The retail sector in India is witnessing a huge change in its retail industry as traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. In this project an attempt has being made to understand the current scenario of the organized retail sector in India and the future challenges as well as the opportunities for the Indian retail sector.
The challenges are such as opening of the multi brand retail to foreign players, who are at present only allowed to invest in single brand retail up to 51% and 100% in wholesale retail through FDI and also the threat possessed by foreign players such as Wal-Mart, Carrefour and Tesco because it is often said that emergence of this player changes the entire game of retail in the country.
It would be challenging for the Indian players to grow in the market and grasp the hold on the consumers to bring them up shopping to their store. The history of Indian retail sector is not much older but a couple of decades. The major reform in the Indian retail sector started in the year 1991 after liberalization measures were taken by the country. Since then the retail sector have being growing but yet it has to emerge as at the top.
This project will put light on steps being adopted by some existing player to face this challenges possessed by emerging players and unorganized retail segment with precise case study about Sahakari Bhandar who have being in this filed for past 40 years and how it has evolved its business in recent years especially after joining hand with Reliance Retail, in systematic manner through a SWOT analysis of this firm and highlighting the some future opportunities for present players in the rural market who have till now confined their operation only to I,II,III tier cities.
The project focuses majorly on opportunities in term of un-tapped market, challenges from emerging player along with a case study on the oldest player in the segment Sahakari Bhandar would be the essence of this project. Introduction The retail sector in India is majorly categorized into two forms i. e. organized retail and unorganized retail. Organized retail consists of the modern retail stores such as super market, hyper market, etc. on the other hand unorganized retail consists of the traditional retail stores such as Kirana shop, general store, paanwala, etc.
The retail sector in India is witnessing a huge changing exercise as the traditional markets make way for new formats such as departmental stores, hypermarkets, supermarkets and specialty stores. Western-style malls have begun appearing in metros introducing the Indian consumer to a shopping experience like never before. Retailing is one of the pillars of the economy in India and accounts for about 35% of the GDP. Organized retailing refers to trading activities undertaken by licensed retailers i. e. those who are registered for sales tax, income tax, etc.
These include the corporate backed hypermarkets and retail chains, and also the privately owned large retail businesses. Organized retail such supermarkets accounts for just 6% of the market as of 2009. Regulations prevent most foreign investment in retailing. Retailing is emerging as a sunrise industry in India and is presently the largest employer after agriculture. Retailing includes all activities involved in selling goods or services directly to final consumers for personal, non-business use. India’s vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets.
However the Indian retail sector is still in an emerging stage. Organized retailing aims at providing an ideal shopping experience for the consumer based on the advantages of large-scale purchases, consumer preference analysis, excellent ambience and choice of merchandise. Efficient management of the supply chain to ensure the profitability of the entire chain, large outlets with modern ambiance and facilities, a wide product profile, self service facilities etc are generally the features of a modern retail store. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas.
This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains. The Indian Retail sector has caught the world’s imagination in the last few years. Topping the list of most attractive retail destination list for three years in a row, it had retail giants like Wal-Mart, Carrefour and Tesco sizing up potential partners and waiting to enter the fray. In fact all the three retail giants have already made an entry in the Indian market and have made tie-up with Indian companies.
India’s retail growth was largely driven by increasing disposable incomes, favorable demographics, changing lifestyles, growth of the middle class segment and a high potential for penetration into urban and rural markets. Asian markets witness a shift in trend from traditional retailing to organized retailing driven by the liberalizations on Foreign Direct Investments. For example, in China there was a drastic structural development after FDI was permitted in retailing. India has entered a stage of positive economic development which requires liberalization of the retail market to gain a significant enhancement.
Hence the Indian government is looking forward to allow a 51% entry to the foreign companies in organized retail sector. A vast majority of India’s young population favors branded garments. With the influence of visual media, urban consumer trends have spread across the rural areas also. The shopping spree of the young Indians for clothing, favorable income demographics, increasing population of young people joining the workforce with considerably higher disposable income, has unleashed new possibilities for retail growth even in the rural areas. History
In India retailing started from the emerged from the opening up of the nearby Kirana stores. This in more specific terms can be said to be as a convenient store. The government of India took steps in order to open up its economy and welcome the new trend of modern retail. Very first franchise model of store chains in India was started by the khadi and village industries commission. 1980’s brought more change as slowly the economy was opening up. The textiles sector with companies like Bombay Dyeing, Raymond’s, S Kumar’s and Grasim saw the emergence of retail chain stores.
Later in a few years Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches. With 1990’s there was more change and now the manufacturers were shifting to become pure retailers. 1990’s brought the emergence of shopping centers, mainly in the urban areas where facility of car parking and home delivery provided a complete destination of shopping experience for all the segments of the society. The traditional grocers, by introducing self-service formats as well as value-added services such as credit and home delivery, have tried to redefine themselves.
However, the boom in retailing has been confined primarily to the urban markets in the country. 2000’s brought the emergence of hyper markets and super markets trying to provide with 3 V’s i. e. value, variety and volume. In the past few years, India’s retail journey seemed picture perfect with the most attractive ‘stops’ still unexploited and under-penetrated. Favorable demographics, steady economic growth, easy availability of credit, and large scale real estate developments were fuelling the growth of Indian retail market.
The opportunity was there for all to see and India was the destination of choice for top global retailers. One can assume that the retailing revolution is emerging along the lines of the economic evolution of society. India has sometimes been called a nation of shopkeepers. Even among retail enterprises that employ hired workers, the bulk of them use less than three workers. India’s retail sector appeared underdeveloped not only by the standards of industrialized countries but also in comparison with several other emerging markets in Asia and elsewhere.
There were only 14 companies that ran department stores and two with hypermarkets. While the number of businesses operating supermarkets was higher most of these had only one outlet. The numbers of companies with supermarket chains were very few which now has grown to a great number proving India’s potential in this sector. Retail sector in India The Indian retail market is the 5th most attractive market in the world. The retail market in India is still mostly untapped and needs to be explored. The growth in the market is forecasted due to the vast middle class that prevails in India.
The turnover of the retail sector in India is of about $510 billion. This figure is expected to grow by about 15 to 20 % in the next coming decade. The India Retail Industry is the largest among all the industries, accounting for over 12 per cent of the country’s GDP and around 8 percent of the employment. One of the reason for the sector not being too much successful as in the other developed countries is the initial investment that is required to break even with the other companies and compete with them. India Retail Industry is gradually inching its way towards becoming the next boom industry.
