Subhiksha - Presentation Transcript

1.

group-4Dev
prayaglavkumarshubhangikaushalswapneshjainmukeshsinghshivpalsingh

ITM- GLC-Navi Mumbai

2.why they failed!!!

3.Subhiksha means prosperity in Sanskrit.

Founded by R. Subramanian, an IIT-IIM alumni in 1997

Wasone of the largest retail value chain in India.(in terms of no. of stores)

1600 outlets selling groceries, fruits, vegetables, medicines and mobile

phones.

4.The People ASSOCIATED

1) Chairman ‐R Subramanian (IIM‐A Alumnus)

2) Ms.Rama Bijapurkar (IIM‐A Alumnus),Board of Director

3) Mr. Kannan Srinivasan (a professor of marketing at Carnegie Mellon

University’s TepperSchool of Business),Board of Director

4) Mr. S.B. Mathur, former LIC Chairman,

5) Ms. RenukaRamnath, Managing Director of ICICI Venture

6) Ms. Rajeev Bakshi, Deputy Managing Director of ICICI Venture and a

former CEO of PepsiCo India.

7) Mr. AjemPremij as Board member

5.Major shareholders

ICICI Venture-23%

Ajempremji(wipro)-10%
ICICI prudential-5%

6.The Positioning:

Low Prices :Subhiksha Positioned itself as Value Retail Chain /Discount

Retail Chain.

Trust : Subhiksha’s name inspires trust and its consumers rely on it

through all times to deliver.

Savings : focuses on the concept of constantly sustainable low pricing .

7.STRATEGY

Cut price strategy.

Focused on the lower & upper middle class.

Wal-mart‐style- everyday‐low‐price (5‐10% less than MRP )

Shops are located not on the main road.

The catchment area of customers.

Informed customers about promotional offers.

8.The expansion:

March 1997 -Opening of the first retail store in Chennai, with 5 lacs Initial
investment.

March 99‐14 stores in Chennai

June 2000‐ 50 stores in Chennai&I CICI venture joins

June 2002‐ 120 stores in whole of Tamil Nadu

June 2006‐420 Stores in other big states in India namely Gujarat, Delhi,
Mumbai, Andhra

Pradesh and Karnataka.

Feb 2007‐500 stores across country

Dec 2007‐ 1000 stores across India

October 2008‐ 1600 stores across India

9.

10.“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,” says R Subramanian

11.Reason For Failure

Big mistake - Expanding rapidly without sufficient funds in hand

Thought of raising equity during last September but were late

Global scenario went wrong

October, 2008 the company ran out of enough funds to run the
organization

There after problems queued up at the doors

12.Financial Crisis

Advertising:Advertising dues not cleared

Wages and Rent :Huge list of outstanding wages and rent

Disruption in supplies by wholesale suppliers

13.Inadequate system control and IT Support: Caused huge audit &

abnormal losses in system

Government Intervention :

Maharashtra FDA,askedSubhiksha to suspend operations at its warehouse

in Bhiwandi

14.Supplier Bargaining Power :

Many wholesale suppliers in Azadpursubzimandi, have stopped supplying
fruits and vegetables in NCR surrounding the national capital.

Long credit periods

Lack of strong HR policy and Staff‐

Was not able to retain the talent which he initially bring into Junior, Middle
and high level management. Whatever was remaining with it is all family
bound with no commitment policy.

15.Huge Rental and Lease Bills :

There are huge frauds while entering in to rental agreements by their own
management people. There was no proper check and control on this
cost ,though this is a very crucial part to defeat competitors and to gain
profitability in future.

The wrong assumption-telecom segment profit making segment.

The CEO never looked in to system losses arise from telecom. Subhiksha
stores always sell handsets at below DP while its benchmarking is to
match DP.

No control on inventory of mobile accessories and there stock value and

were unable to circulate the working capital.

