Retail Stores

About Subhiksha
Types of Retail Formats in India Complexities in Retailing

Retailing scenario in India Retail format of Subhiksha About Subhiksha (Vision, Mission, Internal Analysis, Fund

Recommended Revival Strategies for Subhiksha

Raising) Segmentation, Targeting & Positioning Promotion, Distribution, Pricing & Competitors Decline of Subhiksha Reasons of Decline Revival Strategies of Subhiksha

Mom & Pop Stores (Kirana Stores) Departmental Stores (Westside, Lifestyle) Category Killers (Best Buy, E-Zone) Malls (Inorbit, Ansal Plaza) Discount Stores (Primus Retail) Supermarkets (Haiko) Street Vendors (Hawkers) Hypermarkets (Reliance Fresh, Big Bazar) Kiosks (CCD Express)

1997 Retail Market was non-existant Organized retail accounted for Rs 55000 crores in 2006($12.4 billion) It is only 4.6% of total Indian retail value($270 billion) Retail in India is expected to grow at a rapid rate of 37% in 2012 and 45% in 2015 In 2010, 60% of the retail value ($270 billion) was dominated by food & grocery

1000 900 800 700 600 500 400 300

200 100 0 142, 150, 450, 1000 Subhiksha Reliance Fresh Food Bazaar 0, 0, 22, 325

No. Of Outlets Country Wide

2004 2005 2006

0 , 0, 140, 250
22, 35, 60, 105 94, 46, 55, 70

2007

Food World

Spencer's Daily

Vision To emerge as the largest retailer in the food, grocery, pharmacy segment in all the geographical regions we operate from
Mission To deliver consistently better value to Indian consumers , as guided Subhiksha to deliver savings to all consumers on each & every item that they need in their daily lives, 365 days a year without any compromise on the quality of goods purchased

Subhiksha was started by R. Subramaniam, an IIM A & IIT Chennai alumnus in 1997 Subhiksha in Sanskrit means (prosperity)the giver of all good things in life Theme - Why pay more when you can get it for less at Subhiksha? Discount store at prices lower than other retail outlets 500 outlets in early 2007 Set up 1,000 sq ft shops all across the city

Fruits Vegetables Grocery Medicines Mobiles

Discount Store Multiple Products Small Store format Service Oriented Residential Locations Availing Branded Products

1. 2.

Criticality of cost Convenience of Buying No Frills Store EDLP Strategy Off the main roads to take advantage of low cost Catchment area of approx 2 kms Local low overhead front-end of Kirana stores with efficient supply chain of a large retailer

Establish itself as a neighborhood store Everyday low price system Wanted to attain greater penetration in all markets Lease rental system for stores Centralized purchasing

Subhiksham Card Marketing Communication Supply Chain and Inventory turnover efficiency Home Delivery System Use of IT Online Retail System

1997 - 1st grocery Store in Chennai 2000 - 50 stores in Chennai 2000 June - ICICI Venture 10% stake for 15 Cr 2001 - Increased Stake to 23% 2002 - 120 Stores across Tamil Nadu 2003 - Azim Premji 10% stake for 230 Cr 2006 - 500 Stores across the country 2007 - 1000 Stores Across the country

2007 - 350 Crore IPO 2008 April - Enter into Wholesale Market 2008 April - Un-mindful Expansion 2008 July - Market Falls 2008 Oct - Operating Difficulties 2009 - Major Financial Crisis 2009 March - Shut Down Operations

In 2000 ICICI Venture invested in Subhiksha with 10% stake at Rs15 Cr & raised stake to 23 % by 2004 Subhiksha also raised a 15 Cr debt from the market 2003 - Azim Premji took 10% stake from ICICI for Rs230 Cr 2004 2007 equity of Rs160 Cr, debt of Rs. 345 Cr & bridge loan of Rs.125 cr 2008- raised debt capital of Rs.600 Cr from Enam Securities Ltd, ICICI Ltd & Kotak Mahindra Bank

Segmentation was done on the basis of geography initially

Opened stores in South India

initially , later expanded elsewhere

Later on, was done on the basis of age groups

Different product portfolios

were targeted for different market segments

Expanding middle & upper classes has played a big role in the expansion of existing modern format stores & entry of new ones Attract not the top end customer but the aam aadmi Target Market for different products:
Grocery & Vegetables Common man & specifically

Housewives Mobile Youth Medicines Old Age People

Low prices Consumer Savings Consumer Trust One Stop Shop

Multiple products under one store

Store designed with Indian touch Location Convenience Privilege to loyal customers Indian Management

TV Advertisements Price Challenge Campaign Hoardings Celebrities for promotion EDLP approach Subhiksham Card

EDLP Everyday Low Pricing Approach Prices below the MRP

Subhiksha MRP Rs.102 Rs.21 Rs.119 Rs.24

Product Rice 5 kg Britannia Marigold 400 gm Sugar 1 kg

Rs.15

Rs.17

Distribution Channels helps in the place aspect of the marketing mix It provides place, time & possession utility to the consumers Carpet Bombing Model Cluster of stores in close proximity 10 stores in 1998 to 1000 stores in 2008 Stores with one intermediary Retailers

Brand Name Spencers Reliance Fresh Food Bazar More Food World

Outlet Type Supermarkets Supermarkets Supermarkets Supermarkets Supermarkets

Level of Operation National National National National South India

Niligiris
Fabmall Spar

Supermarkets
Supermarkets Supermarkets

South India
South India South India

We are a golden egg laying duck, we are in trouble. We need their (bankers and lenders) support and upon getting it we will restart operations and repay all debt. It is not easy, but we have to make it happen.

Un-mindful expansion spree across the country Subhiksha was thinking of going for an IPO in 2007 but shelved it in view of uncertain market conditions No consolidation- Tried to be first in every town Poor inventory management Private Labels Operations came to a standstill due to nonpayment of salaries, huge debt burden & arrears to suppliers Major competition by stores like Big Bazar, Spencers etc

Spending the debt raised money Lack of Transparency Liquidity crisis Poor Management Government Intervention Lack of strong HR policies & Staff Wrong Assumption that telecom sector is sound to invest Over Confidence & Aggressiveness

March 2009- Undergone a corporate debt restructuring exercise, with lenders reviewing its books Subikshas subsidiary Cash and Carry Proposed scheme 50% waiver and amalgamation with Blue Green Construction & Investments Post merger promised to pump in 150cr Reopened as Subhiksha Rice Wholesaler 3 stores opened in Chennai

Madras high Court and creditors against the reopening Petition filed by Kotak Mahindra & ICICI Debt burden Tried to re open to fast to soon without clearing dues Chose debt over equity for funding Liquidity crunch Inadequate I.T support

Specializations in products Improved stores Better management with suppliers Raise funds in a systematic manner Shut stores with low sales Focus on quality instead of quantity Invest more in R&D Carry sales check on regular intervals Improve quality & after Sales service Choosing Equity over Debt to be risk free
Study target market well Better Store Design & Interiors

New Store Format Open stores in malls or shopping complexes to increase footfall Diversify in products which are profitable
Products for which overall industry performance is

good Products which are related to the current product basket

Customer Relationship Management Better working conditions for employees