India continues to be among the most attractive countries for global retailers. At US$ 511 billion, its retail market is larger than ever and drawing both global and local retailers. Apparel, along with food and grocery, has being the leading organized retailing in India. India has one of the largest numbers of retail outlets in the world. A report by Images Retail estimates the number of operational malls to grow more than two-fold, to cross 412, with 205 million square feet by 2010, and a further 715 malls to be added by 2015, with major retail developments even in tier-II and tier-III cities in India.
The future in Indian retail looks more promising as the market is growing and the government’s policies are becoming more favorable and emerging technologies are facilitating operations. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are the key growth drivers of the organized retail sector. However there are a few loopholes in the retail sector which might be needed to be overcome.
The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore, the manufacturers cannot maintain the desired relationship with the retailers which in turn make management of the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost remote. Therefore, the member operating between the manufacturers and retailers become more powerful as they can block the channel of communication between the two. So the dependence of retailers on other channel members increases to a high extent.
Thus the participation of retailers in the flows of marketing mix becomes lower than desired. The financial strength of the Indian retailers, in general, is very low and hence the investment capabilities. This makes the retailers more dependent on the other channel members. However, these characteristics are peculiar to the small retail outlets and may not be present at every kind of retail level. Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones.
India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft/person is lowest in the world Indian retail density of 6 percent is highest in the world. Delving further into consumer buying habits, purchase decisions can be separated into two categories i. e. status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators, washing machines, dishwashers, microwave ovens and DVD players fall in the status category. Indulgence-oriented products include plasma TVs, home theatre systems, iPods, high-end digital cameras, camcorders, and gaming consoles.
Consumers in the status category buy because they need to maintain a position in their social group. Indulgence-oriented buying happens with those who want to enjoy life better with products that meet their requirements. When it comes to the festival shopping season, it is primarily the status-oriented segment that contributes largely to the retailer’s cash register. While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through independent local stores.
Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network and little use of IT systems, limitations of mass media and existence of counterfeit goods. Unorganized v/s Organized The retail industry is divided into organized and unorganized sectors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m2) in size. Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc.
These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. Most Indian shopping takes place in open markets and millions of independent grocery shops called kirana. Organized retail such supermarkets accounts for just 4% of the market as of 2008. Regulations prevent most foreign investment in retailing.
Moreover, over thirty regulations such as “signboard licenses” and “anti-hoarding measures” may have to be complied before a store can open doors. There are taxes for moving goods to states, from states, and even within states. Unorganized Retailing In India, the most of the retail sector is unorganized. The retail business contributes around 12 percent of GDP. Of this, the organized retail sector accounts only for about 5 percent share, and the remaining share is contributed by the unorganized sector. The main challenge facing the organized sector is the competition from unorganized sector.
Unorganized retailing refers to the traditional formats of low-cost retailing, for example, hand cart and pavement vendors, ; mobile vendors, local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hardware shop at the corner of your street selling everything from bathroom fittings to paints and small construction tools; or the slightly more organized medical store and a host of other small retail businesses in apparel, electronics, food etc. The main advantage in unorganized retailing is consumer familiarity that runs from generation to generation.
It is a low cost structure and they are mostly operated by owners, have very low real estate and labor costs and have low taxes to pay as compared to the organized sector. India has sometimes been called a nation of shopkeepers. Small-store (kirana) retailing has been one of the easiest ways to generate self-employment, as it requires limited investment in land, capital and labor. It is generally family run business, lack of standardization and the retailers who are running this store they are lacking of education, experience and exposure.
These kirana shops are having their own efficient management system and with this they are efficiently fulfilling the needs of the customer. This is one of the good reasons why the customer doesn’t want to change their old loyal kirana shop. A large number of working class in India is working as daily wage basis, at the end of the day when they get their wage, they come to this small retail shop to purchase wheat flour, rice etc for their supper. For them this the only place to have those food items because purchase quantity is so small that no big retail store would entertain this.
Similarly there is another consumer class who are the seasonal worker. During their unemployment period they use to purchase from this kirana store in credit and when they get their salary they clear their dues. Now this type of credit facility is not available in organized retail store, so this kirana stores are the only place for them to fulfill their needs. Another reason might be the proximity of the store. It is the convenience store for the customer. In every corner the street an unorganized retail shop can be found that is hardly a walking distance from the customer’s house.
Many times customers prefer to shop from the nearby kirana shop rather than to drive a long distance organized retail stores. These unorganized stores are having n number of options to cut their costs. They incur little to no real-estate costs because they generally operate from their residences. Organized retailing Organized retail business in India is relatively very small but has tremendous scope. This organized retail sector includes supermarkets, hypermarkets, discounted stores, specialty stores and departmental stores.
For example, Spencer network has 69 stores, which includes seven Spencer hypermarkets, three Spencer super markets and 49 Spencer daily’s. The organized sector is expected to grow faster than GDP growth in next few years driven by favorable demographic patterns, changing lifestyles, and strong income growth. The Indian Retail sector has caught the world’s attention in the last few years. Topping the list of most attractive retail destination list for three years in a row, it had retail giants like Wal-Mart, Carrefour and Tesco signing up potential partners and waiting to enter the Indian market.
Organized retailers have not been successful to provide services that match those of kirana stores. The true reason of their troubles is that the business capacity of the kirana shop owners and buyers is high in India. Mom and Pop stores already have a model that is preferred by consumers and is also cost efficient. The big stores are still trying to get their model right in providing an alternative to neighborhood retailers who offer convenience, credit and personalized service.
The major constraint of the organized retail market in India is the competition from the un-organized sector. Traditional retailing has been deep rooted in India for the past few centuries and enjoys the benefits of low cost structure, mostly owner-operated, therein resulting in less labor costs and little or no taxes to pay. Consumer familiarity with the traditional formats for generations is the greatest advantage to the un-organized sector. On the contrary, organized sector have big expenses like higher labor costs, social security to employees, bigger premises, and taxes to meet.
The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector. The organized retail sector is yet to be completely explored by the Indian players in order to match the competencies of those foreign players. Foreign Direct Investment(FDI) Present Scenario
The Indian economy is highly regulated and the most significant regulation is the restriction of foreign ownership. The DIPP (Department of Industrial Policy and Promotion) is the governing council of foreign direct investment in retail who takes care of all the issue relating to FDI in every sector of the economy. Presently India only allows 100% FDI in wholesale cash and carry business which was opened completely in 2006 and as per the recent on 31st march 2010 sales to ‘group companies’ should not exceed 25% of cash ; carry company’s turnover and should only be for ‘internal use’.