16.Poor Inventory management

Credit defaults caused supply breakages-inventories going bad or lack of

stock

Became re-sellers rather than retailer

Re-selling to other retailers

17.Strong Competition :

Thus sinking into unrepaired conditions Subhiksha has to compete with its
high profile competitors like RPG, Reliance retail and Future group etc.

Reliance Retail has set up 700‐odd stores in the past two years-Reliance
Fresh
On the other hand is high‐end in terms of display, ambiance and size.

18.Competitive Analysis

Competitors at the National Level

19.Competitive Analysis

Competitors at the Regional Level

20.Over confidence and Aggressiveness:

The raise of the company thus gradually started sinking down step by step
and now stands on the verge of collapse.

The management admit that their over confidence and aggressiveness

are the main reasons for their loss.

They should have gone for an IPO when the things were well and good to
prevent such downfall.

If they had responded in right time they wouldn’t have been put through
such bad phases.

21.References:

http://www.indiaretailbiz.com/blog/category/indian-
retalers/subhikshasubramanians/

http://www.livemint.com/subhiksha.htm

http://www.financialexpress.com/news/subhiksha-charts-rs-1-000-
croreinvestment/373019/

http://www.rediff.com/money/2007/feb/05bspec.htm

22092135 Why Did Subhiksha Failed (1) - Presentation Transcript

1.PRESENTED BY- Bhawna Upadhyay Pujil Khanna Sarika Taneja Vikas
Mitta l

2.SUBHIKSHA- INTRODUCTION

Largest retail value chain in India with 1600 outlets started in 1997 .

Chennai based grocery & pharmaceuticals store Founded by R.

Subramanian in 1997

Revenue Rs. 2200 million

Aimed Rs. 2800 million by the end of 2005

From 150 stores in Sept 2006 all of which were in Tamil Nadu the
company grew rapidly to over 1600 stores by Sept 2008 across the
country.

Product Portfolio- Supermarket, Fruits and Vegetables, Telecom and

Pharmacy.

3.OBJECTIVE OF THE STUDY

Examine the various decisions made by Subhiksha and their alignment

with the business model of Subhiksha

Identify key challenges faced by Subhiksha and importance of assortment

planning and inventory management for Subhiksha.

Evaluate the performance of the Indiranagar store on forecasting and

inventory management.

Examine the supply chain practices followed by Subhiksha for different

categories.

5. To study the management of variation in demand within a month and

variation within a day.

4.

5.BUSINESS DECISIONS TAKEN BY SUBHIKSHA AND THEIR ALIGNMENT

WITH BUSINESS MODEL OF SUBHIKSHA

6.KEY CHALLENGES FACED BY SUBHIKSHA

7.The performance of Indiranagar store : 1. If we observe the negative

receipts in case of 3 items mentioned i.e.; Maggi noodle masala,
Pepsodent 2 in 1, Gemini sunflower oil-negative receipts in case of Gemini
oil is maximum. 2.Maggi incurred moderate negative receipts and
Pepsodent minimum. 3.It can be inferred that most of the Gemini
sunflower oil (1l) was sent from Indiranagar store to other stores to
prevent inventory pile up and have tight control on inventory levels.
4.Sales of Pepsodent were maximum in Indiranagar store than maggi and
Gemini oil has least sales at the store. INTERPRETATION: EXIBIT 8

8.SUPPLY CHAIN PRACTICES BY SUBHIKSHA

9.HOW VARIATION OF DEMAND IS CONTROLLED

10.REASONS FOR FAILURE OF SUBHIKSHA

Expanding the number of stores rapidly without sufficient funds in hand.

Expansion of Stores without adequate system control and IT Support.

Government Intervention.

Lack of strong HR policy and Staff.

Strong Competition.

11.THANK YOU!!

Unlike Reliance Fresh and Food Bazaar, Subhiksha does not provide
any refrigeration facility at its stores, which results in
comparatively lower quality vegetables and fruits. We believe that
such frequent stock outs, coupled with low-quality, limited product
offerings may have an adverse impact on Subhiksha's footfalls

Reliance Fresh focuses more on its private labels, which it pushes

more. aggressively by offering attractive schemes to its customers.
Subhiksha has limited product variety and we found that some items
in our product category list were not available at all. Such limited product
variety plus very frequent stock outs are adding to the displeasure of its
customers.

