as part of the hub-and-spoke model.
3. Diversify strategically:
a. Geography or Location: Expand into new geographies with different market
characteristics to reach new customer segments. Here, Tier 2 Indian cities
would be a profitable opportunity to explore for BuyMore in both the Wholesale
Cash & Carry format as well as Hypermarket format. This is due to the
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BuyMore
increasing purchasing power of the populations of these cities and their
demand for high-quality purchasing experience at par with Tier 1 cities. The
profits would further be driven by the lower rentals and operating costs in
these regions, and would be the logical next step once Tier 1 cities reach a
saturation point.
b. Product offerings: The focus of BuyMore Wholesale Cash & Carry will be to
acquire and then build customer loyalty and satisfaction among Small
Large Businesses Offices & Companies) through marketing and loyalty
programs in the newly entered geographies. To get these customers to shift
from their usual wholesalers would need marketing and promotional efforts as
well as specific product lines and/or brands popular in the target geographies.
Similarly, the consumers shopping at HyperBazaar stores may have product
line and / or brand requirements different from those of customers in Tier 1
cities. This would require BuyMore to procure and supply the demanded
products to HyperBazaar stores.
c. Target customer segments: The target customer segments for BuyMore, the
Wholesale Cash & Carry format stores will continue to be mainly Small
Large Businesses Offices & Companies). Since Wholesale Cash & Carry may
be a new wholesale format in many Tier 2 cities, it will require some marketing
effort on part of BuyMore to gain initial acceptability and build a sizeable
customer base among their customers. Further, the Wholesale Cash & Carry
stores will act as suppliers to BuyMore‟s own sister-concern, the hypermarket
stores, HyperBazaar, which will be set up in parallel to serve the general
consumers. HyperBazaar will itself require some marketing and promotional
efforts to attract customers from their local kirana stores. This will be done
focusing on the customers‟ demand for a better shopping experience as well
as lower prices offered by HyperBazaar due to its system efficiencies, large
scale orders and low transfer prices from BuyMore Wholesale Cash & Carry.
d. Format/Channel: The focus in this part of the strategy will be to propagate the
existing channel, that is Wholesale Cash & Carry (WC&C) in new geographies
including top Tier 2 cities, and establish a new format that is hypermarts as
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BuyMore
part of a hub-and-spoke model. Each BuyMore Wholesale Cash & Carry would
serve as feeders for products to 3-4 HyperBazaar stores within a 200 km
range to start with, and eventually within 100 km, once a sufficiently large
number of hubs have been set up. The target here is to set up one hub and
corresponding 3-4 spokes for every area with a sales potential of Rs. 2000
crore.
To summarize, the expansion strategy would involve a three step approach:

1. Strengthen/ Consolidate current business scope
2. Extend scope of existing business
3. Diversify strategically
Each of these steps would concentrate on four main growth levers:

1. Geography
3. Customer segments
4. Format/Channel
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BuyMore
V. Competitive analysis
A. Organized Wholesale Cash & Carry (WC&C)
With 100% FDI allowed, 3 international Wholesale Cash & Carry (WC&C) have marked
their presence in the India market. The last 3 years have witnessed significant activity
with the opening of 34 WC&C stores primarily led by Best Price and Metro. Best Price
(Bharti-Walmart) has the maximum no. of stores - 20 stores across 19 cities followed by
Metro with 14 stores across 11 cities.
Key market players Metro and Best Price; have focused on different regions to start
business operations. Both are more concentrated in North India with sizeable presence
across other zones except the East. Metro has kept focus on Metros and Mini-Metros
with Best Price focusing on Tier I and II cities. Other players at present maintain a
regional-focus.
Key players are:

1) Metro (Wholly-owned subsidiary of Metro AG)
2) Best Price (50:50 JV between Bharti Group and Wal-Mart)
3) Carrefour (Wholly -owned subsidiary of Carrefour SA)
4) Booker Wholesale (Wholly-owned subsidiary of Booker Group Plc; JV with Satnam
Arora (Kohinoor Foods) for Pune store)
5) Reliance Market (Part of Reliance Fresh Ltd. (Indian company))
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BuyMore
A1. Best Price Modern Wholesale
Company overview: Best Price Modern Wholesale is joint venture between Bharti
Enterprises, one of India's leading business groups with interests in telecom, agri-
business, insurance and retail, and Wal-Mart Stores Inc., the world‟s leading retailer.
Best Price Modern Wholesale was established in 2007 and opened its first
Wholesale Cash & Carry (WC&C) in 2009
Product offerings: Best Price Modern Wholesale offers a wide and innovative
assortment of approximately 6,000 food and non-food Stock Keeping Units (SKUs).
More than 95% of the products are locally sourced. Best Price Modern Wholesale
offers a wide range of private labels. Key product labels include Right Buy, Members
Mark and Bakers & Chefs etc spanning over 400 items in total.

Best Price Modern Wholesale‟s customer segments primarily constitute of the
following categories, which are in-sync with the overall customer segmentation of
organized Wholesale Cash & Carry (WC&C):
2) Retailers
The overall user base of Best Price Modern Wholesale is currently estimated to be
around 0.6 million people that translates to a buyer base of 25,000-30,000 per store.

Best Price Modern Wholesale currently has a network of over 20 stores present in
over 19 cities of India. Below is the distribution of stores by regions of India:
1) North zone: 55%
2) South zone: 25%
3) West zone: 20%
4) East zone: 0%
Average store size of Best Price Modern Wholesale is approximately 55,000 sqft.
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Market focus: Best Price Modern Wholesale‟s Wholesale Cash & Carry (WC&C)
journey began with establishing presence in smaller towns of India. Location
strategy for Best Price Modern Wholesale displays particular focus on tier I and
below. Below is the distribution of stores by city-type in India:
1) Mini-Metros: 5%
2) Tier I: 35%
3) Metros: 0%
Financial overview
Best Price Modern Wholesale, in the year ending Dec 2011, has revenues of
approximately US$ 375 million. Interestingly, 58% of the current revenue is from
sale of merchandise to Easy Day stores (Bharti Retail). Below is the historic net
income trend of Best Price Modern Wholesale:
1) 2009: US$ 40 million
2) 2010: US$ 154 million
3) 2011: US$ 375 million
Best Price Modern Wholesale has displayed an extraordinary growth in net income
over the past few years. 2010 to 2010 witnessed a Year-on-Year (YoY) growth rate
of over 140%.

Best Price Modern Wholesale offers various loyalty services and programs for its
customers. Key service and programs that fall in this category are listed below:
1) Mera Kirana Program: The program is intended to help kirana store customer
segment in competing with modern retail. It has primarily two parts:
a. Seminars at Best Price stores: Regular seminars are organised to address
specific needs of kirana stores. These specific needs have been identified
after extensive feedback from members and range from effective use of
displays, inventory optimization to customer retention. These interactive
sessions are offered as a complete program
b. ‘Mera Kirana’ model shop set up at Best Price stores: Mera Kirana model
shops have been set up within each Best Price Modern Wholesale store which
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helps in practical demonstration of best practices to kirana owners - efficient
lay out, correct stocking of products and maximizing paid displays
2) Credit offered through Co-Branded Credit Card: Best Price Modern

Wholesale has tied up with Kotak Mahindra Bank for members of Best Price
stores. Features of Credit Card include (but not limited to) - No Joining Fee, No
Annual / Renewal fee, Two Free Add-On Cards, Fourteen Days Interest Free
Period
3) Remote Booking Office: Best Price Modern Wholesale has developed a

customized special solution for upcountry members in select cities wherein
members get most current information on prices and a complete range of
available products at the parent store. Members can pay, book orders and
receive merchandize through the official 3rd party delivery solution
4) Training centers:
a. Bharti Walmart has formed Public Private Partnerships with the aim of bridging
the shortage of skilled workers for cash-and-carry and organised retail formats
b. „The skills training centres are called „Bharti Walmart Training Centre‟. It offers
short-term vocational certification courses
c. The Training Centre supports more than 125 students per center, each month
with a course of 2-3 weeks duration conducted six days a week. Till date,
nearly 10,400 students have been certified free-of-cost and nearly 4,000 have
been placed in various jobs
5) Membership details:
a. Requirement: Membership is given on the basis of valid documentary proof of
establishment from the approved list of authorized business licences
b. Validity: Validity of the membership is linked to the expiry of the business
license provided. In case there is no expiry date on the license provided, the
membership is valid for ten years
Primary membership extensible to two business associates
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A2. Booker Wholesale India
Company overview
Booker Wholesale India is q 100% owned subsidiary of Booker Group Plc, which is
UK‟s largest food wholesaler. It operates 172 cash and carry stores in UK, and holds
40% share of the UK cash and carry market. The company made its India foray in
2009 through a 100% owned subsidiary Booker India, with its first store in Mumbai
Product offerings
Booker Wholesale India offers a wide and innovative assortment of approximately
6,000 food and non-food Stock Keeping Units (SKUs). 100% of the products are
locally sourced. The key categories present at store include FMCG (non-food) and
stationery products. It offers private label „Happy Shopper‟ in India in FMCG (non-
food – home care, detergent cakes, dishwashing bars) and a range of staples.
However internationally it has 6-7 private labels.
Booker Wholesale India opted for a joint venture (JV) in 2011 for opening a store in
Pune with Satnam Arora, promoter of Kohinoor Foods. The thought was to explore
how a local partner complements existing strengths and helps accelerate expansion.
The company‟s strategy is to stay focussed on trade (not the end consumer), build a
strong business foundation and hence remains low profile.
Booker is positioned as a trade only, low-cost format providing convenience and
value to the consumer with a wide range of products

Booker Wholesale India‟s customer segments primarily constitute of the following
categories, which are in-sync with the overall customer segmentation of organized
Wholesale Cash & Carry (WC&C):
2) Retailers
The overall user base of Booker Wholesale India is currently estimated to be around
20,000 people (around 60% are active).
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Booker Wholesale India currently has a network of 3 stores present in 2 cities of
India. Below is the distribution of stores by regions of India:
1) Mumbai: 50%
2) Pune: 50%
Average store size of Booker Wholesale India is approximately 23,500 sqft.
Market focus
Booker Wholesale India is a focused player with store concentration in the West –
metro city of Mumbai and mini-metro Pune. Below is the distribution of stores by city-
type in India:
1) Mini-Metros: 75%
2) Tier I: 0%
3) Metros: 25%
Financial overview
Booker Wholesale India, in the financial year 2011, had revenues of approximately
US$ 9 million. The company has had accumulated losses from commencement of its
operations. Below is the historic net income trend of Booker Wholesale India:
1) FY 2010: US$ 2 million
2) FY 2011: US$ 9 million
Key challenges for Booker Wholesale India are:
1) To get new customers as members and retain the existing customer base
ensuring that they remain active customers
2) To make products available due to low fill rates provided by suppliers
Over the next 5 years, Booker Wholesale India is planning to open ~20 cash & carry
stores across India and enter Tier I and II cities

Booker Wholesale India offers various loyalty services and programs for its
customers. Key service and programs that fall in this category are listed below:
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1) Membership Details: Applicants for membership should be minimum 18 years
of age and are required to fill a Registration Form with proof of business as given
below (any two):
a. Shop Licence
b. Utility Bill with Business Address (Electricity/ Telephone)
c. Shop Rental Agreement
d. Invoice Copy from previous suppliers
No add-on cards are issued on the primary card. One card allows entry of 3
people along with the card owner
2) Happy Shopper Program:

a. Under the Happy Shopper program, Booker Wholesale India extends
marketing support to general trade stores (kiranas) via branding, changing
store fascia, signage etc. helping them in creating a store identity
b. Promotional offers are given every month (twenty offers)
c. This benefits retailers in withstanding competition from modern trade and
increase store footfalls and generate higher revenues
d. Deliveries are made by Booker Wholesale India at least once a month to these
stores
3) Promotions:
a. Booker Wholesale India runs monthly promotions at its stores, where profit
margins quoted are a mark-up on the buying price of the retailer
b. Other promotional tools include leaflets, sms communication and via tele-
calling by sales team
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A3. Carrefour Wholesale Cash & Carry
Company overview
Carrefour Wholesale Cash & Carry was established in France in 1959. Carrefour
S.A. is the world‟s second-largest retailer. The group operates over 9500 stores in
32 countries globally. The group entered the Indian organised Wholesale Cash &
Carry (WC&C) market in 2010 through a wholly-owned subsidiary Carrefour WC&C
India Pvt. Ltd.
Product offerings
Carrefour Wholesale Cash & Carry offers a wide and innovative assortment of
approximately 10,000 food and non-food Stock Keeping Units (SKUs). The
categories present at stores include a mix of food and non-food product, however
the focus on fresh foods is low. The company also sells products under genetic
product names (with no brand name)across few categories viz. household care
(toilet cleaner, floor cleaner, air freshener etc.), packaged food like pickle, jam etc.
Carrefour Wholesale Cash & Carry‟s customer segments primarily constitute of the
following categories, which are in-sync with the overall customer segmentation of
organized Wholesale Cash & Carry (WC&C):
The overall user base of Carrefour Wholesale Cash & Carry is currently estimated to
be around 50,000 registered customers.