Government has also open-up FDI to 51% in single brand retail in late 2008 and has prohibited FDI in multi brand retail which soon is expected to be open for foreign player. Government has always try to promote and opt policy in the best interest of its society and economy in large, that by strengthening its domestic players and protecting the interest of it unorganized player in the market. Even Indian companies are trying to capitalized this opportunities by joining hand with their foreign counter-part by a joint venture in order to avail the expertise knowledge of big MNC in this sector.
The recent example could be Wal-Mart and Bharti group, Carrefour and Future group, Tesco and Reliance. Currently there is a big and controversial discussion is going on in the parliament about the bill which has being passed a few days earlier on opening up of FDI in multi brand retail. Prime Minister Manmohan Singh recently said, “We need greater competition and, therefore, need to take a firm view on opening up of the retail trade” and on the other side opposition party BJP said that “opening up of this sector would threaten the existence of unorganized players”.
There are both pros and cons related to this issue ,lets us put light on some concerns and benefits which India could deprive if FDI in multi brand retail in opened and try and arrive at the conclusion. Following are the benefits which India is expected to deprive if it open’s door for FDI in multi brand retail: 1. Improvement in backend: The supply chain will improve as the large retailers will be able to bring their advanced expertise to bear. More importantly, the likes of Wal-Mart, Tesco and Carrefour will be able to bring a global scale in their negotiations with the MNCs such as Unilever, Nestle, Reckitt, P;G, Pepsi, Coke, etc.
They will be able to pass on these reduced prices to their customers and, India being a pricesensitive market, this will certainly help them pick up sales. On the other hand, these companies will not be able to bring skills to bear on the F;V side, this is an area fraught with inefficient intermediaries such as the arthiyas and mandis, and while you can set up a direct distribution linkage with farmers, managing it successfully on an end-to-end basis is not an easy task which is something that even the likes of Reliance and Pantaloon have also not been able to manage so far. . Provide customers better shopping experience: Those customers who go to the large retail outlets will get better pricing and a better shopping experience, but whether it beats the convenience of kirana down the street for day-to-day shopping is highly debatable. So, wherever organized retail is available, there will be some shifting of shopping baskets such that the monthly shopping might move to the larger hypermarket, but the convenience and day-today vegetable shopping will continue from neighborhoods stores. 3.
Generate new employment: As the Indian GDP grows so will the need for new retail formats, experiences and outlets. New stores, whether kirana, organized retail or FDI, will automatically lead to new employment generation, it really depends on how much of the incremental spend each of these three categories captures. It is a fallacious argument that employment generation will go up only because FDI retailers are entering the system as penetration of any form of retail goes up in India, it will inevitably lead to new employment generation.
One can argue that the speed of this penetration will increase through more competition and, therefore, employment generation will get hastened. Apart from these benefits the biggest benefit would be that the Indian companies would be getting an opportunity to learn from these big MNC’s and not only help them to develop their business skills but also help them to get an exposure to the foreign market for expansion. Opening up of the FDI will help our economy as the retail giants will bring in lots of investment.
The competition will get tougher and this help the consumers as each company would like to give the best to the customers. Concerns about opening up of FDI: • It is unlikely that perishables would receive too much attention from global retail chains in the initial stages As it has been seen that organized retail usually starts with non-food items and slowly moves to dry food category and over a period of time enters into fresh food category. In general, perishables are difficult to manage and it is unlikely that it would receive too much attention from global retail chains in the initial stage.
And most unemployment created due to emergence of MNC such as Wal-Mart, who reduces the cost of by 10-12% , now if this is the case then an unorganized store won’t be able face such stringent competition and hence would forced to close down their operation. Now this is big cause of concern because Indian retail sector comprises largely of unorganized sectors, and closer of this segment would create huge unemployment. There is no reason to believe that capital-intensive global retail chains would create more jobs. Other worry is that the global player will wipe out the struggling domestic players who are already facing legacy issue, harvest age and poor supply chain management. • And the worst part in that Government haven’t specified any provision in their proposal to cater this segment which will be unemployed due to emergence of this MNC’s. • Now after goings through all the pros and cons it would recommend that a country could not confined itself and has to open its market for foreign players which is in turn is going to benefit its people.
Government should not allow 100% at once but may do so slowly and gradually which is what being preferred by the Indian players. Here India could learn a lesson from China who opened up its retail sectors for MBR back in 1992 by allowing 26 % of FDI by 2002 it has raised that limit to 49% and by 2004 it completely opened these sectors by allowing 100% FDI. Its retail market is now $580 million in size and at present now in China 25% is organized were as in India it is only 5%. Types of Retail Operations
Retailing is one of the largest sectors in the global economy. It is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Apna Bazaar, More, etc. ), convenience stores (Convenio, HP Speedmart) and fast-food chains.
It is the non-food segment however that has been made into a variety of new sectors. These include lifestyle/fashion segments (Shoppers’ Stop, Globus, LifeStyle, Westside), apparel/accessories (Pantaloon, Levis, Reebok), books/music/gifts (Archie’s, Music World, Crosswords, Landmark), appliances and consumer durables (Viveks, Jainsons, Vasant & Co. ), drugs and pharmacy (Health and Glow, Apollo). Retail Management System targets small and midsize retailers seeking to automate their stores.
The package runs on personal computers to manage a range of store operations and customer marketing tasks, including point of sale, operations, inventory control and tracking, pricing, sales and promotions, customer management and marketing, employee management, customized reports and information security. The traditional grocers, by introducing self-service formats as well as valueadded services such as credit and home delivery, have tried to redefine themselves. However, the boom in retailing has been confined primarily to the urban markets in the country.
Even there, large chunks are yet to feel the impact of organized retailing. There are two primary reasons for this. First, the modern retailer is yet to feel the saturation’ effect in the urban market and has, therefore, probably not looked at the other markets as seriously. Second, the modern retailing trend, despite its cost-effectiveness, has come to be identified with lifestyles. In order to appeal to all classes of the society, retail stores would have to identify with different lifestyles. In a sense, this trend is already visible with the emergence of stores with an essentially `value for money’ image.
The attractiveness of the other stores actually appeals to the existing affluent class as well as those who aspire for to be part of this class evolution of society. Following are the types of organized retail operations or organized retail formats: Malls Malls are the largest form of organized retailing today. Most malls give space out to individuals on lease and these are enticed by the economies resulting from the sharing of costs. In malls like these, the combined brand pull of all outlets is used to create a pull for the mall. Malls are located mainly in metro cities and in urban localities.