Franchises:

Purchasing a franchise is buying the right to use a name, product, concept

and business plan. The franchisee will receive a proven business model
from an established business.
 Advantages:

All of the business operation processes have been established. The

franchisee receives help from a network and customers may already
familiar with the name. The marketing strategy has already been put in
place. Most all of the risk associated with starting a retail business has
been reduced.
Disadvantages:

Franchisees pay a fee, or royalty, based on sales each year. Startup costs
relating to the franchise may be high. One of the biggest disadvantages of
owning a franchise is the lack of flexibility and freedom.
Support:

Franchisors usually provide all the marketing, training and on-going

support needed to run a successful business.

• Posted: Thu, Jan 21 2010. 9:32 PM IST

•
• Corporate News

Subhiksha plans relaunch

in Chennai

R. Subramanian, the retailer’s

managing director, and unnamed shareholders will fund the relaunch of
four to five Subhiksha branded outlets

Vidhya Sivaramakrishnan and Rasul Bailay

Chennai / New Delhi: A year after shortage of cash forced Subhiksha
Trading Services Ltd to close its nationwide network of 1,600 supermarket
stores and default on loans, vendor payments and staff salaries, the
Chennai-based discount retailer is trying to get back on its feet.
 Getting set: The Subhiksha store
under renovation in Chennai. Vidhya
Sivaramakrishnan / Mint
The seller of groceries, fruits,
vegetables, medicines and mobile
phones is planning to reopen a
handful of outlets in Chennai, said
two lawyers representing Subhiksha
and a landlord whose property is also
apparently being readied for the
relaunch.

But walking out of the woods may not be that easy for a company
awaiting court orders that may result in its liquidation. Lender Kotak
Mahindra Bank Ltd and vendor HCL Infosystems Ltd have filed
separate winding up petitions against Subhiksha in the Madras high court
to recover their dues.
R. Subramanian, the retailer’s managing director, and unnamed
shareholders will fund the relaunch of four to five Subhiksha branded
outlets, the lawyers said.
“Subramanian is contemplating to open some stores,” said Prakash
Goklaney, one of its lawyers. The rollout, he added, could happen early
next month.
N. Saravana Kumar, who owns the property in Chennai’s Thiruvanmiyur
neighbourhood where Subhiksha opened its first outlet in 1996, confirmed
witnessing “activities” at the store.
“Some work has been going on in that store for the last 15 days. I guess
they are gearing up to reopen it,” Kumar said. “There is a board outside
the shop that says ‘Wanted Salesmen’.”
Subramanian did not respond to questions emailed to him by Mint.
S.P. Mustafa, director of Zash Investment and Trading Co. Pvt. Ltd,
which holds a 10% stake in Subhiksha, said he had no knowledge that the
firm was planning to reopen some stores.
But a Mint reporter who visited Kumar’s property found some workers
busy renovating the flagship store. A notice outside announced sales staff
were urgently required for a “popular supermarket”, for salaries of
Rs3,600-6,000 per month.
“Subhiksha is going to open this store... It will sell all (its usual) items,”
said one of the workers, who did not want to be named.
Subhiksha’s move comes nearly a year after it asked lender banks to
reduce interest rates and allow it more time to return their dues under a
corporate debt restructuring plan. Subramanian had then said the firm
would need about Rs300 crore to get back into business and open nearly
80% of its mothballed outlets.
But a consortium of banks, which included ICICI Bank Ltd, HDFC Bank
Ltd and Yes Bank Ltd, was unable to file a proposal to revive the retailer
before an extended July deadline. Subhiksha’s stakeholder then filed a
compromise petition in the Madras high court, hoping to reach a
settlement with creditors and vendors to whom they collectively owed
Rs900 crore.
The court dismissed their plea and instead admitted winding up petitions
against Subhiksha by Kotak Mahindra and HCL.
Another lawyer for Subhiksha, who did not want to be identified, said the
pending court cases would have no bearing on the company’s plan to
reopen some stores.
“There is no order against this. Until and unless an official or a provisional
liquidator is appointed, the management can take such decisions,” the
lawyer said.
ICICI Venture Funds Management Co. Ltd, an arm of ICICI Bank,
refused to comment on the subject. But Rahul Balaji, a lawyer for HCL,
agreed there was no legal bar to stop Subhiksha from reopening stores.
HCL, he added, won’t oppose such a move.
vidhya.s@livemint.com
MAGAZINE | DEC 31, 2007