Carrefour Wholesale Cash & Carry operates as a wholly owned subsidiary of
Carrefour S.A. The company‟s focus is to lay increased focus on non-food
categories which are the margin drivers.
Carrefour Wholesale Cash & Carry has 3 stores in India- Delhi, Jaipur and Meerut.
Below is the distribution of stores by regions of India:
1) North zone: 100%
2) South zone: 0%
3) West zone: 0%
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4) East zone: 0%
Average store size of Carrefour Wholesale Cash & Carry is approximately 55,000-
60,000 sqft.
It also has an online portal enabling purchases for businesses and institutions
market focus.
Location strategy for Carrefour Wholesale Cash & Carry displays particular focus on
North India region. Below is the distribution of stores by city-type in India:
1) Mini-Metros: 0%
2) Tier I: 33%
3) Metros: 33%
The company is looking at expanding its operations in India by opening stores in
west and south. Its 4th store is opening in Agra shortly.
Financial overview
Carrefour Wholesale Cash & Carry, in the year ending Dec 2011, had revenues of
approximately US$ 37 million.

Carrefour Wholesale Cash & Carry offers various loyalty services and membership
programs for its customers. Key service and programs that fall in this category are
listed below:
1) Membership details: To register as a member, Carrefour requires a proof of
business (any one): 24 documents as valid documents for member registration
viz. VAT registration certificate, CST registration certificate, liquor license, food
license etc. A maximum of 5 cards can be issued for a company
2) Customer Relationship Manager: A relationship manager is a single point of
contact for customer service. He assists customers in the following areas :
a. To avail latest offers & promotions
b. To collect customer‟s order
c. To know the delivery status
d. Information of new launches
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e. Handling any quality issue or complaints
f. Payment related information
g. Ensure a high level of customer service
3) Cold Chain Services: Carrefour Wholesale Cash & Carry provides a cold chain
facility for fresh products that keeps products safe for 6 hours.
4) Delivery services:
a. Carrefour Wholesale Cash & Carry has a tie-up with „Relogistics‟ for delivery to
shops, hotels, restaurants, offices and Institutions in Delhi NCR region
b. It also offers delivery services to customers named „Jhatpat‟
A4. Metro Wholesale Cash & Carry

Company overview
Metro Cash & Carry currently operates under the Wholesale Cash & Carry (WC&C)
and is present in various cities across India. Established in 1964 in Germany, Metro
Cash & Carry is a leading international player in the self-service wholesale sector.
The group operates 700+ wholesale stores in 29 countries across Europe, Asia and
Africa. Metro was one of the first players to enter the Indian market in 2003 as a
wholly-owned subsidiary of Metro AG; with its first store (Metro Cash & Carry India)
in Bangalore.
Product offerings
Metro Cash & Carry offers a wide and innovative assortment of approximately
20,000 food and non-food Stock Keeping Units (SKUs). More than 90% of the
products are locally sourced. Metro Cash & Carry offers a wide range of private
labels (e.g., Fine Food, Aro, Authentic, HoReCa Select, Sigma). Below are the key
products offerings:
1) Key products in Food category:
a. Daily-use
b. Professional food lines for Hotels, Restaurants, and Caterers (HoReCa)
c. High-end food ingredients
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2) Key products in Non-food category:
a. Daily-use
b. Apparel
c. Bed
d. Linen
e. Textiles
f. Luggage
g. Appliances
h. Office furniture & stationery

Metro Cash & Carry‟s customer segments primarily constitute of the following
2) Retailers
The overall user base of Metro Cash & Carry is currently estimated to be around 0.6
million people.

Metro Cash & Carry currently has a network of 14 stores present in over 10 cities of
India. Below is the distribution of stores by regions of India:
1) North zone: 43%
2) South zone: 36%
3) West zone: 14%
4) East zone: 7%
Market focus
Metro Cash & Carry‟s Wholesale Cash & Carry (WC&C) journey began with
establishing stores in major cities of India. Upon stabilizing the processes,
understanding the Indian market, and identifying potential opportunities in other
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parts of the country, Metro Cash & Carry expanded its presence to tier-1 and below
towns. This move is slightly different from other global and Indian wholesalers, who
have not established their presence in major cities of India due to high capital
expenditure and high operating expenses. Below is the distribution of stores by city-
type in India:
1) Mini-Metros: 36%
2) Tier I: 29%
3) Metros: 21%
Financial overview
Metro Cash & Carry, in the year ending Dec 2012, has revenues of approximately
US$ 300-400 million. Metro is also looking to meet approximately 5% of its global
revenue from India by 2015 (up from existing 1%). It plans to consolidate store
presence in 2013 and initiate store openings again in 2014 (5-6 stores every year)
It aims to break-even by 2016.

Metro Cash & Carry offers various loyalty services and programs for its customers.
Key service and programs that fall in this category are listed below:
1) Metro Bandhan Silver member and Gold member: Based on number and amount
of purchase per month Metro Cash & Carry offers two loyalty programs – Silver and
Gold. Metro Cash & Carry offers various benefits to its members. Some of the
benefits are listed below:
a. Exclusive billing counter
b. Advance promotion information
c. Helpline and dedicated relationship manager
2) Metro Super Trader Program: Metro Cash & Carry closely works with its local
traders to completely rearrange the store as well as to streamline stock control, cash
management and customer interaction skills. It offers this service in the form of a
custom-designed special service to help local traders by transforming the store into
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a streamlined modern superstore. This program is run on 50-50 basis, with the
trader‟s investment returned in the form of product discount.
3) Metro Customer Consultants: Metro Cash & Carry also assigns a customer
consultant to grocery/kirana store owners to assist them in multiple areas of
improvement. Key areas of focus is closely analyzing the demand and sales cycle of
grocery/kirana store and helping them to stock the right products in the right amount.
This helps grocery/kirana store to maximize their profits.
4) Metro Chef-o-logy: Metro Cash & Carry specifically focus on the Hotels,
Restaurants, and Caterers (HoReCa) customers by providing dedicated key account
managers, who help the customers to assist in the following areas:
a. Providing them customize service that focuses on both high quality products
and discounted prices
b. Position and help Metro Cash & Carry as a sustainable single-window
solution for hotels, restaurants, and caterers
c. Knowledge sharing and training with the customer
5) Payment facilities: Metro Cash & Carry accepts in either cash or through Visa,
Master, American Express cards. Metro Cash & Carry also has strategic tie-ups
with selected banks and thus offers 0% EMI of select credit cards
6) Metro key account manager: A customer-doorstep service to assist business

customers in their sourcing requirements, the key account manager is an individual
who:
a. Has an intensive knowledge of customer‟s industry, market and competition
b. Provides information on the latest products and offers
c. Helps customers source key product inputs and provides personalised
business advice
7) E-retail program: For e-retailers, Metro provides complete warehousing solutions,

with the following features:
a. Has The widest range of products from a single source
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b. Guaranteed freshness, quality and great prices
c. Daily inventory tracking for featured, fast-moving articles
d. Customised offers tailored to your customer segment
e. Support in identifying, selecting and selling the right goods
f. Special offers and schemes
g. Access to the Metro Mela and Wednesday Fresh Bazaar
8) Training: Metro Cash & Carry offers multiple training to its customers in various
areas to establish long-term relationship with them by helping them to improve their
productivity and efficiencies. Key training programs are:
a. Health and safety training for the hospitality and catering industries
b. Metro Cash & Carry provides training for the staff of its customers in the
F&B segment, in order to promote up-selling and suggestive selling that
help drive profits up for F&B outlets.
c. Exclusive training program to reach out to farmers and fishermen and train
them in techniques to ensure quality and help them access demanding
markets. Key target segments for the program in India include farmers,
fishermen, and sheep farmers
9) Membership details: Metro Cash & Carry asks for valid identity proof from its
customers to validate their business entity. Metro Cash & Carry issues maximum of
2 cards per business entity.
10) Delivery charges: Based on the bill amount, Metro Cash & Carry has a
differential delivery charge policy. Delivery charges start with approximately $0.7 and
go as high as ~2.0. For bill amount greater than $1,000, Metro Cash & Carry
charges for the whole vehicle.
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A5. Reliance Market
Company overview
Reliance Market is a division of Reliance Fresh Ltd. (part of Reliance Retail), one of
India‟s largest private sector business houses. The company forayed in the
organized Wholesale Cash & Carry (WC&C) business in 2011 with its store in
Ahmedabad.
Product offerings
Reliance Market offers a wide and innovative assortment of approximately 19,000
food and non-food Stock Keeping Units (SKUs). The categories present at stores
include a mix of food and non-food product.

Reliance Market‟s customer segments primarily constitute of the following
3) Retailers
The overall user base of Reliance Market is currently estimated to be around 30,000
members.

Reliance Market has 1 store in Ahmedabad spread over 100,000 sq ft. The company
has plans of opening 100 stores across various cities in India by 2017 viz.
Bangalore, Chennai, Surat, Anand, Guntur, Asansol, Guntur etc. Its 2nd store was
announced to open in Bangalore in early 2013.
Membership details
For membership registration, Reliance Market requires a valid proof of business.

However, it is flexible in extending memberships to small retailers with no relevant
document even by looking at their visiting card.
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A6. Decathlon Sports India

Company overview
Decathlon Sports was established in 1976 in France, Decathlon Group is a large
French sporting goods chain store. The group operates ~535 stores in 17 countries
across Europe, Asia and South America. The company set foot in India in 2009
through Decathlon Sports India, a wholly owned subsidiary of Decathlon Group,
France. It is the first single category organized Wholesale Cash & Carry (WC&C)
player in India with focus on sports goods.
Product offerings
Decathlon Sports offers an innovative assortment of approximately 4,500 sports
goods and accessories at its stores.

The key customer segments of Decathlon India include sports goods retailers, sports
academies etc.

Decathlon is present in India with two stores in Bangalore.The company is looking at
expanding its operations in Karnataka and across 5 states/UTs in India viz. Delhi
NCR, Maharashtra, Chandigarh, Tamil Nadu and Goa in partnerships (real estate)
Two stores are opening shortly in Bangalore and Thane.
Membership details
For a registration, the company requires a valid proof of business from a list of 36
documents. However unlike typical organized WC&C players in India, Decathlon
allows customers to enter and explore stores without a membership. Purchase is
facilitated only to members.
Delivery services: Decathlon caters to deliveries in India through partner TNT

Express Couriers.
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B. Hypermarket
B1. Big Bazaar

Company overview: Big Bazaar is India‟s largest hypermarket format positioned on
the price platform, offering value priced apparel, home products, F&G and FMCG.
The format encapsulates the concept of traditional Indian Bazaars with various
shops in shop formats like Food Bazaar, Gold Bazaar, Electronics Bazaar, Medicine
Bazaar etc. within the store. Food Bazaar is the in-store F&G format in Big Bazaar
and is also operated as a standalone supermarket. Turnover 2012: US$ 1.7 billion
(food bazaar combined). Big Bazaar and Food Bazaar forms the value segments of
Pantaloons Retail which is promoted by Mr. Kishore Biyani. Pantaloons retail is a
publicly listed firm and the promoters and its family currently own ~49% of the
company.
Product offerings: Apparels contributes to ~45% of the total sales of Big Bazaar.
Big Bazaar promotes apparel and home products through value pricing and attracts
customer walk-in. There is a mismatch between apparel and F&G positioning. While
apparel is positioned at SEC B and below, F&G merchandise is more positioned at
SEC A. Despite this format has done well due to lack of options available on
hypermarket side. Big Bazaar is likely to see increased pressure with value retailers
fast penetrating the apparel market. Within non apparel Grocery is the highest
contributor and accounts for 26% of the total sales
Channel footprint
Big Bazaar currently has over 150 outlets covering more than 70 cities across the
country and operates a total area of nearly 6 mn sft. In addition to SIS Food
Bazaars, Pantaloons also operates ~40 standalone Food Bazaar stores
Scalability
Big Bazaar‟s value positioning and optimum size of 40-50,000 Sqft makes the model
scalable for Tier II and III cities. Urban markets are becoming very competitive and
Big Bazaar would need to evolve its positioning to appeal to all consumers.
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Big Bazaar is planning to add 50 new stores in next 2 years with 20 of them in Tier 2
cities. The company is also experimenting with smaller formats of 15-20,000 Sqft
Big Bazaar enjoys a strong competitive advantage due to its scale and developed
backend. The company has performed relatively better than most of the other
retailers. Same store sales for Value Segment was 7.4% as compared to 10% in the
previous year
Quality of management:
The company has been a one man show of Mr. Kishore Biyani for a long time; they
have now taken experienced professionals on board in key strategic areas like
private label, consumer insights. The top operational team is one of the most
experienced in the industry, having significant exposure to the Indian retail.
Quality of proposition:
Big Bazaar pioneered the value hypermarket segment and is currently the best
performer in the segment. The shopping experience is kept voluntarily basic and low
cost, and carries the message that more value is given to consumers.
Price points are very competitive, shelves are packed with merchandise, and
customer service in store is low, yet this is a successful shopping destination and a
rare format where full trolleys can be observed.
Quality of execution:
Execution differs according to sites, but is generally basic. Availability is generally
good but shelves or promotional displays are over-stocked, assortments are hardly
readable. Store associates are more often seen filling shelves and handling boxes
than serving customers, but this gives an overall impression of low cost which suits
their customer
Key differentiating strength:

Big Bazaar main assets are its current store network and customers base. The
format has a base of loyal customers and has reached critical mass in terms of
volumes.
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Innovator and leader in the value segment: develops assortments which are best
positioned to capture the transfer of customers from traditional to organized retail.
Expertise of Future group in building efficient (and nice looking) store concepts: the
group clearly has the capability to refresh the Big Bazaar shopping experience when
it feels the emergency to do so (some Food Bazaar stores have already adopted a
better executed identity).
B2. Reliance Fresh, Reliance Mart and Reliance Super