Malls range from about 60,000 sq ft to 7, 00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment all under one roof. Examples of such malls are In-orbit mall, Thakur mall, etc. Departmental stores Departmental stores are expected to take over the apparel business from exclusive brand showrooms. These stores range over about 30,000 sq ft. Among these Raheja’s Shoppers Stop has being one of the most successful stores. It has even its own set of brand for clothes called Stop. Specialty Stores
Specialty stores are those stores which look to target one specific segment of the market. Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG’s Music World and the Times Group’s music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors. Absence of discounting as a dominant format of retailing in India is a glaring peculiarity. The reasons are two-fold. Unlike most Western countries, Indian retailers have much less bargaining power. They thrive as small store and don’t have the clout to negotiate terms with the manufacturers.
The other reason is that the retailers themselves have no economies of scale to offer discounts on their own. However, the scenario is now changing. Increased investments and the entry of big business houses in retailing is leading to the emergence of bigger retailers, who can both bargain with the suppliers, as well as, reap economies of scale. Hence, discounting is becoming an accepted practice. Discount Stores As the name suggests, discount stores offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season.
A discount store sells products at a lower price by reducing its own margins. This type of stores target high volumes to ensure profitability. The product category can range from a variety of perishables as well as non-perishable goods. Big bazaar is the company’s foray into the world of hypermarket discount stores, the first of its kind in India. Price and the wide array of products are the USP’s in Big Bazaar. Close to two lakh products are available under one roof at prices lower by 2 to 60 per cent over the corresponding market prices.
The high quality of service, good ambience, implicit guarantees and continuous discount programs has helped in changing the face of the Indian retailing industry. Examples of discount stores are More, Reliance Fresh, Sahakari Bhandar, etc. Super Markets Super markets are self service outlets catering to varied shopper’s needs are termed as supermarkets. These are similar to department stores but with a focus on food and household maintenance products. This is more of a self-service operation wherein a customer just goes and picks what he wants.
Super markets can be further classified into mini super markets typically of about 1,000 sq ft to 2,000 sq ft and large super markets typically of about 3,500 sq ft to 5000 sq ft. They have a strong focus on food and grocery. Convenience Stores These are relatively small stores of about 750 to 1,000 sq ft located near residential areas. They stock a limited range of high turnover convenient products and are surely open 7 days a week. Prices are little bit cut down by the stores so as to compete the kirana stores in the residential areas.
More, Reliance fresh, Apna bazaar, etc are a few examples of convenient stores. Existing Players Future Group One of the pioneers of organized retail in India is Kishore Biyani and his future group is one of the leading organized retailers in India. Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai, the company operates over 16 million square feet of retail space, has over 1000 stores across 73 cities in India and employs over 30,000 people.
The company’s leading formats include Pantaloons, a chain of fashion outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include Brand Factory, Blue Sky, Top 10 and Star and Sitara. The company also operates an online portal, futurebazaar. com. Future Value Retail Limited is a wholly owned subsidiary of Pantaloon Retail (India) Limited.
This entity has been created keeping in mind the growth and the current size of the company’s value retail business, led by its format divisions, Big Bazaar and Food Bazaar. The company operates 120 Big Bazaar stores, 170 Food Bazaar stores, among other formats, in over 70 cities across the country, covering an operational retail space of over 6 million square feet. As a focussed entity driving the growth of the group’s value retail business, Future Value Retail Limited will continue to deliver more value to its customers, supply partners, stakeholders and communities across the country and shape the growth of modern retail in India.
A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a largeformat home solutions store, Collection I, selling home furniture products and eZone focused on catering to the consumer electronics segment. Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space. K Raheja Group K Raheja Corp are the pioneers in organized retail by taking a first giant step to successfully establish a retail store know as “Shopper’s Stop”.
The group is expanding its retail chains across the country on the back of the vast experience it gathered from feedbacks and keen observance of people’s taste keeping in tune with its culture, customs, traditions and income. Crossword, In orbit Mall & Hyper City have set new bench marks on the basis of information and adaptation of worldwide changes, innovations and new techniques in retailing practices. Shopper’s Stop Ltd. , has redefined retail in India, taking it to the next level. From being just the sale of goods to consumers, the company has created a unique aura around retail and turned it into an experience, an indulgence.
Shopper’s Stop Ltd. , has been instrumental in bringing about a retail revolution in the country and has become the highest benchmark for the industry. Since its inception in 1991, Shopper’s Stop Ltd, which was founded by the K Raheja Group (Chandru L Raheja Group), one of the leading players in the country in the business of real estate development and hotels, has been offering premium and luxury value for the entire family. It is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). They have signed a 50-50 joint venture with the Nuance Group for Airport Retailing.
The group has announced plans to establish a network of 55 hypermarkets across India with sales expected to cross the US$100 million mark by 2010. TATA Group Established in 1998, Trent – one of the subsidiaries of Tata Group – operates Westside, a lifestyle retail chain and Star India Bazaar – a hypermarket with a large assortment of products at the lowest prices. In 2005, it acquired Landmark, India’s largest book and music retailer. Trent has more than 4 lakh sq. ft. space across the country. Westside registered a turnover of Rs 3. 58 million in 2006.
Tata’s has also formed a subsidiary named Infiniti retail which consists of Croma, a consumer electronics chain. It is a 15000-17000 sq. ft. format with 8 stores as of September 2007. Another subsidiary, Titan Industries, owns brands like “Titan”, the watch of India has 200 exclusive outlets the country and Tanishq, the jewellery brand, has 87 exclusive outlets. Their combined turnover is Rs 6. 55 billion. RPG Group One of the first entrants into organized food & grocery retail with Food world stores in 1996 and then formed an alliance with Dairy farm International and launched health & glow (pharmacy & beauty care) outlets.
Now the alliance has dissolved and RPG has Spencer’s Hyper, Super, Daily and Express formats and Music World stores across the country. RPG has 6 lakh sq. ft. of retail space and has registered a turnover of Rs 4. 5 billion in 2006. It ventured into books retail, with the launch of its own bookstores “Books and Beyond” at the end of 2007. An IPO was also offered, with expansion to 450+ Music World, 50+ Spencer’s hyper outlets covering 4 million sq. ft. by 2010. Landmark Group Lifestyle by the Landmark group was launched in 1998 in India. Lifestyle is spread across six cities, covering 4. lakh sq. ft. with a turnover of Rs 7. 5 billion in 2009. A new division named Lifestyle International has emerged for their international brands business comprising Bossino, Kappa and Springfield in their portfolio. Their retail mix includes Home solutions (Home centre), fashion (lifestyle, landmark International), value retailing (max retail), hypermarkets & supermarkets (Max), kids entertainment (Fun city). They plan to invest Rs. 300 crore in the next two years to expand on Max chain, and Rs 100 crore on City max 3 star hotel chains.