The Big Picture

•At $280 billion, India's retail sector accounts for 10% of GDP and employs
42 million people (8% of the total workforce). Estimated growth: 9.5%
annually.

•There are 12 million unorganised retailers (or neighbourhood stores)

across the country. Completely fragmented, 80% are family-owned and
run.

•Organised, big retail accounts for 4-5% of the total pie. Estimated to
grow to $100 bn (16% of total retail) in five years' time.

•Big retail is just 1% of the food & grocery market

***

The Challengers

Investment of $35 bn in retail over the next five years, largely in food &
grocery

•Reliance Retail Planned investment of over $6 bn; has 430 Reliance

Fresh stores, targets 1,500 by 2011

•Pantaloon Retail Operates in many retail formats, ambitious plans to

grow its 51 Big Bazaar hypermarkets and 77 Food Bazaars

•AV Birla Group Has 299 stores branded 'More', plans to double by 2008-
end; strong in the South after acquiring Trinethra, aims for a national
footprint

•RPG Group Has 350 Spencer's retail stores in 55 cities in four formats;
aims to have 500 stores in 65 cities by March 2008

•Bharti Group With Wal-Mart in charge of backend operations, plans $7 bn

investment in creating a retail network in the country, including 100
hypermalls

•Subhiksha Trading Set up a decade ago, its deep-discount chain has

1,070 stores Other players include Godrej (Aadhar, Nature's Basket),
Indiabulls Wholesale (Trumart), Tata Group (Trent) and so on

***

"We get most of our food on credit from our local grocery store. Also,
Keshto mama (the grocery store owner) has always been considerate and
close to all of us. We can't break that relationship. I did go to Food Bazaar
once, but felt lost and like an alien there."
—Pritha Mukherjee, assistant at the Calcutta Municipal Corporation's
health department

"I have been coming to Reliance Fresh since it opened and just love the
ease of shopping here. Some items are not as cheap as elsewhere, but I
don't mind because it is a one-stop shop and I save in fuel costs going
from shop to shop."

—K.K. Mahajan, a Chandigarh-based retired government officer whose

brother runs a corner store

These two disparate voices from consumers lie at the heart of an

emotional debate on the future of the small store in India. Driven by
projections that the country will become the world's fifth-largest consumer
market in a couple of decades, corporate houses will pump in a huge $35
billion over the next five years to build networks of big retail chains,
promising greater choice and savings for consumers, millions of jobs, as
well as an overhaul of the way India shops. The impact is already being
felt in urban centres as new, branded shop formats come up, seemingly
overnight. But as the juggernaut rolls on, so do the questions. Will Indian
consumers change their shopping habits? Will deep pockets outprice and
outmanoeuvre the existing players? And finally, will the traditional mom-
and-pop (or kirana) store survive?

These are not insignificant issues for a nation of shopkeepers.