Company overview: Reliance Industries operates 3 formats in the F&G – Fresh,
Super and Mart. Reliance Fresh is a convenience store neighborhood format spread
across 1,500 to 2,000 Sqft on average. Reliance Mart is an all under one roof
hypermarket format with an average store size of 70,000 Sqft. Reliance super is a
larger supermarket format mainly driven by F&G and spread across 25,000 Sqft
Turnover 2012: Crossed INR 10,800 crores for the whole retail business
(Approximately 56% of this revenue came from its value and other segment).
Reliance Retail is a division of Reliance Industries Ltd. Which owns 94% of the
company and the rest of the ownership is with key management employees.
Product offerings: Fresh is the most prominent store-format that Reliance as

launched, and the fastest rolled out (due to its small floor size). It accounts for 73%
of the total sales from all F&G formats. Reliance Mart was planned as the most
visible format, supposed to bring international retail benchmarks into India to
compete against Big Bazaar. Stores rollout was more difficult due to store size and
cost of real estate. Reliance Super was defined by default as a smaller version of
“Mart”, it has reached a reasonable network as the Super stores were quicker to find
and to open.
Channel footprint
Reliance Retail currently operates over 650 Fresh, 25 Super and 15 Marts spread
across over 2.6 Mn Sqft
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Scalability
The high market size of F&G category coupled with low penetration of organized
retail will drive future growth and expansion into other cities.
The key to achieve scale would be to build an efficient backend supply chain for F&V
and private labels and differentiate from the traditional Kirana and other organized
stores.
High rental costs and relatively slow development on back end has impacted
Reliance Retail F&G formats. The company closed down 25-30 fresh stores and
also resized its hypermarkets in Ahmadabad. Most of the store closures were closed
in Tier II cities. The company is focusing on developing its back end and currently
slowed down its F&G formats roll out. Reliance Retail is also focusing on developing
formats like Reliance Trends, Reliance Jewels, Vision Express and joint ventures
partners (e.g. M&S)
Reliance hired some of the most experienced retail executives in India – e.g. R.
Pillai, G. Kapoor, K. Radhakrishnan. However their influence was diluted by the size
and complexity of the Reliance Group. Some of them already left.
Reliance Retail‟s success depends on their ability to leverage the expertise of these
professionals.
Very difficult proposition to sustain, combining lowest prices and best convenience
(in western markets, a premium is charged in city center convenience stores).Pan-
India presence from scratch make the supply chain network more complex to
manage. Large formats make more sense, but the number of stores is still limited
and formats fail to find their customers.
Implementation of the model is still in under development : high levels of shrink and
out-of-stocks as compared to standards, poor store maintenance, low quality of F&V
(depending on city) due to lack of supply capacity
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Reliance is known for reacting and correcting fast. Store floor plans and space
allocations have already been adjusted to take into account the learning of the
starting phase.

Reliance has been one of the world‟s fastest growing retailers. The group has now
reached a critical mass in many cities and can implement synergies across value
formats (e.g. on the CRM programs). Most of the stores are well located and
planned according to better standards (e.g. in customers circulation) and the
company has a track record of fixing quickly its early mistakes.
Reliance can base its operations on a robust operations backbone, but lacks
execution compliance. Process compliance is a major area of progress which could
dramatically improve the overall proposition of the store.
B3. More
Company overview: Aditya Birla Group entered F&G retailing through acquisition of
Trinethra. The company currently operates 2 formats in the F&G category – “More
Supermarkets” in fact a convenience store format and “More Megastores”
hypermarkets. The More Supermarkets stores are neighborhood stores spread
across 2,500 to 3,000 Sqft and targeted to reach out to a large number of
households in a particular area. Megastores are destination hypermarkets of 70,000
Sqft and cater to a wider catchment area
Turnover 2012: INR 4,700 crores (Madura and the food & grocery retail chain More)
More is the flagship format of Aditya Birla Retail Limited (ABRL) which is fully owned
by the Aditya Birla Group.
Product offerings: ABRL focus has been primarily on expanding “More

Supermarkets” and as a result they contribute to ~80% of the total sales today
Food comprising of F&G, F&V and FMCG products comprise major share of ABRL
sales. The initial focus of ABRL was to sell high proportion of private label through
their stores however the company has not been able to achieve that due to lack of
backend infrastructure.
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Channel footprint
ABRL currently operates over 650 supermarket / neighborhood stores and over 5
Hypermarkets across 40 cities occupying a total space of ~2 Mn Sqft.
Scalability
The high market size of F&G category coupled with low penetration of organized
retail will drive future growth and expansion into other cities. ABRL would need to
look at right sizing their formats as there the difficulties in not only locating real
estate for supermarket but it also creates difficulties in filling up the stores. Right
sizing would help company save on rent as well as on initial capital expenditure
involved.
ABRL being one the late entrants in F&G retail has suffered due high rentals and
fast roll out with lack of back end support. The company closed down 70 stores and
have resized close to 50 stores in last one year. The company has also faced
problems on account of changes at the top management levels. The company is
planning to open more More Megastores and is also focusing on developing private
label.
The leadership team that has launched the stores has been replaced with a new
team led by Mr. Thomas Varghese. The new team seems to be taking right strategic
steps towards profitability
Formats very similar to Reliance – More Supermarket is similarly a very difficult
proposition to sustain, combining lowest prices and best convenience
More Megastores are direct equivalents of Reliance Mart stores. Only 4 stores with
diverse quality of product offer depending of category - proposition is still to be
proven.
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As for Reliance, the execution of More Supermarkets is still to be improved: high
levels of out-of-stocks, poor store maintenance, low quality of F&V (depending on
city) due to lack of supply capacity.
More Megastores are better operated but do not appear to generate the footfalls of a
hypermarket format – a majority of 2 wheelers on the parking and therefore people
shop in bags not in trolleys.

More has 2 essential strengths:
1) Rapid start allowed by the refurbishment of an existing, profitable network of
stores (Trinethra)
2) Powerful branding (More) with a potential to differentiate from the competition
(Fresh being the most common name)
The backing of Aditya Birla group is an asset, which they can use to develop good
private label offers, especially in apparel where they could use the capabilities of
Madura Garments. Large formats (but only 4 stores) seem to do better in store
execution, but range quality is inconsistent across categories.
B4. Star India Bazaar

Company overview: Star India Bazaar is the hypermarket format part of the Trent
group of companies. Although the company opened its first Star India Bazaar in
2004 till now it has been slow expansion with 7-8 stores with an average size of
50,000 Sqft. Turnover as of FY 2010-11 was around INR 520 crores.
Initially a part of Trent Ltd., Star India Bazaar has now been hived off into a
subsidiary firm, however still owned completely by Trent Ltd. Trent has signed a deal
to partner with Tesco to open up Cash and Carry stores and expand the retail
operations of Star India Bazaar. Trent Ltd. is publicly listed with the promoters
owning a stake ~32.5% of the firm
Product offerings: The Hypermarket format contributed to 12% of the total sales of
Trent (the remaining part being Westside), F&G contributes to 58% of the total
turnover of Star India Bazaar while Non Food contributes to 42%. Non food sales
primarily include apparel and small home related products.
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Channel footprint
Star India Bazaar is relatively new in the Indian market and currently has 8 stores
spread across an area of 0.4 Mn Sqft
Scalability
Star India Bazaar has a mid market positioning and is scalable beyond the metros
and Tier I cities. Cash and Carry operations with Tesco have very high scalability to
Tier 2 cities. It is expected that both these formats will see good expansion in the
future with the back end support of Tesco.
Due to low scale of Star India Bazaar operations there has been limited impact of
slow down. The company is planning to open 50 hypermarkets in next 5 years.
The company is already in advanced stage of supply chain development and
integration with Tesco which is expected to aid hypermarket roll out.
Backing of TATA‟s, a professionally managed group, it has a good potential to
manage and grow the business. Mr. Noel Tata, himself is very much involved in this
business and gives the strategic direction to the company.
The company also hired Mr. Harsh Bahadur who was instrumental in setting-up of
the Metro Cash and Carry in the country. The tie-up with Tesco is going to help the
company, specifically in the sourcing, merchandising and store operations
Large hypermarket formats outside city centers. Wide ranges of assortment, low
price, and good balance between food and non food exist. Strategic alliance with
Tesco to stabilize back end operations, which will certainly reinforce their proposition
and accelerate modern retail learning process
Recent store checks show that progress has been made in execution as compared
to the start of the first Ahmedabad store. Good floor plans and customer circulation,
efficient customer service (e.g. at food counters), very good store maintenance close
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to western standards. Good product density, rich ranges especially in food and
grocery, very good proposition in F&V quantity, range and quality

TATA‟s Star India Bazaar has only limited stores but differentiates in the quality of
the proposition and execution:
1) The proposition is a possible winner – large formats outside the city centers
providing value offers. If this proposition is confirmed on a large scale, this would
position Star India Bazaar as a key competitor to Big Bazaar, as providing the
same quality of deals for a better store experience.
2) Execution is generally better than the competition: well maintained store, very
good availability and service, good floor plans and customer convenience. The
formats differentiates in the hyper landscape, being the best value / shopping
experience combination
The format will be able to leverage many assets in the next 2 - 4 years which should
allow them to secure their store growth at similar or exceeding performance:
1) The tie-up with Tesco looks very promising, bringing Tesco‟s core strength
mainly on the back end to support Star India Bazaar‟s growth: sourcing, private
labels, larger volumes, and also CRM.
2) The apparel expertise available in the Tata group of companies could be
leveraged to improve the areas of assortments where the offer is perfectible.
B5. Easyday
Company overview: Bharti Retail in India currently operates 3 formats in the F&G
category – Easyday, Easyday market & Best Price Modern Wholesale. Easyday is
the neighborhood convenience format which will provide extensive reach, while
Easyday market is the compact hypermarket format. Best Price Wholesale is
Bharti‟s cash and carry venture in partnership with Wal-Mart and caters to the
unorganized retailers, institutions and HoRECA segment.
The front end company Bharti Retail is a fully owned subsidiary of Bharti Ltd.
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The back end Bharti Wal-Mart is a 50:50 JV between Bharti Retail Holdings and
Wal-Mart Mauritius
Product offerings: Food and FMCG forms a major share of Easy Day Revenues.
Channel footprint
Easyday presently has 220 stores across 13 states in India.
Scalability
F&G and Cash and Carry offers high scalability. It is expected that with the support
from Wal-Mart the backend would be highly robust which would facilitate rapid roll
out in next few years.
The Bharti team is led by experience retail hands, and also has the valuable support
of the Walmart. The team has a very strong strategic as well as operational focus,
which will help the format to grow and take a string position in the future.
As for the Reliance and the Birla formats, the convenience store proposition cannot
yet be considered as proven. Bharti WalMart however was very smart in
concentrating the first store openings in a limited region to simplify the supply chain,
and in executing a reasonable speed of rollout. The Cash & Carry is bound to be a
successful proposition which will bring WalMart‟s supply chain expertise to Indian
largest retail opportunity.
Easy Day stores are currently in a very nascent stage of execution with the lot of
focus on development of supply chain and store operations. In the initial stages the
stores are better executed as compared to Reliance and Aditya Birla More in terms
of store layouts, merchandise mix and product availability. Visual merchandising is
better managed with a dedicated staff at the store.
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The key strength of Bharti / WalMart is the combination of the two partners‟
expertise. Bharti knowledge of the local landscape and WalMart back office & supply
chain expertise. This is reflected in a number of good options taken by the
partnership:
1) Location strategy – to concentrate in a region to simplify supply networks is the
right strategy : its simplicity differentiates from the geographical spread of the
competition (Birla, Reliance)
2) Limited scale to start with – to reduce the human resource hiring and training
effort allows to reach a good level of execution in the stores
3) Good availability in FMCG – based on the supply chain knowledge of WalMart.
However, their results on the F&V category show that they are still in a learning
phase in this domain
4) The good balance in the various formats – addressing C&C, hypermarkets and
convenience stores formats and generate synergies between these
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VI. Organizational Structure
Organization Structure
The company would be organized into two separate business units (SBU) where each
organization would have their own revenue and profitability targets. The two business
Cash and Carry business and Hypermarket would have their own COO.
Organization Structure – Cash & Carry
CEO
COO - COO -
Cash & Carry Hypermarket
Buying & Support - HR,

Operations Supply Chain Finance Marketing
Merchandising Admin & IT
B&M Central Central

Central Supply Chain Finance
Team - Marketing Central Team
Projects Team Central Team Central Team
Category Team
Store B&M - Zonal

Supply Chain Store Finance Store
Operations Team - Store Team
Hubs Team Team Implementor
Team Category
The Cash & Carry Organizational structure is provided above. The details of each of the
functions and the roles of the teams will be explained after the organization structure for
the Hypermarket
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Organization Structure – Hypermarket
CEO
COO - COO -
Hypermarkets Cash & Carry
Buying & Support - HR,

Operations Supply Chain* Finance Marketing
Merchandising* Admin & IT
B&M Central Central

Central Supply Chain Finance
Team* - Marketing Central Team
Projects Team Central Team Central Team
Category Team
Store B&M - Zonal