They have already instituted a separate company christened City max Hotels (India). Piramal Group In September 1999, Piramal Enterprises announced their arrival into retail with the launch of three retail concepts: India’s first true shopping mall of international standards, called Crossroads; a lifestyle department store named Piramyd Megastore; and a family entertainment centre known as Jammin. Piramyd Megastore and Jammin were anchor tenants for Crossroads (recently sold to Pantaloon for Rs 4 billion).
In 2001, the group entered the business of food & grocery retail with the launch of TruMart supermarkets in Pune. They have around 18 TruMart stores covering 1. 90 lakh sq. ft. registering a turnover of Rs 57. 6 million in 2009. Piramyd Megastore’s contributes more than 70 % to their retail mix with a turnover of Rs 112. 8 million. They plan to open 150 stores covering 75 million sq ft of retail space in the next 5 years. Bharti-Wal-Mart Their plans include US$ 7 billion investment in creating retail network in the country including 100 hypermarkets and several hundred small stores.
They have signed a 50:50 percent joint venture agreement with Wal-Mart. Wal-Mart will do the cash & carry while Bharti will do the front-end. Reliance Retail India’s most ambitious retail plans are by reliance, with investments to the tune of Rs. 30,000 crore to set up multiple formats with expected sales of Rs 90,000 crore by 2009-10. There are already more than 300 Reliance Fresh stores and the first Reliance Mart Hyper mart has opened in Ahmadabad. The next ones are slated to open at Jamnagar, followed by marts in Delhi / NCR,
Hyderabad, Vijay wada, Pune and Ludhiana. Reliance retail under the chairmanship of Mr. Mukesh Ambani is the most expected growth retail organization in the near future. They have also entered into a joint venture with the Sahakari Bhandari in order to get their expertise in the retail sector to use. A V Birla Group They have a strong presence in apparel retailing through Madura garments which is a subsidiary of Aditya Birla Nuvo Ltd. They own brands like Louis Phillipe, Van Heusen, Allen Solly, Peter England, Trouser town.
In other segments of retail, AV Birla Group has announced investment plans of Rs 8000 – 9000 crore in the first 3 years till 2010. The Group’s foray into the retail sector began in December 2006 when it acquired Trinethra, the chain of stores based in south India. May 2007 saw Aditya Birla Retail Limited (ABRL) launch their own brand of stores called ‘More. ‘ Till end-September 2009, the company had set up 640 supermarkets and five hypermarkets. All the supermarkets are branded More and the hypermarkets are branded More Megastore. The company has around 11,000 employees and has a pan-India presence.
More supermarkets are neighborhood stores with the core proposition of offering value, convenience and trust to the customers and averaging 2,500 sq ft area. The hypermarkets are self-service superstores offering value and range in food and non-food products and services at a single location. Hypermarkets are located in large catchment areas and encourage mass consumption with discount prices and substantial depth of assortment with an average store size of 55,000 sq ft shopping area. Within a short span of less than three years, More has more than 1. 6 million members as part of its loyalty program.
More has also launched a huge range of private labels in food and grocery, staples and apparel which have already obtained a significant share of category as well as salience with the consumer. Aditya Birla Retail Limited is the retail arm of Aditya Birla Group, a USD 28 billion Corporation. The Company ventured into food and grocery retail sector in 2007 with the acquisition of a south based supermarket chain. Subsequently Aditya Birla Retail Ltd. expanded its presence across the country under the brand “more. ” with 2 formats Super market Hypermarket. Emerging Players
Indian retail sector recognized that it can no longer operate in a water tight environment and in 2006 INDIAN recognizing the need to globalize this sector open-up gate for foreign MNC by allowing 51% foreign direct investment in wholesale cash and carry business which leads in emergence of retail giant Walmart in Indian retail industry. Further improvising on its step government of India allowed 100%FDI in wholesale cash and carry business and 51% in single brand retail which in turn invited international players such as US firm wal-mart, French retailer Carrefour and British firm Tesco and METRO enter Indian organised retail sector.
Let’s put light on the some emerging player and their India plans Wal-mart Wal-mart, $2 billion company with their operation in almost every context of the world has entered India in 2006 with a joint venture with Bharti retail for cash and carry store and supply chain store and it will operate under the of easy day whose operation are fully taken care by Bharti. Wal-mart has plan to invest around $10000 million dollars in 5 years in India and in 3years have open around 12 store across India and by 2012 is planning to open around 80 store across the country.
It is being said that Wal-mart has cut down the operating cost by 10-12% in market were its conducts its operation and which in turn has helped them to give better price to its customer now it would be interesting to see how does existing player sustain such emerging competition. Carrefour Carrefour world second largest retailer, which has tied up with the country’s largest retailer Future Group for India entry, is reported to have secured properties for cash-an-carry outlets in New Delhi, Bangalore, Chennai, Hyderabad and Mumbai.
And it is expected to open its first store at Seelampur in New Delhi this. According to the source its is planning to roll-out 30 store in coming 3 years across the country under the brand of KB Best Price with the investment of around $5000 million in last 3 to 4 years. Tesco British retail giant Tesco, Annual profit of 3. 18 billion pounds, expects to open its first cash-and-carry store in India by the end of this year. In India, Tata Group firm Trent is the joint venture partner of Tesco for the cash-and-carry business. Tesco spoke person said in an interview that. Our local management team is helping our franchise partner, Trent, to develop its Star Bazaar hypermarket operation. Plans for our wholesale business are also on track with our first cash and carry store expected to open towards the end of this year. Now it would be interesting to see how existing strong player like Bharti, future group and Trent mobilize this opportunities In term of straightening their back hand infrastructure which will help them to sustained the upcoming the challenge face by this player once after FDI in multi brand retail is opened.
Till then is it’s just a wait and watch situation in India’s most booming retail sectors. Rural Market While most of the new entrants in organized retailing are focusing on urban markets, some companies are now experimenting with the different models of organized retail in rural areas. The interest in rural retail stems from its market potential. For example, rural market in India account for almost 100% of the agriculture input sales, 53% sales of the fast-moving consumer goods sectors, and 59% of the durable goods sales.