"I never shopped in markets. But now I go to Spencer's nearby. It's so

neat and customer-friendly." V.K. Mittal, Retired bureaucrat, Lucknow

India is dotted with largely family-owned retail stores of all shapes and
sizes, some 12 million of them. With retail traders, wholesalers, hawkers,
pushcart vendors and daily-wage workers in the chain, retail equals 42
million people—making it the second-largest employer after agriculture. It
is estimated that there are 16 shops per 1,000 people in India. In the US,
it's 4 per 1,000, while the figure for the UK is 3 per 1,000. Stung by
sporadic protests against big retail in many states, a cautious upa
government commissioned think-tank Indian Council for Research on
International Economic Relations (ICRIER) to survey the impact of big
retail on the corner store. Though the final report is due in March 2008, a
recent story in the media says the survey actually shows a significant
impact, with 50 per cent of small retailers reporting lower sales.

However, ICRIER chief executive Rajiv Kumar says the media story quotes
an "old and partial version of our data" (see pg 46). Quizzed by Outlook,
Kumar was guarded about the details. But he says: "There is a negative
impact on revenues and profits, to begin with. But over a period, it wears
off as the mom-and-pop stores are able to adjust and adapt, and therefore
able to find ways to protect their niche." He also says there is "very little
impact" on employment as the corner store "competes successfully",
adding that the survey reveals that consumers want both formats (the
mom-and-pop stores and the malls) as each offers different advantages.
And that low-income consumers are benefiting more from big retail than
high-income ones.

***

Consumer Speak

"Local grocery stores give you discount on everything. There's also the
personalised service." Ranjana Chowdhury, Lawyer, Indirapuram

"I get stuff from Nilgiris, which offers variety and fresh stock. Choice at
small shops is limited; you are never sure of quality." Shalini Vinay,
Homemaker, Bangalore

"In a supermarket, the display acts as a reminder of some things you need
but don't have on a list." Shanti Raj, Housewife, Chennai

"I never shopped in markets. But now I go to Spencer's nearby. It's so neat
and customer-friendly." V.K. Mittal, Retired bureaucrat, Lucknow

***
Industry Speak

"Companies are now circumspect. While there is no slowdown, they are

treading carefully.'' Arvind Singhal Chairman, Technopak

"We have created a new breed of shoppers that does not compete with
the daily shopping needs that kirana stores cater to." Kishore Biyani,
Chairman, Future Group

"With every new unit opening, business would definitely fall for the
existing ones in the short term." R. Subramanian, MD, Subhiksha Trading

"The intermediaries and middlemen of today could become entrepreneurs

of a different kind." Rajan Bharti Mittal, MD, Bharti Enterprises

***

Source: ERNST & YOUNG

***

There is some time before the report is made public, but one thing is
clear: there will be some impact, even if in the initial stages. Big retail and
analysts agree. Says R. Subramanian, MD, Subhiksha Trading, which has
the largest spread of 1,070 small format fresh food and grocery stores in
neighbourhoods countrywide, "With every new unit opening, the business
would definitely fall for the existing ones in the short term as the existing
business gets shared among all players." At the same time, there are
many who say investments in big retail will bring gains for farmers, small
manufacturers and consumers. "The big retail chains will surely put
pressure to upgrade, improve and compete," says D.H. Pai Panandikar of
rpg Foundation.

While there's no indication from the upa government that it is taking a re-
look into its policy for the retail sector, caution rules. All Union commerce
minister Kamal Nath is willing to tell Outlook is: "The ICRIER report is not
out yet. I'm only concerned with the part." The fact is that not all
organised retail is being opposed, but domestic retail chains in the food
and grocery business, from Reliance, Spencer's to the AV Birla Group.

"Local grocery stores give you discount on everything. There's also the
personalised service." Ranjana Chowdhury Lawyer, Indirapuram

Also, foreign retail biggies like Wal-Mart and Metro AG are only allowed to
operate in the wholesale trade. They are obviously itching to get into
multi-brand retailing (where FDI is barred), but it remains to be seen
whether the government has the political will with the 2009 general
elections within smelling distance. Montek Singh Ahluwalia, deputy
chairman, Planning Commission, tells Outlook: "Modern retail is absolutely
essential. With any modern technology, there is resistance. It is illogical to
say we want development but don't want modern retailing."