Supply Chain Store Finance Store
Operations Team* - Store Team
Hubs Team Team Implementor
Team Category
The organization structure of both the business units will mirror each other. However the
company would benefit from the synergies of the two companies by combining the
sourcing function of the two organizations. The Cash & Carry format will source the
products for its own stores and also the Hypermarket business. Therefore the teams in
the Hypermarket Buying and Merchandising and Supply Team will not be as elaborate
as the Buying and Merchandising and Supply Team of the Cash and Carry business.
The Buying and Merchandising Team along with the Operations Team will drive the
business whereas IT and the Supply Chain will be the pillars of the organization. IT and
Supply Chain will enable Buying & merchandising and Operations to drive sales and
margin for the business.
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Role and Function
CEO: The Chief Executive Officer will be responsible for the health of the entire
organization. He not only has to ensure the timely progress of each of the SBU‟s with
respect to the revenue and profitability targets, but also ensure smooth integration of the
2 SBU. The strategy and the direction to both the units will be provided from the CEO‟s
office.
COO: The Chief Operating Officer will be responsible for the business they are
operating: Cash and Carry or Hypermarket. They would drive the business strategy and
expansion for their respective units. The 2 COO will work closely with the CEO and each
other as the expansion strategies of the 2 formats is linked. The Hypermarket format will
only open in areas where there is existing Cash & Carry for company. The COO will also
be responsible for driving new store opening and would work closely with the Operations
Head and the Projects Team (under Operations). The COO would also learn about the
customer profile from each other and would feed it in their respective strategy for the
formats.
OPERATIONS
Operations Head: The operations head for the format will need to ensure that the day-
to-day operations function as prescribed. He would ensure that all the store teams follow
the instructions to the letter. He would also ensure that the company‟s focus on operation
excellence is communicated and adhered to. He would also be responsible for the rollout
of the new stores. The decision would be taken in conjunction with the COO and the
implementation would be carried out by the Projects Management team under the
guidance and watch of the Operations Head. He would also have the overall P&L
responsibility of the stores. However his primary responsibility would be to drive down all
operating costs for the stores while achieving the sales for the stores.
Central Projects Team: The team will be responsible of getting the stores operational
within the time frame allocated. They would be responsible for a) identifying the right
location, b) getting it approved from the management, c) getting the necessary licenses
for the stores d) getting designs for the store, e) getting the fixtures and interiors for the
store in place as planned, etc. The team would directly work with the Operations head
and the COO for the format.
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Store operations Team: Every store will be managed by a store manager who would be
responsible for nearly Rs. 150 crores of sales annually (Cash & Carry) or nearly Rs 30
crores of sales annually (Hypermarket). He would have complete authority of the store.
The primary responsibility of the store manager and his team would be driving store
sales and managing store operations costs. It will be the store managers responsibility to
ensure that all the stock is neatly arranged on the shelves, shelf ticketing is updated,
store is clean, pilferage is low, customers are happy with the store processes.
Buying & Merchandising Head: The Buying and Merchandising Head for the Cash &
Carry format will responsible for the gross margins and vendor support (promotion, staff,
etc) the format is able to get from its vendors. The Buying & Merchandising Head will
ensure that the margin targets for each of the category are met and what could the
company do in case it was lagging in certain categories. The Buying and Merchandising
Head will also be responsible of initiating dialogues with large companies such as HUL,
P&G and others to get their support for developing the categories within the formats.
The Buying and Merchandising Head for the Hypermarket Division will yield significantly
less power as compared to the Cash and Carry Buying and Merchandising Team as
nearly 80% of the merchandise that the Hypermarket format would house would be
source from the Cash and Carry format. The vendor negotiations would be handled by
the Buying & Merchandising Team of the Cash & Carry format. Although the
Hypermarket B&M Head and the team would act as a large internal client it will not affect
the overall profitability of the company.
Central Buying & Merchandising Team: The Central Buying & Merchandising Team in
the guidance of the Buying & Merchandising Head will drive the negotiations and
interactions with the vendors. The system will be tiered with each of the members of the
Buying and Merchandising Team looking at a small category such as oral care, hair care,
etc. They will work closely with the zonal teams to get their inputs for each of the
categories.
Buying & Merchandising Zonal Team: The zonal teams will aggregate the demand
from each of the store at a hub level. They will be responsible for ordering products with
the vendors at a regular interval. They will ensure that the promotions negotiated from
the vendors is communicated and implemented by the store teams.
Supply Chain Team: The Supply Chain Team will work in conjunction with the Buying
and Merchandising and the Operations Team within the company and the vendors from
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the outside to ensure smooth functioning of the supply chain process. The supply chain
team‟s role will be pivotal in keeping the inventory levels low in the system.
Finance Team: The finance team will be crucial for managing the working capital for the
company. As the inventory level in the company increases so does the need for working
capital. The finance team will act as the controller for Buying & Merchandising Team,
Operations Team and the Supply Chain team. It will push the Buying & Merchandising
Team to negotiate higher credit days from the vendors. Similarly it will push the
Operations Team to ensure higher sales of the products and the Supply Chain Team to
ensure that the inventory in the supply chain is optimized.
Marketing Team: The Marketing Team will work largely on the „Below-The-Line‟
activities. It will try to get all the possible support from the vendors through the Buying
and Merchandising Team with coming out with Marketing Collaterals funded by the
vendors. It will also ensure that the marketing activities are communicated properly with
the help of the Operations Team.
The marketing team will also have a wing of data analytics experts as part of their team.
These people would extract data generated in the IT system to learn further about the
customers and do predictive analytics. The inputs from the same would be shared with
the Buying & Merchandising team and the Operations team to help them in their decision
making.
IT Team: The IT system installed for the company would be developed one of the big IT
systems vendors. The company would not have a large internal IT team however the
same would be outsourced to the vendor to manage the operations. They will keep the
systems in place whereas the internal IT team will ensure that the needs and
requirements of the company have been ably supported by the outsourced vendor.
HR Team: The HR team would be responsible for developing policies for recruitment,
employee benefits, training, etc. The aim for the team would be retain as many
employees as possible. The HR team will work towards developing career progression
for deserving employees and nurture them.
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VII. Strategy and Implementation Plan
As discussed above, the broad-level strategic objectives of BuyMore‟s expansion are

four-fold:
1. To increase revenues substantially
2. To achieve operational efficiencies to improve profitability
3. To improve Brand value and brand recognition
4. To issue an IPO to fuel further growth
In order to achieve these objectives, the expansion strategy would involve a three-
pronged approach:
1. Strengthen/ Consolidate current business scope
2. Extend scope of existing business
3. Diversify strategically
Each of these steps would concentrate on four main growth levers:

1. Geography
3. Customer segments
4. Format/Channel
The first two steps would be covered over a relatively short period of time and would be
complete by 2014, after which the main focus of the company will be on expanding to
newer geographies classified as A, AA and AAA cities. For the detailed store rollout plan,
please refer Section IX Financial Statements.
BuyMore currently has 25 Wholesale Cash & Carry stores, under the brand name
BuyMore, and plans to open 5 Hypermart stores under the brand name HyperBazaar by
the end of 2013. The corresponding numbers would grow to 80 BuyMore stores and 250
HyperBazaar stores in 2017, and 200 BuyMore stores and 500 HyperBazaar stores by
2022.
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For setting up hypermarts, after Tier 1 cities including the metros, Hyderabad,
Bangalore, Chandigarh etc., the top Tier 2 cities considered would be as below:
1. Kochi: The retail activity here is mostly concentrated on a central high street, M.G
Road. The other areas that present attractive options for setting up retail hypermarts
in Kochi include Marine Drive, Vytilla Junction, Palarivattam and Edapally. Shopping
malls, such as Lulu Mall are also coming up in parts such as Maradu and Edapally.
2. Jaipur: Jaipur has shown tremendous growth in retail in recent years, with a large
middle class population looking for better shopping destinations. Tonk Road, Malviya
Nagar and Ajmer Road are some of the coveted retail destinations here.
3. Indore: The traditionally unorganized markets are paving way for organized retail
here as malls and shopping centres are proliferating the city. Some good areas to set
up HyperBazaar would be Jawaharlal Nehru Road and MG Road.
4. Ludhiana, Udaipur and Nagpur would be some other attractive markets to enter as a
starting point.
Setting up operations at such a large scale (200 hubs / Wholesale Cash & Carry stores
and 500 spokes / Hypermarts) would require BuyMore to:
1. Establish Standard Operating Procedures and policies for all its operations to achieve
a common understanding ground for all managers as well as standardize reporting
statements.
2. Implement an Enterprise Resource Planning (ERP) system to keep track of supply
chain, sales and other operational parameters as well as HR modules for the large
manpower employed.
3. Integration of ERP system with the Point of Sales (POS) systems in each BuyMore
store as well as HyperBazaar store would be crucial to achieve supply chain
efficiencies through the virtual consolidation approach, wherein each and every store,
both Wholesale Cash & Carry BuyMore and retail Hypermart would have real-time
information of the product stock levels at all stores through the ERP system.
4. The product mix to be procured would need to be defined both top-down (based on
the overall sales targets) and bottoms up (based on the local demands and
influences) – Specialization approach to be followed in HyperBazaar stores, that is
stocking of products would be done on the basis of usual demand figures with little
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slack for uncertainty, and any unanticipated demands will be met through the supply
chain of the local hub (BuyMore store), details of which would be available to all
stores due to virtual consolidation.
5. Minimize inventories at the Wholesale Cash & Carry BuyMore stores through the
cross-docking approach, which is the practice of unloading supplies from an
incoming trailer or truck and loading these products directly into outbound vehicles to
the HyperBazaar stores as well as to the customers, with little or no storage in
between.
6. Performance management for both people and processes will be another issue to be
taken care of.
The supply chain implementation planning would involve 4 major steps:

1. Planning :
a. Assortment localization in India is both a major differentiator and a challenge. Local
and regional tastes & preferences will have to be accounted for. The capability of
the local supply will impact the quality of the assortment. From a process point of
view, the difficulty resides in the definition of the right level of centralization
between national head office, state head office and store, to maximize the benefit
of consolidation without losing the required customization of the offer. The
efficiency of internal communication will be key in this process.
b. BuyMore‟s multi-formats strategy raises complexity in the assortment plans, as
each store size segment will need to have its own category space allocation and
adjacencies model. Standardization of “store templates” will be a requirement to
allow the quick replication of models and accelerate growth.
c. Planogramming is a challenge in India driven by the diversity of the stores floor
shapes and the relative absence of market, consumer, and historical POS data.
Many stores were opened in locations which were not designed to be an organized
store and store design teams have often had to compromise with the floor plates
they received from real estate teams.
2. Buying :
a. The supplier‟s landscape is characterized by a high level of fragmentation and the
presence of intermediaries leading to additional costs. This increases the
difficulties of young and growing companies like BuyMore where coaching
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suppliers is going to be a success factor to open stores on time. Again internal
communication will be a success factor as store openings require store teams to
apply with their local suppliers process models designed centrally.
b. The development of strong private labels (especially for categories with high share
of unbranded products) will be a major task for BuyMore – an extension of a
western practice where most successful large retailers differentiate with quality
private label offers. Absence of data and the inadequate supplier‟s landscape
(most of the suppliers are in SME sector hence difficulty in locating reliable
suppliers for private labels) is expected to be a major constraint.
c. Collaboration and assistance from international brands suppliers (in the FMCG
sector) will be key to BuyMore – essentially on assortment, promotions and
product introductions. This has been difficult to implement in India so far because
(i) suppliers are more interested in dealing with non-organized channels which still
account for over 95% of their business and are easier to manage than large
corporations; (ii) the absence of historical data and panels make collaboration
more difficult. Supplier collaboration will be critical however, as consumers choose
organized retail for discounts (promotions) and variety (assortments), two areas
addressed jointly with large suppliers in advanced organized retail models.
3. Moving
a. The ability to develop a strong back-end will be necessary to industrialize the
delivery of a constant service and quality level which competes with the
performance of other markets.
b. The supply chain is structurally a challenge in India, and improving logistics
network is critical in a low margin business: Inadequate infrastructure, complete
absence of cold chain facilities, and the importance of losses in transit due to poor
roads, overloading, and inadequate packing will be the most important challenges
to deal with.
c. In this context, acquiring quick maturity on modern supply chain processes and
technologies is an imperative : using EDI for at least orders and delivery notes
(integrated with stores back-end IS) and internationally standardized barcodes has
been a major factor of development of organized retail in mature countries, and is
still at nascent stage in India. The lack of collaboration with suppliers (a
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fragmented base) and of consistency in the choices of large Indian retailers will
need to be overcome to introduce standard models and increase supply chain
efficiency.
4. Selling :
a. Finding good store locations is the number one challenge and a critical success
factor for Hypermart chains. High rentals and operating costs in major cities are a
challenge. In addition, government regulations may be a challenge especially to
develop large formats, such as APMC Act restraining growth of hypermarkets in
the country.
b. The service reference of the Indian consumer is high: mom-and-pop stores are
unbeaten in convenience of quick home delivery, personalized service, and credit.
Indian retailers require an excellent level of execution to compete on these items
and offer a wider range to differentiate.
c. Store execution is made difficult by the lack of qualified store resources. A large
hypermarket employs 300 to 400 people, most of whom are new to retail and must
be trained. A high level of attrition exists as competition is fierce among retail
chains and retail is a tough job which more than 20% of store associates new to
the industry leave in the first 2 months.
Across Processes, building a scalable model to drive cost reduction is an imperative:

Building a scalable model that is replicable across regions scale to be the driver for
reducing costs. An interesting growth potential for major players is to go to non-
metros. It would be logical for the players to not limit their operations to metros as
many smaller cities are ready to absorb organized retailing in food and grocery.
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VIII. Operations Management, Sourcing and Supply Chain
SOURCING
In order to get accepted across the length and breadth of the country, the company will
cater to the unique and local needs of the customer. A centralized sourcing structure
alone may not be sufficient and capable of handling regional nuances. Therefore the
company will adopt a dual sourcing structure where
The company will look to negotiate on the sourcing of ~80-90% of the products
centrally.
Another 5-10% of the products (although are common across all locations but
have a local supply chain and is therefore catered by local / regional suppliers
Rest of the merchandise is unique to the region one is operating out of. The
merchandise will be sourced by regional sourcing team.
The chain will benefit from centralized sourcing of the products from large consumer
product companies. The actual orders will not be placed by the central merchandising
and sourcing team but these will be placed at the hub level. The company will benefit
from aggregating orders of the different stores – Cash and Carry and Hypermarkets.
Reduce Inventory in the System: The more we are able to aggregate the
demand, the more we will be able to reduce the overall inventory in the system.
Higher Availability of products: This will also ensure higher availability of the
products at the stores and less frequent stock-outs.
Large volumes of products will be sourced from various large and small consumer
product companies. We will contribute significant level of revenues for these companies
and therefore command special status. In order to fully benefit from it, the negotiation on
the contracts will take place at the centralized level.
Better terms of trade: High volumes will help the company gain better terms of
trade from all the companies it deals with. This will translate into
o Higher Margins: With larger volumes, the companies are known to offer
better margins to the larger retailers. This is primarily due to the increased
bargaining power of the retailer vis-à-vis the consumer product companies.
Also higher margins are a result of lower distribution costs incurred by the
retailer
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o Better credit period: Usually the credit period for FMCG products in
categories such as personal care, homecare, processed and packaged
food, etc. varies between 14-21 days. However we would be able to get
nearly 30-35 days credit period for the goods we would carry.
o Greater promotion support: For consumer product companies, it is very
difficult to introduce a new product to the consumers with the help of the
traditional kirana store. Also it is very difficult for them to reach a large
number of these stores due to their size and location. The modern stores
on the other hand facilitate browsing and interaction of customers with all
the products. It is also easier to activate promotional schemes with large
format stores and measure its effectiveness. Therefore we would be able to
get better and larger promotion support from the brands
o Greater in store support: For certain categories such as make-up,
lipstick, watches, jewellery, etc. it is difficult to sell the product without the
support of the sales staff. Also these categories are driven by impulse. With
large walk-ins, we would be able to get the companies to provide in-store
promoters to sell the product. This will not only result in higher sales but
also result in lower manpower costs,
Preference in product delivery / availability: Being one of the prominent or
larger accounts for the supplier companies, the products would get preferentially
allocated to the company stores all across the country.
BuyMore will work together with the suppliers to develop each of the categories. A brand
or a company will be established as the category captain to drive sales for the category.
Private Label: There will be distinct focus on the private label products across
categories. Private labels in India have already started to make their presence felt. In ten
years time, the penetration of private labels will be much higher and would be
comparable to the level of private labels in the US at present. The initial focus of the
private label program would be to offer the customer a comparable product at a better
price. However the margin earned on these products would be nearly double that of the
national brands. Once the company achieves critical mass and greater acceptance of the
brand amongst the masses, it would then focus on developing better quality products
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and would price them at par with category leaders. The products can be easily
outsourced to manufacturers across the country and therefore should not be a problem.
BuyMore will offer private labels in multiple categories.

Categories Focus
Staples High
Packaged Food High
Home Care High
Personal Care Medium
Apparel High
General Merchandise Medium
Most of the offering in staples would be private label with only a few products offered by
branded players. Packaged Food and Home care categories offer the most opportunity
to launch private labels with many small packaged food players offering products across
the categories. Further within packaged food category it would be at first easy to
replicate the products produced by large national and popular regional brands. In the
homecare category, the company would launch private label products in non-core
categories of FMCG majors. Once it starts establishing itself amongst the consumers, it
will move into core categories such as laundry soap, powder, etc. Majority of the apparel
offering would be private label.
Hypermarket Sourcing of Products:

Hypermarket business will source 70-80% of the products it sells from the Cash and
Carry Division. It will pay a sourcing management fee to the Cash & Carry division for the
service. For other product categories the company will source the products through its
own buying and merchandising team.
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OPERATIONS MANAGEMENT:
Cash Handling
Cash handling is one of the most important aspects of retailing. It allows the retailer to
keep track of its cash flows. BuyMore already has a very elaborate and robust ERP
system installed and integrated with its front end computerized point of sale (POS). It
calculates the revenue and profitability measures on a daily basis.
The wholesale cash and carry format on an average collects INR 45-60 lacs on a daily
basis whereas each hypermarket collects INR 10-15 lacs. With no acceptance of credit
cards at WCC and low sales on cards in Hypermarkets; large amounts of cash are
collected at each store. In order to safeguard the cash collected, the store would have
cash collected once in a day in the evening. The remaining cash collected during the day
would be stored in the safe within the store.
Prevent Shoplifting/Safety and Security

Modern retail is subject to shoplifting. A modern retail format allows the customer to
freely interact with the merchandise. With the number of customers being large, number
of sales personnel being small and greater access to merchandise makes it easy for the
customers to shoplift. However it is a significant cost to the retailer if not kept in check.
Pilferage attributable to employees is considerably high. The store would be able to keep
the cost down by deploying technology and building in process that would help bring
down such costs.
No merchandise would be displayed very close to the entry and exit
CCTV‟s and cameras would be installed to keep a close look at the customers
As far as possible, small and high value items would be manned by customer
associates, other large and valuable items to have security tags attached to them
Customers need to submit their belongings at the gate at the
Train employees on subjects of ethics and do thorough police verification of
every employee hired
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Store Atmosphere
The store ambience should be welcoming. A positive ambience impacts the customer
experience and longevity of the relationship with the customer. Since the store will be
selling products at a low cost to the customers, it will not be adorned by fancy interiors.
However it will have clear signage, intuitive category placement based on shopper
behavior. The store will not give a cluttered look. There won‟t be any loud music in the
store. Although the staff‟s primary role would be to ensure goods are stocked neatly and
that there are no stockouts, they will also attend to the customers and help them find
their way in the large store. The staff will ensure that the products are properly arranged
on the shelves according to their sizes and patterns and that product do not fall off the
shelves.
The staff would also ensure that there is no foul smell in the store as it irritates the
customers. The floor, ceiling, walls, gondolas, shelves, etc. and even the mannequins
are clean and without any spots. Any unwanted material is not dumped inside the store.
Customer Service
Customers are the biggest asset of the organization. An irate customer could take away
with him many more customers. The cost of acquisition of a customer is always very
large for any company. Customers come to a Cash & Carry or a Hypermarket for the
following reasons:
Good Price
Large Assortment
One-Stop Shop
Guarantee of genuine products
One-Stop Shop
The staff will make sure the same have been communicated effectively to the customer
when he / she is around. On top of that, the customer executives will
Greet customers with a smile.
Assist them in their shopping.
The biggest worry for the shopper is the wait in the queue for billing the products
that one has bought. The company will invest in technology that will help reduce
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the same. Besides it will use different ways of operational excellence to optimize
the time taken by the executive to complete the process and man apt number of
people at the cash tills depending on the number of customer walk-in.
The sales representatives would help the individuals buy merchandise as per their
need and pocket.
Help the customers reach a decision about their purchase on their own.
Give the individual an honest and correct feedback.
Never compromise on quality of products. Remember one satisfied customer
brings five more individuals to the store. Word of mouth plays an important role in
Brand Promotion.
Refunds and Returns

The chances of return in „Cash & Carry‟ and „Hypermarket‟ format are low however there
needs to a clear policy on the refunds and return. Initially when the store is new in any
city, the cashiers especially would educate the customer on their check out process.
Besides this the policy will be spelt out clearly for the customers at a place which is
clearly visible to the customers. The policy would detail out
The merchandise that can be returned
The store timings
The place where it can be exchanged
The procedure for the return
Within the days of purchase a merchandise can be returned
Any other policy related on merchandise on discount, etc. would be covered in the
same
The products would not be exchanged in lieu of cash
In any case, the customer executive would never be rude to the customer. The executive
will try to sort out any issue that the customer may have and if he is not able to help he /
she would take the best possible decision in their jurisdiction to pacify the customer.
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Visual Merchandising
Visual Merchandising is the art of selling by enticing and attracting the customer through
visual stimulus. Some of the important aspects of visual merchandising that would be
taken care by the visual merchandising team are as follows:
The location of the categories would not be changed (unless there is evidence
that the category can perform better elsewhere). This is because customers who
purchase daily household items are regular customers and visit the store often.
They prefer familiarity of the place where the product is kept. It may be done at
times to encourage the customer to move around the store and visit new areas.
There should be adequate light in the store. Lights impact the likeliness of the
customer to purchase products. Therefore it is important to change the burned out
lights immediately.
Don‟t stock unnecessary inventory at the store: Only the merchandise that can
generate sales should occupy the shop floor.
Make sure the signage displays all the necessary information about the store and
is installed at the right place visible to all.
The customers should be able to move and shop freely in the store.
The retail store should be well ventilated.
Training Program
The store manager along with the HR team would conduct frequent training programs for
the sales representatives, cashier and other team members to motivate them from time
to time.
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STORE LAYOUT
The store layout of HyperBazaar stores will be based on five key steps:
1. Consumer Flow Concept
2. Functional Store Areas
3. Concept of Assortment Roles
4. Product Placement in Store
5. Micro Merchandising
Consumer Flow
In-store product placement is highly interrelated with an effective fixture placement,
which will lead consumers through the store on a limited set of alternative routes
Key actions taken to create consumer flow will be:

1. Divert flow & create interest using fixture placement
2. Attract attention with stimulating, well merchandised presentations
3. Lead through the store using walkways, sightlines and focal points
An example:
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Functional Store Areas
The functions of the shop-floor segments will be identified and enforced by the defined
consumer flow
Functions of different areas in the store will be:
1. Attraction
a. Primary space at front of store
b. New innovative products
c. Eye catcher / Accessories
d. Products with high commercial value
2. Substance
a. Volume driven products
3. Destination
a. Products with less commercial value
b. Destination products
An example:
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Assortment Roles
The objective will be to get a logical balance of the four product roles within the
assortment and place these within the correct designated areas of the stores
Product Placement
Making effective use of store space in line with the functions of the different areas will be
vital in order to place the product roles appropriately
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Micro-Merchandise Concept – Product presentation
A clear and logical product presentation will be done in order to create variation and
appeal
1. General Remarks: Products presented in an appealing and diversified manner in
order to trigger sales and communicate assortment message
2. Colour composition: Colour a key factor in creating excitement and appeal in a
store
3. 100% Principle: A distinctive and consistent merchandise presentation (e.g. 100%
colour, 100% brand, 100% size) facilitates customer recognition and enhances
willingness to buy
4. Merchandise on sale: Mark down should be placed separately from regular
merchandise in order to keep an attractive overall store impression
5. Promoted merchandise: Merchandise that is part of a promotion campaign is
marketed via price comparisons but nevertheless treated differently to
merchandise on sale
6. POS Material: Point of sale material supports the product in terms of brand image,
product features and presentation
7. In-store display: In addition to product presentation and product suggestions in-
store displays are used to support the consumer flow in all areas of the store
8. Store window: The display window is the figurehead of any store and should
represent the latest seductive products in an appealing manner
9. Lighting: Lighting as a tool to underpin product placement, decoration and store
routes (i.e. consumer flow)
10. Display presentation: Fixtures should present merchandise in an appealing
manner, offering variety as well as easy access
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SUPPLY CHAIN
BuyMore will develop Hubs for every area with a potential of Rs. 2000 crore sales in the
initial period. These Hubs will consolidate the demand from the stores located within a
distance of 100 Kms. With such large demand coming from a single hub, it will feature
amongst one of the top buyers for the vendors. This will ensure high fill rates for the
company. Also the company would use modern supply chain techniques to minimize the
inventory in the system.
With the help of the Buying & Merchandising Team, the Supply Chain Team will
partner with the vendors to ensure high fill rates.
It will also be able to synchronize the deliveries of various vendors to ensure
smoothening of the flow of the goods to the hub.
Further it will use cross-docking as a technique to decrease the inventory time at
the hub and direct it straight to the stores.
Since large deliveries from the vendors will be taken centrally at the hub, the cost
of delivering the same to the store would be recovered from the vendors in form of
additional margin money
With consolidation of large stock at the hub, the supply chain will be able to
minimize the effect of variation of demand experienced at different stores (instead
of maintaining large inventories at each stores)
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IX. Financial Statements
The revenue for the company is estimated to increase from ~Rs 2,300 million in 2013 to ~Rs 92,800 million in 2022. The
number of stores in the same period is estimated to increase from 15 in 2012 to 700 stores across Cash and Carry -200
stores and Hypermarket Stores 500. The gross margins for the company are expected to increase from 7% at present to
nearly 14% for the 2 formats combined. Individually the formats would also be able to get nearly 200 basis points increase
in its gross margin because of the sheer scale of operations. The company estimates to achieve a PAT of 2.7% in the tenth
year of operations from now.
The company turns profitable in 3 years in 2015 having spent nearly 10 years in India already. It benefits from the
experience of being in the country for so long and the synergies from the Hypermarket format. The company also starts
generating enough cash from its operations that it is able to funds its expansion from 2016 onwards from internal accruals.
The NPV of the firm is nearly Rs. 79,000 million. The project also delivers an IRR of 43%. The ROA for the company is
12.8%. Refer detailed calculation in the subsequent pages.
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Part1: BuyMore (Standalone) – Only Hub calculations
Assumptions
1 Dollar 60
1 Million 1000000
Number of Days 360
Number of Days (First Year of Operation) 180
BuyMore 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Number of Stores 15 25 35 48 60 80 105 135 160 180 200
Sales Per Square Feet 28,000 29,400 30,870 32,414 34,034 35,736 37,523 39,399 41,369 43,437 45,609
Average Store Size 55,000
Growth (%) 5%
Store Rollout - BuyMore 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
AAA Cities 3 4 6 8 10 12 14 15 15 15 15
AA Cities 9 12 15 19 23 28 34 40 55 75 90
A Cities 3 9 14 18 27 35 42 55 65 75 95
Total 15 25 35 48 60 80 105 135 160 180 200
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% Margin - Customer
Categories – % Margin
% Share 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
BuyMore HyperBazaar
Food & Grocery 80% 6% 6% 7% 7% 7% 7% 7% 7% 7% 7% 7%
Staples 20% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 1%
Processed
Food 17% 6% 6% 6% 6% 6% 6% 6% 6% 6% 7% 7% 2%
Beverages 5% 6% 6% 6% 6% 6% 6% 6% 6% 6% 7% 7% 2%
Fresh foods 15% 12% 12% 12% 12% 12% 13% 13% 13% 13% 13% 13% 4%
Personal care 15% 6% 6% 6% 6% 6% 6% 6% 6% 6% 7% 7% 2%
Home care 8% 6% 6% 6% 6% 6% 6% 6% 6% 6% 7% 7% 2%
Non-FMCG 20% 11% 11% 11% 11% 11% 11% 11% 11% 11% 11% 12% 4%
Apparel 3% 15% 15% 15% 15% 16% 16% 16% 16% 16% 16% 17% 5%
Footwear 2% 15% 15% 15% 15% 16% 16% 16% 16% 16% 16% 17% 5%
Consumer
durables 6% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 1%
Stationery 2% 6% 6% 6% 6% 6% 6% 6% 6% 6% 7% 7% 2%
Home ware 7% 15% 15% 15% 15% 16% 16% 16% 16% 16% 16% 17% 5%
Total 100% 7.2% 7.3% 7.3% 7.4% 7.5% 7.6% 7.6% 7.7% 7.8% 7.9% 8.0%
Growth (%) 1%
Per
tore Employees 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store
Store Manager 1 15 25 35 48 60 80 105 135 160 180 200
Assistant Store
Manager 1 15 25 35 48 60 80 105 135 160 180 200
Divisional Managers 10 150 250 350 480 600 800 1050 1350 1600 1800 2000
Sales Staff 60 900 1500 2100 2880 3600 4800 6300 8100 9600 10800 12000
Cashier / Counter 15 225 375 525 720 900 1200 1575 2025 2400 2700 3000
Security Guard 10 150 250 350 480 600 800 1050 1350 1600 1800 2000
Store Finance 3 45 75 105 144 180 240 315 405 480 540 600
Store HR 2 30 50 70 96 120 160 210 270 320 360 400
Total 102 1530 2550 3570 4896 6120 8160 10710 13770 16320 18360 20400
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Per
Store Employees 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store
Store Manager 2.0 30.0 52.5 77.2 111.1 145.9 204.2 281.4 379.9 472.8 558.5 651.6
Assistant Store
Manager 1.0 15.0 26.3 38.6 55.6 72.9 102.1 140.7 190.0 236.4 279.2 325.8
Divisional Managers 0.5 75.0 131.3 192.9 277.8 364.7 510.5 703.6 949.8 1,182.0 1,396.2 1,628.9
Sales Staff 0.1 90.0 157.5 231.5 333.4 437.6 612.6 844.3 1,139.8 1,418.4 1,675.4 1,954.7
Cashier / Counter 0.2 33.8 59.1 86.8 125.0 164.1 229.7 316.6 427.4 531.9 628.3 733.0
Security Guard 0.1 15.0 26.3 38.6 55.6 72.9 102.1 140.7 190.0 236.4 279.2 325.8
Store Finance 0.4 18.0 31.5 46.3 66.7 87.5 122.5 168.9 228.0 283.7 335.1 390.9
Store HR 0.4 12.0 21.0 30.9 44.5 58.3 81.7 112.6 152.0 189.1 223.4 260.6
Total 4.7 288.8 505.3 742.8 1,069.6 1,403.9 1,965.5 2,708.7 3,656.7 4,550.6 5,375.4 6,271.2
Per Store Employee
Expense 19.3 20.2 21.2 22.3 23.4 24.6 25.8 27.1 28.4 29.9 31.4
Growth 5%
Per
Space Occupied 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store
Space Occupied 0.8 1.4 1.9 2.6 3.3 4.4 5.8 7.4 8.8 9.9 11.0
Rent Per Square Feet 400.0
Rent 330.0 577.5 808.5 1,108.8 1,386.0 1,848.0 2,425.5 3,118.5 3,696.0 4,158.0 4,620.0
Growth 5%
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Utilities Cost 150 150.0 157.5 165.4 173.6 182.3 191.4 201.0 211.1 221.6 232.7 244.3
Communication
Expenses 1 1.0 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.5 1.6 1.6
Advertising Expense 0.25%
Credit Card
Commission 0.00% 2.50% 0.00%
Brouchers &
Catalogues 0.25%
Sales Promotion 1.00%
Pilferage Costs 0.25%
Other Misc. Costs 1%
Central Employee
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Cost
CEO 1 1 1 1 1 1 1 1 1 1 1
COO 1 1 1 1 1 1 1 1 1 1 1
Function Head 6 6 6 6 6 6 6 6 6 6 6
General Managers 15 16 18 20 21 23 24 25 27 29 30
Managers 30 32 35 38 42 46 50 55 60 65 70
Asst Managers 50 55 60 65 70 75 85 90 100 110 120
Others 10 12 14 16 18 20 22 24 26 28 30
Total Employees 113 123 135 147 159 172 189 202 221 240 258
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Central Employee
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Cost
CEO 8.0 8.0 8.4 8.8 9.3 9.7 10.2 10.7 11.3 11.8 12.4 13.0
COO 6.0 6.0 6.3 6.6 6.9 7.3 7.7 8.0 8.4 8.9 9.3 9.8
Function Head 4.0 24.0 25.2 26.5 27.8 29.2 30.6 32.2 33.8 35.5 37.2 39.1
General Managers 2.5 37.5 42.0 49.6 57.9 63.8 73.4 80.4 87.9 99.7 112.5 122.2
Managers 1.5 45.0 50.4 57.9 66.0 76.6 88.1 100.5 116.1 133.0 151.3 171.0
Asst Managers 0.7 35.0 40.4 46.3 52.7 59.6 67.0 79.7 88.6 103.4 119.5 136.8
Others 0.5 5.0 6.3 7.7 9.3 10.9 12.8 14.7 16.9 19.2 21.7 24.4
Total 160.5 179.0 203.4 229.8 257.1 289.7 326.3 363.0 411.5 463.8 516.4
Growth 5%
Office Costs 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Office Space 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Rental, Utilities 1200 5.2 5.4 5.4 5.4 5.4 8.1 8.1 8.1 8.1 8.1 8.1
Consumables,
Communication, Etc. 15000 1.7 1.9 2.2 2.6 2.9 3.3 3.8 4.3 4.9 5.6 6.3
Total Office expense 6.9 7.4 7.7 8.0 8.3 11.4 11.9 12.4 13.0 13.7 14.4
Central Logistics Cost 2%

Marketing & Ad Costs 1%
Other Misc. Costs 0.25%
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Investment
Assumptions
New Store
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Investment
Store Interiors,
Furniture & Fixtures 2000 6,000.0 1,100.0 1,212.8 1,655.4 1,604.5 2,807.8 3,685.3 4,643.4 4,063.0 3,412.9 3,583.6
Power Backup 1.0 3.0 10.0 10.5 14.3 13.9 24.3 31.9 40.2 35.2 29.5 31.0
Data Processing
Equipment 2.0 6.0 20.0 21.0 28.7 27.8 48.6 63.8 80.4 70.4 59.1 62.1
Contingency 0.1 300.0 55.0 60.6 82.8 80.2 140.4 184.3 232.2 203.2 170.6 179.2
Re-investment 50% 3,154.5 592.5 652.4 890.6 863.2 1,510.6
Rental Deposit
(months) 6 165.0 110.0 121.3 165.5 160.4 280.8 368.5 464.3 406.3 341.3 358.4
Total 6,474.0 1,295.0 1,426.2 1,946.7 1,886.8 6,456.4 4,926.3 6,113.0 5,668.6 4,876.7 5,724.8
Depreciation
Calculation
Furniture & Fixtures 15%

WDV 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Opening Value 2,000 6,800 6,715 6,739 7,135 7,428 8,701 10,528 12,896 14,415 15,154
Addition 6,000 1,100 1,213 1,655 1,604 2,808 3,685 4,643 4,063 3,413 3,584
Total 8,000 7,900 7,928 8,394 8,739 10,236 12,386 15,172 16,959 17,828 18,737
Depreciation 1,200 1,185 1,189 1,259 1,311 1,535 1,858 2,276 2,544 2,674 2,811
Net Value 6,800 6,715 6,739 7,135 7,428 8,701 10,528 12,896 14,415 15,154 15,927
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Power Related
Equipment 80%
WDV 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Opening Value 0 1 2 3 3 3 6 7 10 9 8
Addition 3 10 11 14 14 24 32 40 35 30 31
Total 3 11 13 17 17 28 37 48 45 38 39
Depreciation 2 8 10 13 14 22 30 38 36 31 31
Net Value 1 2 3 3 3 6 7 10 9 8 8
IT Equipment 60%
WDV 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Opening Value 0 2 9 12 16 18 26 36 47 47 42
Addition 6 20 21 29 28 49 64 80 70 59 62
Total 6 22 30 41 44 66 90 117 117 106 104
Depreciation 4 13 18 24 26 40 54 70 70 64 63
Net Value 2 9 12 16 18 26 36 47 47 42 42
Total
WDV 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Opening Value 2,000 6,803 6,726 6,753 7,155 7,450 8,733 10,572 12,952 14,471 15,204
Addition 6,009 1,130 1,244 1,698 1,646 2,881 3,781 4,764 4,169 3,502 3,677
Total 8,009 7,933 7,970 8,451 8,801 10,330 12,514 15,336 17,121 17,972 18,880
Depreciation 1,206 1,207 1,217 1,297 1,351 1,597 1,942 2,384 2,650 2,769 2,904
Net Value 6,803 6,726 6,753 7,155 7,450 8,733 10,572 12,952 14,471 15,204 15,976
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Means of Finance
Long Term
Equity 50%
Debt 50%
Cost of Equity 15%
Interest on Long
Term Debt 12%
Repayment period
(Years) 10
Working Capital
Equity 25%
Debt 75%
Interest on Working
Capital (annual) 12%
WACC 14%
Growth Rate after 5
years 5%
Tax Rate 34.0%
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Project Financing
No of Years of Loan 10
Loan Repayment
Loan
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Taken
2012 4,652 517 517 517 517 517 517 517 517 517
2013 2,036 226 226 226 226 226 226 226 226 226
2014 1,607 179 179 179 179 179 179 179 179 179
2015 280 31 31 31 31 31 31 31 31
2016 0 0 0 0 0 0 0 0
2017 0 0 0 0 0 0 0
2018 0 0 0 0 0 0
2019 0 0 0 0 0
2020 0 0 0 0
2021 0 0 0
2022 0 0
Total 8,575 517 743 922 953 953 953 953 953 953 436 210
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Opening Balance 0 4,135 5,428 6,113 5,441 4,488 3,535 2,582 1,629 677 241
Additional Loan 4,652 2,036 1,607 280 0 0 0 0 0 0 0
Repayment 517 743 922 953 953 953 953 953 953 436 210
Closing Balance 4,135 5,428 6,113 5,441 4,488 3,535 2,582 1,629 677 241 31
Interest on term loan 248 574 692 693 596 481 367 253 138 55 16
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BuyMore
Part2: Hyper Bazaar (Standalone) – Only Spoke calculations
Hyper Bazaar 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Number of Stores 0 10 70 130 190 250 300 350 400 450 500
Sales Per Square Feet 0 10,000 10,500 11,025 11,576 12,155 12,763 13,401 14,071 14,775 15,513
Average Store Size 30,000
Store Rollout - Hyper