Good monsoons and improvement in agricultural productivity has fuelled greater affluence, transforming rural markets into a large consuming class. As rural markets are considered to be drivers of future growth, companies are fine tuning their models of organized retail in rural markets. For their agriculture input requirement, farmers have been buying from the local traders who supply fertilizers, seeds, pesticides and so on at the time of sowing.
At the same time, retailing for consumer products in rural India has been traditionally driven by grocery stores who also stocks different FMCG product this shops which carry a limited number of merchandise and brands often suffer from frequent stock-outs. Companies have started initiatives in rural retails to address these issues by building shopping plazas in the villages with long term plan to build partnership with rural consumers. some prominent in rural retailing in India include hariyali kissan bazaar promoted by DCM sriram consolidated ltd. choupal sagar, set up by the international business division of tobacco major ITC ltd, and Aadhaar promoted by godrej agro vet ltd. Hariyali kissan bazaar, a pioneer in new format rural retailing, started with catering to a wide range of requirements of farmers such as farm implements and other agriculture inputs through stores housed over an area of 2 to 3 acres, catering to a cluster of villages. These are self-services stores wherein farmer’s pick-up product from DCM sriram products as well as agric-products sourced from other companies kept in the shelves.
In case farmers needs advice abound agricultural practices, it provides by an agric-graduate who is stationed in the store. After initial experiments of carrying agriculture inputs, these stores have expanded their merchandise to include an assortment of consumers and household products Choupal sagar, the second layer of physical infrastructure supporting the internet kiosk e-choupal of ITC, has been set up to serve two purposes.
One purpose is to acts as a collection center for farm output that the farmers would like to sell to ITC, based on the prices across the mantis and ITC’s buying prices inform them through e-choupal in the villages, the second and the more important purpose is to function as a high quality low cost channel for rural India, offering a wide variety of products ranging from personal care to household utility product. Typically, these shops have floor space of 7000 to 10000 square feet.
While choupal sagar stocks ITC brands along with other national brands for consumer merchandise sourced directly from manufacturers, it has partner with TVS and either to showcase and sell motorcycle and tractors, respectively. As in the case of urban malls, large parking spaces, which accommodates over 150 tractors/ is also provided? Currently there are 20 choupal sagars in rural areas of Madhya Pradesh, Uttar Pradesh and Maharashtra. Godrej agro vet ltd. (GAVL) entered the organised rural retailing by opening up large-formats stores named Aadhaar.
The stores provided the farmers with the high quality supplies of agriculture inputs like pesticides, seeds , and fertilizers along with the others consumer products, grocery, apparel, utensils, and other household items. Implemented as the hub and spoke modal, a typical spoke store is spread over about 1000 square feet area of floor space and hub store has a floor area of 7000-10000 square feet. In addition to these big companies, some smaller initiatives have also been made by co-operative to cover rural market.
The warn bazaar set up by sugar co-operative in Kolhapur and single district of Maharashtra consists of superstores of 10000 sq feet area and smaller stores of 500-1000 square feet area. They have a product mix covering agric-inputs, food and groceries, apparels, consumer’s durables and vehicles. Similarly, caste society, based near Ahmednagar in Maharashtra, which operates three supermarkets, has several shops arranged in a shopping center format spread over 5000 square feet area. This was the some business giants who have recognized the potential of the untapped rural markets.
But still it has only being able to conquer the tip of an ice berg and therefore it would be interesting to see how the existing and emerging players explore this opportunity by extending their operation to rural masses. Sahakari Bhandar-A Case Study History and Introduction Sahakari Bhandar a government owned co-operative was started in the year 1966. Sahakari Bhandar has about 20 retail stores in the Mumbai city. It can be said that Sahakari Bhandar has captured the whole Mumbai city for its retail operations. Though Sahakari Bhandar exists in the market for more than 40 years it has restricted its operations to Mumbai city only.
Sahakari Bhandar was an oldfashioned Indian state owned department store until sometime. In the year 2006 Reliance retail entered into a merger with the Sahakari Bhandar. As Reliance being new to the retail sector it can make use of the expertise of SB. Thus Reliance has made the effort to make the old fashioned Sahakari Bhandar into a new modern store and it has being able to achieve it as well. The new department stores of Sahakari Bhandar are completely renovated and air conditioned their staff in a well dressed uniform.
Reliance Retail can make use of the stores as a secret test bed for product lines and a new system of supply chain management. With RIL coming into the picture it is expected to see more number of shops of Sahakari Bhandar not just in Mumbai but in other cities as well. Reliance Retail’s tie-up with Sahakari Bhandar is perceived to transform the face the organized retail industry in India. Reliance has reached an understanding with the Sahakari Bhandar to manage the supply chain for the latter’s 20 stores in the city.
Sources close to the development indicate the arrangement is likely to be upgraded into a franchise agreement later. A buyout is unlikely since it is partly owned by the government. Another possibility is scaling up the total store presence across the city once it has finished renovating the existing stores. Sahakari Bhandar has over the years built its brand on affordability, offering marginal discounts on branded products. The unbranded commodities, for which the store is popular on account of its competitive prices, have been put under another label, SB Home.
To drive home this USP, the store’s long history (since 1966) is visible at various touch points, along with a new tagline, “Sahi Quality Sahi Price”. While sections like kitchen appliances and jewellery are missing in the new format store, there have been additions like a pharmacy, bakery, music and DVD counter along with a fresh fruit and vegetables section. The tie up with Sahakari Bhandar works well for Reliance, which is betting big on retail, as it provides a presence in some of the choicest locations in the city without the hassles of finding the correct property. Swot Analysis of Sahakari Bhandar Strength
Loyalty:Sahakari Bhandar was among the first organized co-operative store which started operation from 1966, providing a diversified range of product and service to its customer. Now what make Sahakari Bhandar different from other player is their closeness to their customer and the relationship being built with them. In short they know A to Z about their customer, who is being coming to them since years and loyal to them. Now this has given them edge over their competitors even though having the same facility and goods, it’s the emotional attachment and the closeness with the brand Sahakari Bhandar that brings them to their outlet.
Through our observation and research it was found that customer and employee relation is so good that customer knows an employee by his/her name. This was really worth noticing that how a employee have become as part of customer life, and there efficiency in dealing with their customer is the real strength of this brand and this element of customer service is being created over 40 years of consistent and successful operation, which is really working miracles for the brand SB and making them one of the most competent players in terms of sales per square feet.
