Rise and Fall of Subhiksha | Grocery Store | Retail

Rise and Fall of Subhiksha

Presentation By: Ankit Verma Rohit Sharma

‡ Indian Retail Industry
‡ Subhiksha- Introduction ‡ Strategies adopted by them ‡ Their Positioning ‡ Their Format ‡ Competitive analysis ‡ An end has a start ‡ Expert¶s comment ‡ Fall from Glory ‡ Conclusion

trak.Indian Retail Industry ‡ The Indian retail industry has been riding a wave for the last couple of years. Big Bazaar and many more have entered India since the modern format retail concept began. More.in . Vishal Retail. Subhiksha. Spencer¶s. ‡ Source: www. Reliance Fresh. ‡ According to a latest report. retail sales are expected to rise from US$ 343 billion currently to US$ 543 billion.

Continued« ‡ The expanding middle and upper class has played a big role in the expansion of existing modern format stores and entry of new ones But. ³Have all of these stores been successful?´ The answer is a big NO ‡ ‡ .

which runs the retail stores across India. is battling for survival.Not So Good News Subhiksha. It has negotiated its rentals in many cities but now it is planning to close its stores ‡ ‡ ‡ ‡ UK retailer Argos is pulling out of India Reliance Fresh is not doing that well Same is the case with Spencers and Aditya Birla group¶s More .

Good News Future Group¶s Big Bazaar has bucked the trend though it is resorting to new ways to boost sales ‡ It is trying to rent expensive clothes for special occasions. It is also in talks with Carrefour for a cash-and-carry set-up ‡ Mahindra and Mahindra group has quietly entered the retail space with its Mom & Me store ‡ Bharti has collaborated with WalMart for a cash and carry business and has named its stores as BestPrice Modern Wholesale ‡ .

What Actually Works Out? ‡ Since organized retail is pretty new in India. Parking space ‡ . 2. The profitability is not there for that small a space. Good customer care 4. 3. Big Bazaar is a hit. is something worth paying attention to. which is a rip-off of Saravana Stores in Chennai. no body knows what really works But there are few trends if we look closely1.Which means their store format. Small stores like the Subhiksha format or the Reliance Fresh format did not work.

In 2004. Subramaniam. ‡ . they opened 164 stores all over Tamil Nadu & Pondicherry and had grown to more than 1665 stores by 2009.. an IIM A and IIT Chennai alumnus with its first store at Chennai ‡ It was a discount store at prices which were much lower than other retail outlets ‡ Subhiksha started with 1 store in 1999.An Introduction Subhiksha was started by R.

Strategies adopted by Subhiksha ‡ ‡ ‡ ‡ ‡ Focus on the lower & upper middle class Offer a better ambience than typical general stores Prices were 8% less than the MRP Inform customers about promotional offers Store keepers help buyers in purchase decision .

Introduction Continues« Subhiksha had ICICI Ventures and Wipro¶s Aziz Premji as its investors. ‡ ‡ ‡ Everything seems to be in the right place. So What could possible go wrong? .

The Positioning Subhiksha made an extensive research on consumer behavior and found that offering the branded goods at a lower price could make them stand in competitive retail industry ‡ Low Prices.Its consumers started relying on it to deliver larger savings ‡ .Subhiksha positioned itself as Discount/Value Retail Chain with theme as ³Why pay more when you can get for less´ Trust.

It focused on the concept of constantly sustainable low pricing so that regular customers see the same low prices month after month and buy with an assurance that they are going to save .Continued« ‡ Savings.

Their Format ‡ Subhiksha and its format was viewed to be the best suited to the Indian market for food & grocery retail ‡ It opted for a format of discount store at prices much lower than Kirana (Mom & Pop) Stores and other retail outlets Their approach was a combination of the Indian kirana shops with the efficient supply chain of a large retailer Subhiksha's shops were no-frills (sub-500 sq ft. non-AC) ‡ ‡ .

medicines and lately mobile phones . fruits and vegetables.Continued« ‡ They did not allow consumers to walk through the store to browse products (no aisles ± no wasted area) They planned to be well distributed (aimed to have a store within 1 kilometer of any household) ‡ ‡ Subhiksha focused on selling FMCG.

Perishables. Mobiles 5-10% low than MRP Grocery. Perishables Prices MRP . Pharma.Competitive Analysis Key Elements Subhiksha Neighborhood Stores Yes Convenience Yes Store Location 2Km in radius 1Km in radius Product Range Grocery.

Continued« Key Elements Positioning Store Format Subhiksha Discount Store No touch and feel offered Low Pricing OK Everyday low prices 365 days Neighborhood Stores Pop & Mom Store No touch and feel offered Trust and Relationship OK Credit provided and Customer relationship Brand Image Quality Strengths .

An End Has A Start There are several things which went wrong in Subhiksha¶s case but 2 points are to be noted: ‡ 1. Expansion against consolidation Lack of Focus . 2.

Expert¶s Comment: ‡ Alok Kejriwal. I know this guy right from the days when he was an executive in Enfield. And when such a person by hook or crook establishes a company then it will be a manifestation of his arrogance and the end is very natural.The founder of 2Win Group says- Subhiksha·s fall is something to do with the DNA of its founder. . His arrogance was stunning even in those days. In Subramanian·s dictionary there is no word as Humility. the self styled Sam Walton of Indian Retail(!!!!!).

Fall From Glory From Largest Indian Retailer Doom ‡ Reason 1- Un-mindful expansion spree across different parts of the country ‡ Reason 2- Over expenditure in advertising. wages and rent .

Continued« ‡ Reason 3- Did not consolidate ‡ Reason 4- Inadequate system control and IT support .

Continued« ‡ Reason 5- Poor Inventory Management ‡ Reason 6- Strong Competition .

‡ .Conclusion Before opening the 500th store they would have checked whether people were buying medicines from them or going to the medical shop round the corner. ‡ Before opening the 1000th store they would have checked whether people were buying a mobile from them or from a specialized mobile store.

Conclusion Continued« As Indian customers. we all would rather go to a store which has a specialization for the thing we want to buy. That is the bigger issue ailing Indian retail not just Subhiksha. .

asp ‡http://www.chennaibest.cms ‡http://www.indiatimes.thehindubusinessline.htm ‡http://www.com/articleshow/2456436.indiaretailbiz.economictimes.com/cityresources/home_needs/profile02.References ‡http://www.livemint.com/2007/07/26/stories.com/blog/category/indian-retailers/subhiksha- subramanians/ ‡http://www.htm ‡http://www.in .trak.com/subhiksha.

Thank You!! .

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