ANALYSES OF SUBHIKSHA CASE FACTORS FOR RISE OF SUBHIKSHA

1. The expansion of stores By March 1999, Subhiksha started expanding rapidly. From 14 stores, it was expanded to 50 stores by June 2000. In the next two years, it had 120-130 stores across Tamil Nadu.They decided to look at every part of India which is significantly literate and is a significant consumption market. Telecom companies are their role model. They employed capable regional managers and expanded. In 2004-05, they decided to have 420 stores in places like Gujarat, Delhi, Mumbai, Andhra and Karnataka by 2006. In 2005, Subhiksha started recruiting people in various regions. 2. Cut price strategy Opening a chain of no-frills stores-no air-conditioning, no fancy lighting, and no touch- and-feel experience (customers have to ask for products at Subhiksha stores)-was a deliberate strategy. Shops are located not on the main road, but just off it, to take advantage of vastly lower rentals. The catchment area of customers is rarely beyond a two-km radius, since its customers usually come on two-wheelers or on foot. FACTORS FOR FALL OF SUBHIKSHA 1. Risk in retailing and expansion As it happens with many growth stories, the retailer could not keep pace with its growth and got into liquidity trap as in the hope increasing its valuations, it kept postponing infusion of equity funds 2. Need for an IT Solution The company needed a solution to manage the payroll system. Although it didn't have any HR issues at the ground level, sending the payroll to employees on time was getting difficult. The system worked manually, with a central team taking care of running 2-3 payroll systems

in a month depending on the availability of the bandwidth and the entire process. 3. High debt Company was not able to raise funds through equity as there was global slowdown and also investors were loosing confidence in the company due to its deteriorating situation. 4. Deteriorating relations with suppliers Many wholesale suppliers in Azadpur subzi mandi, or vegetables market, have stopped supplying fruits and vegetables to Subhikshas outlets in the National Capital Region (NCR) surrounding the national capital.This comes in the wake of the company holding up payments for two to six months against normal credit period of one month. 5. Inefficient inventory management Credit default by subhiksha was causing supply breakages which resulted in the low inventory in few outlets which further resulted in customer dissatisfaction.