In this competitive environment where company are taking proactive step to retain its customer and create loyalty for their brand must surely learn lesson from this Sahakari Bhandar whose base is their loyal customer, who are being shopping in from them since inception of their outlets had has no plans to switch their loyalty to others players in the vicinity. As observed by us during our research that 60 % of the total sample size of customer was above the age of 45 and are being shopping from the same were store since their childhood.
Now they have not only created customer but also retain them through their proactive customer service. Proficient customer service and the empathy (i. e. knowing customer needs) part of their service is the key strength of Sahakari Bhandar and a thing which they can cherish upon. Availability:Gone are the days when people confined their thinking about Sahakari Bhandar as mere general store, if the still feel so they must visit the nearest store to them , I am sure they would surely change their perception about SB(Sahakari Bhandar).
A properly designed store matching all the needs of modern superstore with properly design layout, eye catchy infrastructure, with proper mechanism with technically advanced point of sale computers, properly air conditioned has revolutionized Sahakari Bhandar image in the minds of customer from oldfashioned Indian state-owned store to a well established modern supermarket this is mainly after the tie-up with reliance retail who are working with this brand on management agreement, which has really helped then to strengthen their logistical arm.
Both the player is working with great synergy to provide its customer “Sahi quality Sahi price” which is theirs new tag line and even USP form past 40 year. If you still have a suspicious in our mind visit regarding Sahakari ad I insist he reader to visit Sahakari Bhandar Prahabhadevi store Sahakari Bhandar first effort to provide a true family experience, this is the biggest of Sahakari Bhandar having almost every merchandise under it right from staples, vegetables to apparels almost everything, which truly give us a feeling of having everything under one roof with “Sahi quality sand Sahi price” Now this the store where we conducted research and it was found that the reason the shoppers loyalty with this brand was firstly trust for the brand as specified earlier and then the availability factors which this store and every store of Sahakari Bhandar provide i. . right from peas to CD and apparel to utensils everything is being try and made available for the convenience of the customer. Why availability is the strength and makes them different from other players in vicinity is keeping goods as per local appeal. Were in was found during our research that vile-Parle (e) Sahakari Bhandar especially kept fast food article for their Jain customer which is their in masses in the proximity of the store and like this store very store have try and alter its their product merchandise as per the emand of their customer which is not being done by any organized current player at least in Mumbai. Making goods available as per local taste and understanding the want of the customer is what differentiate a kiranas or mom-pops store and has a advantage upon over organized player is what is being said by various expert but Sahakari Bhandar in this regime have proved them wrong by catering customer as per their demand with the maintaining close relationship with their customer through their dedicated employee have made them a high tech kirana store.
As said by Mrs. Nilesh pednekar (strategist reliance retail) “We don’t want our customer, come to us only on weekend and shop for a week, but we want them to come to us daily and shop for a day”.
This statement helps us to know that how Sahakari Bhandar has always belief in breaking the rule of retail were in this competitive organized sector they still have their own distinct identity were they belief that ”our competitor are not Wal-mart, Bigbaazar in real case but are the roadside kirana wala who possess the same customer relationship and closeness to customer like we have and that was make them our main competitor” this thing can even be for fact that staples and other foods item are the most selling and the goods for which Sahakari Bhandar is dmired for in terms of its quality and price Location: Location has being a key strength for Sahakari Bhandar which has located its outlets in the cities some of the key location such as Matunga, Juhu, and Breach candy, etc. If observed this are some location were real estate cost are touching sky, and the store are either at residential areas or area in the close proximity of station.
Now a new players could not even imagine opening up store hear because their majority profit would firstly eaten up in real estate cost and secondly the competition they will face from this established players. Reliance which is largely betting big on retail, would have consider place as a driving force while tying-up with Sahakari Bhandar which provides a presence in some of the choicest locations in the city and even the stigma of co-operative is working miracle for this stores.
Weakness (The following weaknesses are being completely based on the research sample size and based on their opinions. ) Inefficient replenishment of food and vegetables: During our research it was often being found that many customer of were dissatisfied with the quality of vegetables during the noon time as compared to morning and this often caused inconvenience to its customer especially the working crowd who normally shop during noon time.
So this was one of the weaknesses of this store. When this was informed to management its was being know that this thing is often the biggest fences SB is trying to work on, because while get the goods from distribution center to stores there is lots of inconvenience being created through toll nakas and clearance agents and this consumed lots of time and unable them to replenish their stocks quickly.
Even customer often compliant about, the improper cleanliness at the area of food and vegetables and requested us to inform this to the management to ensure proper and hygienic environment at their foods and vegetables segment which will help them to enhance the shopping experience of customers. Low Youth customer strength:
If observed above the age-group below the 30 is only 15-20% in term of number of foots falls which is the great cause of concern for the brand whose major strength is their loyal customer or in short are the base of this brand, but five year down the line this can often be a great cause of concern if considerable steps are not being taken to attract this young masses who often posses high disposal income and drive them to their store, which would surely arrive them long benefits. This could often being done by offering value added services which will help attract this high demanding young crowd.
Less and inefficient payment counter: When asked about would like to recommend any changes in this store? More than 70% of the customer complaint about less cash counter and point of sales computer not working, skills of employee etc and the considerable amount of time wasted in queue’s standing for payment of bill, causing lot of inconvenience to the customer. Therefore SB really needs to take proactive steps in this regards, either by increase number of payment counter or by introducing any such mechanism which would enable them to make payment quickly and easily.
This is the necessary steps which often need to be taken fast if the compared their business or competes with kiranas. Inefficient marketing communication: Firstly, SB being an establish brand doesn’t go for huge advertisement, but it does go for sales promotion by coming up with timely scheme of discount, offers etc. when customer were asked about the attraction and influence this promotion cause in their shopping behavior we were amazed to know that majority of their customer were unaware about the scheme and offer.
This could majorly due the fact that, customer were not being communicated about such scheme and offers and its was often found that majority of the customer where unable to listen the in store announcement properly, so to start up and to overcome this problem we would recommend that initially they can work on proper in store announcement and then start providing for value-added services to their customer if they what to retain their customer because youth, along with good price expect better shopping experience and proper communication which is the core quality determinants of any service provider Opportunities Rural market: As Specified in the earlier part of my project about rural market its capabilities to turn around the fortune of any business, if being expected by rural masses. Therefore it throws a goodly opportunity for this long existing player with a traditional name Sahakari Bhandar depicting a Maharashtrian culture could flourish well in the rural areas of Maharashtra if it diversifies its business to this untouched rural segment. Private label:
This is the most recent activity being started by each and every organized retail players to produced in-house product with their own brand labels, having better margins and as per the collected sources working well for these players. The players such as Big-bazaar and MORE are the players started with this trend of selling private labels goods in segment such staples and even processed food etc. Now Sahakari Bandar being a late adapter should start with the private label merchandise for staples and other processed food items which in future can help them to increase their product portfolio with better margins.