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Bazaar
AAA Cities 0 1 2 4 6 8 10 13 16 18 20
AA Cities 0 2 5 10 19 32 45 67 84 102 130
A Cities 0 2 8 16 35 50 65 80 100 130 150
Total 0 10 70 130 190 250 300 350 400 450 500
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% Margin - Customer
Categories - Hyper %
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Bazaar Share
Food & Grocery 60% 16% 16% 16% 16% 16% 17% 17% 17% 17% 17% 17%
Staples 18% 10% 10% 10% 10% 10% 11% 11% 11% 11% 11% 11%
Processed Food 10% 20% 20% 20% 21% 21% 21% 21% 21% 22% 22% 22%
Beverages 6% 10% 10% 10% 10% 10% 11% 11% 11% 11% 11% 11%
Fresh foods 12% 25% 25% 26% 26% 26% 26% 27% 27% 27% 27% 28%
Personal care 10% 15% 15% 15% 15% 16% 16% 16% 16% 16% 16% 17%
Home care 4% 15% 15% 15% 15% 16% 16% 16% 16% 16% 16% 17%
Non-FMCG 40% 26% 27% 27% 27% 27% 28% 28% 28% 28% 29% 29%
Apparel 13% 35% 35% 36% 36% 36% 37% 37% 38% 38% 38% 39%
Footwear 6% 35% 35% 36% 36% 36% 37% 37% 38% 38% 38% 39%
Consumer durables 15% 12% 12% 12% 12% 12% 13% 13% 13% 13% 13% 13%
Stationery 1% 30% 30% 31% 31% 31% 32% 32% 32% 32% 33% 33%
Home ware 5% 35% 35% 36% 36% 36% 37% 37% 38% 38% 38% 39%
Total 100% 20.0% 20.2% 20.4% 20.6% 20.8% 21.0% 21.2% 21.4% 21.7% 21.9% 22.1%
Per
Store Employees 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store
Store Manager 1 0 10 70 130 190 250 300 350 400 450 500
Assistant Store Manager 1 0 10 70 130 190 250 300 350 400 450 500
Divisional Managers 6 0 60 420 780 1140 1500 1800 2100 2400 2700 3000
Sales Staff 25 0 250 1750 3250 4750 6250 7500 8750 10000 11250 12500
Cashier / Counter 8 0 80 560 1040 1520 2000 2400 2800 3200 3600 4000
Security Guard 6 0 60 420 780 1140 1500 1800 2100 2400 2700 3000
Store Finance 2 0 20 140 260 380 500 600 700 800 900 1000
Store HR 1 0 10 70 130 190 250 300 350 400 450 500
Total 50 0 500 3500 6500 9500 12500 15000 17500 20000 22500 25000
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Per
Store Employees 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store
Store Manager 1.5 0.0 21.0 154.4 301.0 461.9 638.1 804.1 985.0 1,182.0 1,396.2 1,628.9
Assistant Store Manager 0.7 0.0 10.5 77.2 150.5 230.9 319.1 402.0 492.5 591.0 698.1 814.4
Divisional Managers 0.4 0.0 31.5 231.5 451.5 692.8 957.2 1,206.1 1,477.5 1,772.9 2,094.3 2,443.3
Sales Staff 0.1 0.0 26.3 192.9 376.2 577.4 797.7 1,005.1 1,231.2 1,477.5 1,745.2 2,036.1
Cashier / Counter 0.2 0.0 12.6 92.6 180.6 277.1 382.9 482.4 591.0 709.2 837.7 977.3
Security Guard 0.1 0.0 6.3 46.3 90.3 138.6 191.4 241.2 295.5 354.6 418.9 488.7
Store Finance 0.4 0.0 8.4 61.7 120.4 184.8 255.3 321.6 394.0 472.8 558.5 651.6
Store HR 0.4 0.0 4.2 30.9 60.2 92.4 127.6 160.8 197.0 236.4 279.2 325.8
Total 3.8 0.0 120.8 887.5 1,730.6 2,655.9 3,669.3 4,623.3 5,663.6 6,796.3 8,028.1 9,366.1
Per Store Employee
Expense 0.0 12.1 12.7 13.3 14.0 14.7 15.4 16.2 17.0 17.8 18.7
Per
Space Occupied 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store
Space Occupied 0.0 0.3 2.1 3.9 5.7 7.5 9.0 10.5 12.0 13.5 15.0
Rent Per Square Feet 500.0
Rent 0.0 126.0 882.0 1,638.0 2,394.0 3,150.0 3,780.0 4,410.0 5,040.0 5,670.0 6,300.0
Growth 5%
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Utilities Cost 200 200.0 210.0 220.5 231.5 243.1 255.3 268.0 281.4 295.5 310.3 325.8
Communication Expenses 1 1.0 1.1 1.1 1.2 1.2 1.3 1.3 1.4 1.5 1.6 1.6
Advertising Expense 0.25%
Credit Card Commission 0.75% 2.50% 30.00%
Brouchers & Catalogues 0.50%
Sales Promotion 1.50%
Pilferage Costs 0.25%
Other Misc. Costs 1%
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Part3: BuyMore (Standalone) – Only Hub Financial statement
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store Revenue 23,100 40,425 59,425 85,572 112,313 157,238 216,693 292,536 364,045 430,028 501,700
COGS 21,437 37,485 55,060 79,224 103,898 145,339 200,132 269,954 335,662 396,165 461,798
Gross Margin 1,663 2,940 4,365 6,348 8,415 11,899 16,562 22,582 28,383 33,863 39,902
Gross Margin (%) 7.2% 7.3% 7.3% 7.4% 7.5% 7.6% 7.6% 7.7% 7.8% 7.9% 8.0%
Store Rentals 330 578 809 1,109 1,386 1,848 2,426 3,119 3,696 4,158 4,620
Store Salaries 289 505 743 1,070 1,404 1,965 2,709 3,657 4,551 5,375 6,271
Utilities Cost 124 217 318 458 602 842 1,161 1,567 1,950 2,304 2,688
Communication Expenses 15 26 39 56 73 102 141 190 236 279 326
Advertising Expense 58 101 149 214 281 393 542 731 910 1,075 1,254
Credit Card Commission 0 0 0 0 0 0 0 0 0 0 0
Brouchers & Catalogues 58 101 149 214 281 393 542 731 910 1,075 1,254
Sales Promotion 231 404 594 856 1,123 1,572 2,167 2,925 3,640 4,300 5,017
Pilferage Costs 58 101 149 214 281 393 542 731 910 1,075 1,254
Other Misc. Costs 231 404 594 856 1,123 1,572 2,167 2,925 3,640 4,300 5,017
Total Store Costs 1,393 2,437 3,542 5,046 6,553 9,082 12,395 16,577 20,444 23,942 27,701
Store EBITDA 270 502 822 1,302 1,862 2,817 4,167 6,005 7,939 9,921 12,200
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Part4: Hyper Bazaar (Standalone) – Only Spoke Financial statement
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store Revenue 0 5,500 40,425 78,829 120,972 167,132 210,586 257,968 309,562 365,670 426,615
COGS 0 4,389 32,177 62,585 95,795 132,001 165,878 202,653 242,520 285,685 332,366
Gross Margin 0 1,111 8,248 16,243 25,177 35,132 44,708 55,315 67,042 79,986 94,250
Gross Margin (%) 0.0% 20.2% 20.4% 20.6% 20.8% 21.0% 21.2% 21.4% 21.7% 21.9% 22.1%
Store Rentals 0 126 882 1,638 2,394 3,150 3,780 4,410 5,040 5,670 6,300
Store Salaries 0 121 888 1,731 2,656 3,669 4,623 5,664 6,796 8,028 9,366
Utilities Cost 0 63 463 903 1,386 1,914 2,412 2,955 3,546 4,189 4,887
Communication
Expenses 0 11 77 150 231 319 402 492 591 698 814
Advertising Expense 0 14 101 197 302 418 526 645 774 914 1,067
Credit Card Commission 0 41.25 303.19 591.22 907.29 1,253.49 1,579.40 1,934.76 2,321.72 2,742.53 3,199.61
Brouchers & Catalogues 0 28 202 394 605 836 1,053 1,290 1,548 1,828 2,133
Sales Promotion 0 83 606 1,182 1,815 2,507 3,159 3,870 4,643 5,485 6,399
Pilferage Costs 0 14 101 197 302 418 526 645 774 914 1,067
Other Misc. Costs 0 55 404 788 1,210 1,671 2,106 2,580 3,096 3,657 4,266
Total Store Costs 0 554 4,028 7,772 11,808 16,156 20,167 24,485 29,130 34,126 39,498
Store EBITDA 0 557 4,220 8,471 13,369 18,976 24,541 30,831 37,913 45,860 54,751
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Part5: BuyMore and Hyper Bazaar (Hub n Spoke) – Consolidated Financial statement
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store Revenue 23,100 45,925 99,850 164,400 233,285 324,370 427,280 550,505 673,607 795,698 928,315
COGS 21,437 41,874 87,238 141,809 199,693 277,340 366,010 472,607 578,182 681,850 794,164
Gross Margin 1,663 4,051 12,612 22,591 33,592 47,030 61,270 77,897 95,425 113,848 134,151
Store Rentals 330 704 1,691 2,747 3,780 4,998 6,206 7,529 8,736 9,828 10,920
Store Salaries 289 626 1,630 2,800 4,060 5,635 7,332 9,320 11,347 13,403 15,637
Utilities Cost 124 280 781 1,361 1,987 2,757 3,573 4,522 5,496 6,492 7,574
Communication Expenses 15 37 116 206 304 421 543 682 827 977 1,140
Advertising Expense 58 115 250 411 583 811 1,068 1,376 1,684 1,989 2,321
Credit Card Commission 0 41 303 591 907 1,253 1,579 1,935 2,322 2,743 3,200
Brouchers & Catalogues 58 129 351 608 886 1,229 1,595 2,021 2,458 2,903 3,387
Sales Promotion 231 487 1,201 2,038 2,938 4,079 5,326 6,795 8,284 9,785 11,416
Pilferage Costs 58 115 250 411 583 811 1,068 1,376 1,684 1,989 2,321
Other Misc. Costs 231 459 998 1,644 2,333 3,244 4,273 5,505 6,736 7,957 9,283
Total Store Costs 1,393 2,991 7,570 12,818 18,361 25,238 32,562 41,062 49,574 58,068 67,200
Store EBITDA 270 1,059 5,042 9,773 15,231 21,792 28,708 36,836 45,851 55,780 66,951
Central Manpower 161 179 203 230 257 290 326 363 411 464 516
Central Office Costs 7 7 8 8 8 11 12 12 13 14 14
Central Logistics Cost 347 689 1,498 2,466 3,499 4,866 6,409 8,258 10,104 11,935 13,925
Marketing & Ad Costs 214 419 872 1,418 1,997 2,773 3,660 4,726 5,782 6,819 7,942
Other Misc. Costs 4 10 32 56 84 118 153 195 239 285 335
Total Central Costs 732 1,304 2,613 4,178 5,846 8,058 10,561 13,554 16,549 19,516 22,733
EBIDTA -462 -245 2,429 5,595 9,385 13,735 18,147 23,282 29,302 36,264 44,219
Depreciation 1,206 1,207 1,217 1,297 1,351 1,597 1,942 2,384 2,650 2,769 2,904
PBIT -1,668 -1,452 1,212 4,298 8,034 12,137 16,205 20,898 26,653 33,496 41,315
Interest on Long Term Loan 248 574 692 693 596 481 367 253 138 55 16
Interest on Working Capital 159 294 581 892 1182 1539 1895 2272 2566 2774 2937
PBT -2,075 -2,320 -61 2,713 6,257 10,117 13,943 18,373 23,948 30,667 38,361
Tax 0 0 0 0 1,517 3,399 4,685 6,173 8,047 10,304 12,889
PAT -2,075 -2,320 -61 2,713 4,740 6,718 9,258 12,200 15,901 20,363 25,472
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Consolidated Financials
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Store Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
COGS 93% 91% 87% 86% 86% 86% 86% 86% 86% 86% 86%
Gross Margin 7% 9% 13% 14% 14% 14% 14% 14% 14% 14% 14%
Store Rentals 1% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1%
Store Salaries 1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2%
Utilities Cost 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Communication Expenses 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Advertising Expense 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Credit Card Commission 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Brouchers & Catalogues 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Sales Promotion 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Pilferage Costs 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Other Misc. Costs 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Total Store Costs 6% 7% 8% 8% 8% 8% 8% 7% 7% 7% 7%
Store EBITDA 1% 2% 5% 6% 7% 7% 7% 7% 7% 7% 7%
Central Manpower 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Central Office Costs 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Central Logistics Cost 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%
Marketing & Ad Costs 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Other Misc. Costs 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total Central Costs 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2%
EBIDTA -2% -1% 2% 3% 4% 4% 4% 4% 4% 5% 5%
Depreciation 5% 3% 1% 1% 1% 0% 0% 0% 0% 0% 0%
PBIT -7% -3% 1% 3% 3% 4% 4% 4% 4% 4% 4%
Interest on Long Term Loan 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0%
Interest on Working Capital 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0%
PBT -9% -5% 0% 2% 3% 3% 3% 3% 4% 4% 4%
Tax 0% 0% 0% 0% 1% 1% 1% 1% 1% 1% 1%
PAT -9% -5% 0% 2% 2% 2% 2% 2% 2% 3% 3%
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Cash Flow Statement
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Cash Flows - Operating Activities
PBT -2,075 -2,320 -61 2,713 6,257 10,117 13,943 18,373 23,948 30,667 38,361
Add :Depreciation + Amortization 1,206 1,207 1,217 1,297 1,351 1,597 1,942 2,384 2,650 2,769 2,904
Less: Change in WC 1,762 1,508 3,184 3,454 3,223 3,966 3,962 4,191 3,264 2,310 1,813
Add: Interest Paid 407 868 1,273 1,585 1,777 2,020 2,262 2,525 2,705 2,829 2,954
Less: Tax Paid 0 0 0 0 1,517 3,399 4,685 6,173 8,047 10,304 12,889
Total Cash Flow from Operating
Activities -2,224 -1,752 -754 2,141 4,645 6,369 9,501 12,918 17,992 23,650 29,516
Cash Flows - Investing Activities

Capital Expenditure 6,474 1,295 1,426 1,947 1,887 6,456 4,926 6,113 5,669 4,877 5,725
Total Cash Flow used in Investing
Activities -6,474 -1,295 -1,426 -1,947 -1,887 -6,456 -4,926 -6,113 -5,669 -4,877 -5,725
Cash Flows - Financing Activities