A look into the protests against big retail in nine states (including Uttar
Pradesh, Maharashtra, West Bengal, Orissa, Madhya Pradesh and
Jharkhand) shows that trader associations are leading the charge. Says
Pravin Khandelwal, secretary general, Confederation of All India Traders
(CAIT), "Our study of 10 countries clearly shows big retail tends to wipe
out local competition to create a monopolistic market and then dictates
prices to both consumers and small manufacturers from whom it is
sourcing products." CAIT is planning to conduct its own study on the
impact on the small retailer. Last month, under the banner of the
Federation of Associations of Maharashtra (FAM), thousands affected by
big retail took part in a mass protest at Mumbai's Azad Maidan. Shop
inaugurations in Kerala too are invariably accompanied by street protests
that follow a well-set pattern. Youth, often pro-Left, charge at the police,
breach barricades and break a few glass panes before dispersing. Shops
remain shuttered for the day and open soon after the trouble is over.
Down with... A vandalised Reliance Fresh store in Ranchi

Then, there are the farmer associations, which say that big retail will lead
to cartelisation which in turn will eat into their margins. But farmer bodies
—like Namdhari's Fresh—are benefiting, because they realise value in
their produce. Minister of state for commerce Jairam Ramesh feels
organised retailing has potential: "To the extent that the big retail chains
source products from areas like the Northeast, it'll be an advantage. But it
remains to be seen whether they will do so." In all, 19 states allow farmers
to sell directly to companies instead of going through the mandis, which
are asserting themselves. For instance, in Delhi's Azadpur Mandi,
companies sourcing directly from farmers have to pay it a 1 per cent tax.
The associations have demanded a regulator to govern direct
procurement by firms. Says Ashok Gulati, director, Asia, International Food
Policy Research Institute, "In the absence of a proper supply chain, the
wet market remains fragmented where producers get lower prices and
consumers pay higher prices."

Of course, the protests are affecting the companies' well-laid plans.

"Companies are now circumspect. While there is no slowdown, they are
treading carefully," says Arvind Singhal, chairman of leading retail
consultancy Technopak. Most of the protests are focused on Reliance
Fresh, which was asked to shut shop in UP and West Bengal. Saying that it
is waiting for word from the two governments, Raghu Pillai, president,
Reliance Retail, adds: "It's a free country, and we are free to sell and
procure from whoever we choose."

When contacted, a top UP government official spoke on the condition of

anonymity. "We are looking into the case and trying to work out some
change in their (Reliance's) format so that the interest of farmers is not
compromised. A solution is in the offing in the near future," he said. In
West Bengal, Reliance's return is in the works with the Forward Bloc
recently saying it was opposed to foreign retail, not domestic chains.
Companies are quietly tweaking their models in other problem states: for
instance, Food Bazaar has stopped selling perishables in Darjeeling, as
have Reliance Fresh stores in Bhubaneshwar.
In its defence, big retail stresses that there will be no dramatic shift in
customer loyalties and there's enough space for both large and small
formats to coexist. For one, at around 5 per cent of the total pie,
organised retail today is too small and urban-centric to have a major
impact, though it will grow rapidly over the next few years. In evolving
economies, the organised sector constitutes 35-40 per cent of the market.

"We have created a new breed of shoppers that does not compete with
the daily shopping needs that kirana stores cater to." Kishore Biyani
Chairman, Future Group

Says Samar Singh Sheikhawat, VP, marketing, Spencer's Retail, "In China,
even 10 years after FDI was allowed in retail, the top 10 chains put
together cannot come close to unorganised retail."

The big differences in consumption patterns across the country may well
be the corner store's best line of defence against the big-chain models.
Consumers in the south, for instance, prefer packaged goods, while those
in the East go for loose, unbranded goods. According to Technopak's
Consumer Trends '06-07, 93 per cent of households across India prefer
the local kirana store for staple food and vegetables. And 66 per cent of
households want to travel a distance of less than 200 m to 1 km for their
shopping needs. Given poor roads, and the fact that many women don't
have personal transport, consumption patterns are not expected to
change overnight. Says Santosh Desai, CEO, Future Brands: "There will
always be a place for a personal, convenient shopping experience. In
India, you won't get such clear, dramatic shifts in a hurry."