Threats Unorganized players getting organized: It is observed and heard more frequently about how unorganized players (traditional kirana wala) have diversified its business and getting organized in every aspects of his business. This often posses the biggest threat to SB because even this brand having sharing the same story and strength which often a Karana’s have, such as loyalty, good relationship, etc and therefore is a great cause of concern and is surely the area which have to be looked into. Emerging foreign players and existing players:
Other threats which are is quite often being observed and seen by every customer is the price war among the existing players, every one quoting about the quality at reasonable price often creating a clutter like situation. This players, which are focusing more on upcoming generation and especially youth by providing various add-on and complementary services with good shopping experience often posses a big threat in future to SB, whose biggest strength is the customer loyal customer above the age of 45.
Even the recently emerging player such as Wal-mart, Tesco, and Carrefour along with their strong Indian counterparts will make the competition more stringent for Sahakari Bhandar. Michael Porter’s Five Forces Michael Porter formulated the five forces in the year 1979 in order to study the competitive advantage of the firm when compared with the other competitors present in the market. Strategy consultants occasionally use Porter’s five forces framework when making a qualitative evaluation of a firm’s strategic position.
According to Porter, the five forces model should be used at the line-of-business industry level; it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. A firm that competes in a single industry should develop, at a minimum, one five forces analysis for its industry.
Porter makes clear that for diversified companies, the first fundamental issue in corporate strategy is the selection of industries (lines of business) in which the company should compete; and each line of business should develop its own, industry-specific, five forces analysis. The average Global 1,000 Company competes in approximately 52 industries (lines of business). Following are the Five Forces for Sahakari Bhandar: 1. Threat of new entrants: There can be a threat of a new entrant in the market.
The retailers have to fight for the same audience though it may depend upon the class of the people but India is a country of masses so it does not makes a big difference. This force helps an existing company to know what effect it might have on its business on the entrance of a new player in the market. As Sahakari Bhandar has believed that their biggest competitors are the kirana walas they have a threat from their business. Though the kirana wala do not impact their business that much the threat factor is much lesser and hence forth they even don’t have a threat from the big retail giants coming up in India.
Sahakari Bhandar has the location advantage as well as the loyalty factor is high. Sahakari Bhandar can reach where Wal-mart or Tesco cannot. Though they may try to consider this factor and come up with some new strategies they can always bank upon their loyal customers because the service offered by them is excellent. 2. Rivalry amongst the existing firms: Rivalry exists in any kind of business and in the case of retailers there is a lot of rivalry as they need to get the customers to their store first. The firms have to be sure about the effectiveness of their strategy before implementing it.
The retailers have to conduct a research on the products that have to be merchandised at their store. In case of Sahakari Bhandar they have a rivalry with the kirana wala where they have the advantage of their big store and the shopping experience they provide. The merchandising of their products have being very effective. Though there are other stores such as more, big bazaar, etc, they are in the business from the last 40 years which is an advantage for them and they also specialize in grocery which is their major strength.
The rivalry is going to benefit the consumers as the firms are going to provide the best products and best service in order to attract and retain the consumers. 3. Threat of substitute products: The products offered by the players are a close substitute of each other. Thus it is the price factor that has to be considered in this case. Sahakari Bhandar are specialized in grocery and they have to make sure that the quality has to be maintained so as to keep their customers satisfied and see to it that they came back again.
The products that are provided by Sahakari Bhandar are also available at the other stores. But as a customer comes in to buy grocery he will like to finish his shopping at the same store rather than going to different stores. The discounts and offers also play a big role in case of substitutes. Reducing the price of the products cannot be a solution because if one player reduces the price the other has to reduce it as well. But there is a limit to which extent discounts can be provided, a company cannot bare losses and sell its product.
This is what being thought by Sahakari Bhandar and that’s why they don’t believe in giving big discounts. The threat of substitutes to them is minimum as compared to other stores. 4. Bargaining power of the suppliers: The suppliers play a very important role as a business cannot be efficiently run without their support. A company has to ensure that their suppliers are happy and Sahakari Bhandar has being effective in doing this. It can be very costly for a firm to switch from one supplier to another but at the same time it has to see that the existing supplier does not takes advantage of it.
The question that arises here is how much power does the supplier have over the company? Sahakari Bhandar has a good sale of the grocery and F&V thus the suppliers of these both have a business with them and hence even they are in a need to sell. Sahakari Bhandar has the advantage over the suppliers as there are substitutes available. In case there are a very few suppliers of the required product then the suppliers have the upper hand. Sahakari Bhandar purchases in bulk quantity and thus their economy of scale is efficient enough. . Bargaining power of the buyers? Consumers are the king of the market and any business organization has to satisfy its customers anyhow. The buyers have the bargaining power more than the sellers because there are many sellers in market. In case of retail the buyers cannot bargain directly with the sellers but they can switch from one store to another if they are not satisfied with that seller. Sahakari Bhandar has taken various steps in order to retain their customers and has provided a number of offers to the customers.
Sahakari Bhandari is the only store where the customers are seen bargaining not for price but for the quality or availability. This is a good sign for them as it shows the loyalty of the customers that they want to complaint also and they want to shop at the same place. Sahakari Bhandar comes up with discounts and offers on every occasion of festival or change or the season. They have being giving offers in summer, winter, during Diwali, etc. Thus the bargaining power of the customers of Sahakari Bhandar is even with them as they are satisfied to enough.
A survey on the customers of Sahakari Bhandar 1. Why do you prefer Sahakari Bhandar? 8 25 67 2. Are your expectations met by the store? 20 80 3. How frequently do you visit Sahakari Bhandar? 18 7 61 14 4. What category of product do you mainly purchase from Sahakari Bhandar? 2 31 10 40 32 7 5 5. What difference did you find at Sahakari Bhandar? 10 30 60 6. Are you able to locate the product easily? 4 96 7. Did you find the promotions attractive? 300 70 8. Are you in the Loyalty Member Club? 40 60 9. Are you happy with the services offered by Sahakari Bhandar? 3 97