Increase in Equity 4,652 2,035 1,607 280 0 0 0 0 0 0 0
Increase in Debt 4,652 2,036 1,607 280 0 0 0 0 0 0 0
Increase W.C. Loan 159 294 581 892 1,182 1,539 1,895 2,272 2,566 2,774 2,937
Less :Repayment of Debt 517 743 922 953 953 953 953 953 953 436 210
Less: Interest paid 248 574 692 693 596 481 367 253 138 55 16
Total Cash Flow from Financing
Activities 8,698 3,048 2,181 -194 -367 105 575 1,067 1,475 2,283 2,711
Net Increase in Cash & Cash

Equivalents -0.14 0.97 0.03 -0.03 2,391.57 17.52 5,149.70 7,871.70 13,798 21,057 26,503
Opening Balance 0.00 -0.14 0.82 0.86 0.83 2,392.40 2,409.92 7,559.61 15,431.31 29,229.37 50,285.88
Closing Balance -0.14 0.82 0.86 0.83 2,392.40 2,409.92 7,559.61 15,431.31 29,229 50,286 76,789
Free Cash Flow -8,698 -3,047 -2,181 194 2,758 -87 4,574 6,805 12,323 18,773 23,791
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Cash Flow at Terminal Value -8,698 -3,047 -2,181 194 2,758 -87 4,574 6,805 12,323 18,773 303,690
NPV 79,028
IRR 43%
ROA 12.8%
Working Capital Statement
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Average Inventory (Number of Days) 55 54 53 52 51 50 49 48 47 46 45
Cost of Inventory 3,230 6,195 12,667 20,203 27,902 37,992 49,136 62,151 74,451 85,932 97,911
Total Current Assets 3,230 6,195 12,667 20,203 27,902 37,992 49,136 62,151 74,451 85,932 97,911
Average A/c payable (Number of

Days) 25 26 26 27 27 28 28 29 29 30 30
Amount Payable 1,468 2,925 6,214 10,296 14,772 20,895 28,077 36,902 45,938 55,108 65,274
Total Current Liabilities 1,468 2,925 6,214 10,296 14,772 20,895 28,077 36,902 45,938 55,108 65,274
Total Working Capital Requirement 1,762 3,270 6,453 9,907 13,130 17,096 21,058 25,249 28,513 30,823 32,637
Margin Money 440 817 1,613 2,477 3,283 4,274 5,265 6,312 7,128 7,706 8,159
Bank Loan 1,321 2,452 4,840 7,430 9,848 12,822 15,794 18,937 21,385 23,118 24,478
Interest on Bank Loan 159 294 581 892 1,182 1,539 1,895 2,272 2,566 2,774 2,937
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Income Tax Calculations
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
PBT -2,075 -2,320 -61 2,713 6,257 10,117 13,943 18,373 23,948 30,667 38,361
Losses brought forward 0 -2,075 -4,394 -4,456 -1,743 0 0 0 0 0 0
Losses carried forward -2,075 -4,394 -4,456 -1,743 0 0 0 0 0 0 0
Taxable Income 0 0 0 0 4,514 10,117 13,943 18,373 23,948 30,667 38,361
Income Tax @ 33.6% 0 0 0 0 1,517 3,399 4,685 6,173 8,047 10,304 12,889
BALANCE SHEET
Particulars 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
LIABILITIES
Equity - Promoters Contribution 4,652 6,687 8,294 8,574 8,574 8,574 8,574 8,574 8,574 8,574 8,574
Reserves & Surplus -2,075 -4,394 -4,456 -1,743 2,997 9,715 18,973 31,173 47,074 67,437 92,909
Term Loan 4,135 5,428 6,113 5,441 4,488 3,535 2,582 1,629 677 241 31
Working Capital Loan 1,321 3,774 8,614 16,044 25,892 38,714 54,508 73,444 94,829 117,947 142,424
Current Liabilities 1,468 2,925 6,214 10,296 14,772 20,895 28,077 36,902 45,938 55,108 65,274
Total 10,198 20,000 33,347 48,202 65,903 85,024 112,258 146,561 187,536 235,619 290,435
ASSETS
Gross Fixed Assets 8,009 15,942 23,912 32,364 41,164 51,495 64,009 79,344 96,465 114,437 133,318
Less : Depreciation 1,206 2,413 3,630 4,927 6,278 7,876 9,818 12,202 14,851 17,620 20,524
Net Fixed Assets 6,803 13,529 20,282 27,437 34,886 43,619 54,191 67,143 81,614 96,818 112,794
Current Assets 3,230 6,195 12,667 20,203 27,902 37,992 49,136 62,151 74,451 85,932 97,911
Deposits 165 275 396 562 722 1,003 1,372 1,836 2,242 2,584 2,942
Cash & Bank Balances 0 1 1 1 2,392 2,410 7,560 15,431 29,229 50,286 76,789
Total 10,198 20,000 33,347 48,202 65,903 85,024 112,258 146,561 187,536 235,619 290,435
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RESERVES & SURPLUS

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
CALCULATION
LIABILITIES
Reserves & Surplus :
Profit B/F 0 -2,075 -4,394 -4,456 -1,743 2,997 9,715 18,973 31,173 47,074 67,437
Add.: Profit / (Loss) for the year -2,075 -2,320 -61 2,713 4,740 6,718 9,258 12,200 15,901 20,363 25,472
Profit C/F -2,075 -4,394 -4,456 -1,743 2,997 9,715 18,973 31,173 47,074 67,437 92,909
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X. Appendix
Table1
Organised WC&C Market Size in India (US$ Bn)*

9.1
40%
66% 1.7
0.1
2007 2012 2017

CAGR
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Table2: Terms of Trade – Wholesale Cash & Carry (WC&C) – Part1
Parameters
Buy & Sell or Outright:

a) Ownership of goods: Transferred to the retailer and the revenue is recorded in its name
b) Credit Period: Payment for all the goods purchased is made after the stipulated credit period
c) Liability of Goods: In case the retailer is not able to sell the goods, the liability of the goods rests with
him
d) Shrinkage: Shrinkage is retailer‟s liability subject to the clause within the contract or negotiation
Sell or Return:
a) Ownership of goods: Transferred to the retailer and the sales is recorded in his name
b) Credit Period: Only payment for goods which are sold by the retailer is made after an agreed term
(usually 15 days)
c) Liability of Goods: In case the retailer is not able to sell the goods, he has the right to return the goods
Buying
Model
Consignment:
a) Ownership of goods: Ownership of the goods stays with the brand and the sales is recorded in the
books of the brand. Only commission is recorded as income for the retailer
b) Credit Period: Payment for only goods which are sold by the retailer is made
c) Liability of Goods: If the retailer is not able to sell the goods, he has the right to return the goods
e) Service Tax: Retailer is liable to pay service tax on consignment margin earned on sale of goods
Sale or Return is preferred over Consignment
Additional service tax liability on the consignment margin earned by the retailer
a) The sale is recorded in retailer‟s books in case of sale/return
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Table3: Terms of Trade – Wholesale Cash & Carry (WC&C) – Part2
Parameters Description
Minimum Minimum Order Quantity is defined as number of pieces or minimum value of goods required to be ordered
Order by the retailer from the brand to supply the goods
Quantity
Margins negotiated by the retailer are always net of taxes. It means that all taxes are paid up to the time the
goods are sold to the retailer. Also any tax (usually VAT) which is payable by the retailer is compensated
Category extra to the net margin agreed
Margins (net Sometimes Margin is also arrived at by estimating the Return on Investment (ROI) for a store. Here in this
of taxes) case the margin (%) changes from store to store. This is usually used to arrive at the margin for an exclusive
brand outlet (franchisee store)
Number of days after which the payment is due to the brand. Usually brands negotiate the credit period from
Credit days the date of receipt of goods and not on the day when the bill is raised by the brand. This allows the retailer to
save on his days of credit that would otherwise have been lost in transit of goods
Stock Stock Correction (%) is the percentage of goods that can be returned to the brand after an agreed period
Correction (usually a season). However actual Stock Correction % depends on the retailer profile. It can be higher to
(%) maintain brand equity and freshness within the store
Cash Discount (%) is the discount provided by the brand for paying the dues against the goods sold prior to
the agreed credit period
Cash Cash Discount (%) is usually quoted per month
Discount (%) E.g. A brand usually extends 60 days credit and offers 2% Cash Discount per month. If the retailer makes
payment 30 days before the due date, he can earn 2% Cash Discount
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Turnover discount is provided usually to a store for achieving a mutually agreed sales target.
Turnover As the margins between the brand and the large format retailer are negotiated every 3-6 months; turnover
Discount discount as a component usually does not feature in the contract as margins are revised based on sales
achieved in the previous season / quarter
Security deposit or a bank guarantee is required from the retailer by the brand against the stocks maintained
Security by the retailer
Deposit/Ban The amount of security deposit is usually equal to the cost of stock that will be maintained within the store for
k Guarantee the particular brand
Discount Usually brands offer promotions during festivals to promote sales. If there is an additional product offered by
Sharing – the brand; the cost is usually borne by the brand. If there is any discount offered by the brand, the brand
EOSS & Non shares the discount
EOSS (End a) Usually 50-50 or
of Season b) Without affecting retailer (% margin)
Sale) c) As mutually agreed
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Table4: Organized Wholesale Cash & Carry (WC&C) landscape
Metro Best Price Booker Carrefour Reliance Market
Year of Entry 2003 2009 2009 2010 2011
Product Mix (food and non-food 18,000- 18,000-20,000

~6,000 ~6,000 ~10,000
SKUs) 20,000
Registered User Base ~0.6-0.7 Mn ~0.5-0.6 Mn ~20,000 ~50,000 30,000+
14 stores in 20 stores in 3 store in 2 3 stores in 1 store in 1 city

Wholesale Presence
11 cities 19 cities cities 3 cities
Big store:
~0.1Mn
55,000- ~100,000
Average Store Size (Sq ft.) Small store: 54,000 20,000-25,000
60,000
50,000-
55,000
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Focus on big Focus on

Regional
cities; move Tier I and Metros & Mini- N/A
Market Focus focus –
towards tier I below towns Metros in West
North India
and below India
Plans to
Expansion Plans to
expand
plans put on expand to
further in Plans to
hold for West India. Plans to open 100 stores
2014 expand in Tier
Future Plans investigation To open its by 2017
targeting 2 & Tier 3
against 4th store in
cities with towns
bribery Agra
population >
allegations shortly
0.5 Mn
US$ 335 Mn US$ 375 Mn* US$ 9 Mn (FY US$ 37 Mn N/A

Est. Turnover
(CY 2011) (CY 2011) 2011) (CY 2011)
Table5: References and secondary sources

1) Company website, annual reports, and other financial reports
2) Various industry reports on Indian retail sector and its trends
3) Company specific industry reports
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BuyMore Business Plan for Hub-and-Spoke Expansion

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Team: The Casenovas

Team members: Sachin, Saurabh and Sidharth

2) Retail Business Chain Overview 05

3) Market analysis and Customer segmentation 09

7) Strategy and Implementation Plan 54

8) Operations Management, Sourcing and Supply Chain 59

BuyMore currently operates under Wholesale

Presence of Wholesale Cash & Carry (WC&C) stores

Service and programs

3) BuyMore also assigns a customer consultant to grocery/kirana store owners to assist

4) BuyMore specifically focus on the Hotels, Restaurants, and Caterers (HoReCa)

6) Training: BuyMore offers multiple training to its customers in various areas to

Overall market landscape of organized retail in India can be classified as follows:

Food and Grocery

Cash and carry Hard discounters Hypermarkets and Convenience stores

Local, International Local, International Local, International Local, International

A. Organized Wholesale Cash & Carry (WC&C) market and customers

Following section will provide business chain overview of WC&C market:

Advantages of Organized Wholesale Cash & Carry (WC&C)

B. Hypermarket customer analysis

Key consumer characteristics:

Key drivers of shopping from unorganized retail:

Key challenges for organized retail from consumer viewpoint:

The broad-level strategic objectives of BuyMore‟s expansion are going to be four-fold:

BuyMore plans to achieve these objectives through a three-step approach. First

Addressing the expansion strategy constituents one at a time:

To summarize, the expansion strategy would involve a three step approach:

Each of these steps would concentrate on four main growth levers:

A. Organized Wholesale Cash & Carry (WC&C)

Key players are:

Key customer segments

Presence of Wholesale Cash & Carry (WC&C) stores

Service and programs

2) Credit offered through Co-Branded Credit Card: Best Price Modern

3) Remote Booking Office: Best Price Modern Wholesale has developed a

Key customer segments

Presence of Wholesale Cash & Carry (WC&C) stores

Service and programs

2) Happy Shopper Program:

Presence of Wholesale Cash & Carry (WC&C) stores

Service and programs

A4. Metro Wholesale Cash & Carry

Key customer segments

Presence of Wholesale Cash & Carry (WC&C) stores

Service and programs

6) Metro key account manager: A customer-doorstep service to assist business

7) E-retail program: For e-retailers, Metro provides complete warehousing solutions,

Key customer segments

Presence of Wholesale Cash & Carry (WC&C) stores

For membership registration, Reliance Market requires a valid proof of business.

A6. Decathlon Sports India

Key customer segments

Presence of Wholesale Cash & Carry (WC&C) stores

Delivery services: Decathlon caters to deliveries in India through partner TNT

B1. Big Bazaar

Key differentiating strength:

B2. Reliance Fresh, Reliance Mart and Reliance Super

Product offerings: Fresh is the most prominent store-format that Reliance as

Key differentiating strength:

Product offerings: ABRL focus has been primarily on expanding “More

Key differentiating strength:

B4. Star India Bazaar

Key differentiating strength: