BASMATI HOUSE SUPERMART

CO-OPERATIVE COMPETITION WITH AN E-RETAIL CHANNE

DELL [Date] [Course title]

PEER RATING:
S.NO NAME Registration No. Peer rating

1. Sakshi 12102193 10

2. Arpit 12102059 10

3. Shashank Singh 12012838 10

4. Mohini Saini 12102129 7

5. S M Athar Shabaz 12102189 7

Basmati House Supermart

Basmati House Supermart (BHS) was a large grocery outlet located in Sadar Bazar,1
Gurugram, India. Major Commodities of BHS original stores was Sugar,Rice & Refined
cooking oil. But majorly Rice was accounted for the 80% of the total Sales.
Pran Nath Narang and two partners established Basmati House, the forerunner of BHS, in
the main grocery market of Sadar Bazar in 1976. In early 2016, Basmati House increased its
product portfolio from rice and a few staples to include more than 3,000 grocery stock-
keeping units (SKUs). Pran Nath’s son, Vishal, began taking an active interest in Basmati
House in 2014. When moving the store to its new premises in July 2016, Pran Nath also
passed the reigns of the business to Vishal and restricted his own role to providing advice
when asked.

TIMELINE:

1976
Establishment

Jan 2020 1996

Renew the Partition in
Contract or Three
Not subsidaries

BHS

2006
2019
Contruction
Partnership
Boom in
with Springers
Gurgaon
2016
Pran Nath’s
son, Vishal’s
Takeover
Abstract
In July 2019, the owner of Basmati House Supermart (BHS), a grocery store, entered into a
six-month agreement to become a partner outlet of a large online grocery retailer in India.
During the first two months, BHS acquired many new customers and also increased its
customers' monthly purchase. However, the steep discounts and promotions used to attract
customers to the business drove down the margins, while the customer churn rate
increased. The store owner was particularly concerned about the continued use of discounts
to attract new consumers, which could potentially transform his own loyal customer base
into deal-seeking, less loyal, and online-promotion-driven buyers, thereby leaving BHS
terminally dependent on the large online retailer to maintain its sales. The owner wondered
whether he should renew his contract with the online retailer in January 2020, and if he did
not, what his best course of action would be.

PROBLEM IDENTIFICATION-
 The First and Major problem with BHS was their product line because they only
offered three commodities Rice, Sugar & Refined Oil.
 Change in their Credit Policy-Credit purchases amounted to only about 20 per cent of
its total sales. During the transition, Basmati House lost some credit- based sales,
which it tried to make up for by increasing its retail sales. As, the BHS changed their
credit policy there were many retailers who switched their distributor because of
which BHS was facing declining Retail orders.
 Space problem with Different locations-Basmati House increased its product
portfolio from rice and a few staples to include more than 3,000 grocery stock-
keeping units (SKUs). The cost of such a space was prohibitive in the vicinity of their
current location, so they decided to move to Jacobpura. The Jacobpura market
offered less expensive retail space, although it had a much lower footfall in terms of
grocery customers.
 New Reforms by the Government such as GST and Demonetization which forced
most shopkeepers to change their business practices and also brought a lot of
previously unreported business within the new system of taxation.

 The Final and most important problem faced by the BHS was the declining profit
margin that they were seeing after partnership with SPRINGERS, Springers had
spent heavily on advertising, promotional schemes, and discounts in an effort to
increase both customer footfall and basket size at BHS. Which has caused a major
concern in the Mind of Owner Mr.Vishal. He was particularly concerned about the
disadvantages of high discount schemes, which might persuade even loyal customers
 to abandon their loyalty, seek deals, and focus on online promotions, thereby leaving
BHS terminally dependent on Springers.

SOLUTION:
BHS should continue their contract with springers, Because….
 According to Our analysis the first and foremost thing the Company should do to
revive themselves is extend their Contract with Springers because maybe they
were the reason for declining profit but they have contributed a lot in increasing
the footfall and the reach of the BHS.
After the Partnership with the sprinkles the
Average monthly Purchase per customer has increase from Rs. 2153000 to
Rs.2260650 within six months only which is quite good and also the number of
unique customers has increased from 827 to 950 which shows the increase in new
customers and a good influence of Sprinkles on BHS.

 The Store location was also good the major concern because it was located in
Jacobpura but after the tie up with Sprinkles most of the sales started to happen
online and it the location of the store hardly made any impact on the sales,
although it helped the sales to grow. The consumers now are shifting towards
the online retailers like Big Basket and Amazon groceries therefore the BHS
should not worry much about the footfall instead they should focus on Online
Consumers.

Here we can see the growth of number of new customers and net sale hike after the
contract with Springers
Before after highlights on key financial indicators, here we can see Net sales is increased
even the difference is not much but it has a positive indication as we know that this the
review of 3 months only.
We can see BHS started investing on Marketing with the amount 25000 / month after the
contract with springers, which the positive indication of nascent growth of BHS in digital
market.

As we can see BHS is shifted to periphery of the core market in year 2016 in the same year
and even after this shift BHS earning initial profit it is the good significance of growth.
As we can see FMCG wholesale is increased in over all markets of Gurugram from 2000-
2019 it means the FMCG market is growing and it has the opportunity of profitability.

As we can observe from the table above that FMCG retail is increased from 2000-2019, it
becomes important to make business in FMCG in order to sustain in the market.
As we can see sales of retail is more and discount given is less in retail in comparision to
wholesale cost of goods sold was high in case of retail so BHS should also remain with retail
of FMCG for the betterment of BHS in Future.

If we compare CPI and Population growth of Gurugram in past 25 years we can conclude
that there was nothing wrong with the growth of market the overall market and its size
grown siultaniously.
 Future of BHS with SPRINGERS:-

 As there is bright Future of online market, so BHS should associate with more E-
commerce or digital marketing agencies.
 D2C is Future sales so BHS should emphasise more on direct sale.
 Inventory management like JIT (Just In Time) are going to be the future trend in
Industries so in order to go with trend BHS should be more Digitalize.
 Instant Delivery System is future so in order to sustain in market BHS should work
With Springers.
 Digital marketing of firms is an essential need now a days and that’s why association
with online player is important.
 Sale pricing strategy (Offers & Discount) is the emerging ways to attract the
customer, so BHS should create more and offers and discount digitally or physically.
 Now sellers reach to customers, not customer to sellers so digital reach can be come
out as game changer.
 Brand building activities are the essential process for any of the firm so BHS can do it
with Springers easily.