Besides leveraging long-term relationships with consumers, the small

store gives two crucial extras to consumers—goods on credit and home
delivery. Many corner stores are cleaning up their displays and reaching
out to price-sensitive consumers with deals. Says Asitava Sen, VP, retail
and consumer goods, Technopak Advisors: "What nobody points out is
that traditional trade itself is growing." Pinakirajan Mishra, partner, Ernst
& Young, says "Corner stores have become smart, they have started
differentiating and giving value-added services." Here, it would be
instructive to look at the experience in the South, where 35 per cent of
households prefer to shop at homegrown departmental stores—like
Nilgiris, Varkey's and Giant. Analysts say the rest of India will graduate to
this model.

It's already happening. Traditional kirana player Peshawari has set up

smart daily needs stores in different parts of Chandigarh, Panchkula and
Mohali. Then there's Harri's Hypermart, scheduled to open by the end of
the month in Chandigarh. Says its proprietor Harish Bansal, "We have a
traditional kirana business in the grain market in Chandigarh and are
targeting the housewife at this new store. So, besides daily needs items,
we shall also stock cosmetics and imitation jewellery." Or take Bangalore's
M.K. Ahmed Super Shoppe, which has become a chain in its own right.
M.K. Ahmed had six children and the family divided after his death. Now,
each of the six children runs independent grocery stores (branded after
M.K. Ahmed) in different localities of the city. There are 15 such branches.
Says Jaleel E., who runs the parent shop: "Next, we plan to start a
supermarket in North Bangalore. We don't bother about big retail brands
in Bangalore because we're confident we know our customers best. "

Clearly, new retail formats will emerge. Says Kishore Biyani, founder and
chairman, Future Group, one of India's largest retailers: "I believe we have
created a new breed of monthly shoppers that does not compete with the
daily shopping needs local kirana stores cater to." Brand consultant Harish
Bijoor talks about a franchisee model, where large players tie up with
small stores. While the big players manage the back-end and
procurement, the small players interact with the consumer. Some large
players like Bharti Retail are considering such formats. Says Rajan Bharti
Mittal, MD, Bharti Enterprises, "The intermediaries and middlemen of
today could become entrepreneurs of a different kind. There would be
enough space for processing food and groceries to make it ready for the
consumer." It obviously helps that the small store is sitting on expensive
real estate—and is closer to the consumer.

Finally, what about the consumer? A cross-section of consumers Outlook

spoke to are thrilled at being upgraded to the new shopping experience
that big retail has served up. There are also many defenders of the small
store, which is changing to meet expectations. No guessing who's the
ultimate winner from the retail revolution.

India: Subhiksha stores to reopen as franchises

Subhiksha Trading Services, the retail chain whose stores have been closed for more than a year for lack of
money, is planning to reopen some through a franchise model, say sources.

Renovation at two shops in the city are in full swing and advertisements for sales boys and girls have been
placed. A notice outside one of the shops stated the salary would be in the range of Rs 3,500 to Rs 6,000 per
month.

When a staffer of this newspaper took photographs, staffers from the shop came out and snatched the camera,
returning it only after deleting all photos taken.

E-mails sent by this correspondent to R Subramanian, promoter and managing director, remained unanswered.

Subramanian had earlier stated the retail chain would require Rs 300 crore to get back into business. However,
creditors have decided not to lend any more money and there are petitions being heard in the High Court to wind
up the company. Subhiksha had also filed for a compromise with its creditors, but this was dismissed.

ICICI Bank had stated that Subhiksha has an exposure of Rs 870 crore to banks, Rs 107 crore to unsecured
lenders and Rs 250 crore reserves, “which none of us know where it went”. The bank has also asked for a probe.