THE FALL OF SUBHIKSHA

Presented By: Shiv Kumar Vivek Chauhan Rahul Sharma Manpal Singh Megha Kapoor Chetna Singh Laxman Singh Upasana Kashab Devesh Rathore Joyti Shishodia

Retail Industry
Sale of goods to end users, not for resale, but for use

and consumption by the purchaser. Retail transaction is at the end of the supply chain. Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers.

Indian retail Industry

Indian Retail Industry is standing at its point of

inflexion, waiting for the boom to take place Organized retail accounted for 4.27 billion USD in the year 2010 which is still less than 10% of the total Indian Retail Industry Value More than 60% is dominated by Food and Grocery Retail Indian retail sector accounts for more than 20% of the country's GDP It is one of the largest sector providing employement oppotunity

Indian organized retail industry

 Founder of Subhiksha.

Mr. R. Subramanian

About logo:

Subhiksha in Sanskrit means the giver of all good things

in life.
1. Started its operation on 8 march 1997 in Thiruvanmiyur, by

founder Mr. R Subramanian. 2. In 2004 Subhiksha had 164 stores all over Tamil Nadu and Pondicherry (Chennai alone account for 72). 3. initially sold grocery and pharmaceuticals. 4. Goods were 8-10% lower than maximum retail price(MRP). 5. Store keeper helped customer in their buying decision. 6. The stores were without air condition, extravagant lightning or decoration. 7. Customer had to ask for product against touch and feel experience offered by many stores.

The expansion of the stores:

In March 1997 Opening of the first retail store in Chennai, with

5 lacs Initial investment. March 9914 stores in Chennai June 2000 50 stores in Chennai, ICICI ventures joins Subhiksha June 2002 120 stores in whole of Tamil Nadu June 2006420 Stores in other big states in India namely Gujarat, Delhi, Mumbai, Andhra Pradesh and Karnataka. Feb 2007500 stores across country Dec 2007 1000 stores across India October 2008 1600 stores across India

To emerge as the largest retailer in the 'Food Grocery Pharmacy' segment in all the geographical regions we operate from.

Short comings of Vision

1. 2. 3. 4. Timeline. Vague statement. Limited to Food grocery and Pharmacy. Lack of focus.

MISSION
To deliver consistently better value to Indian consumers, has guided Subhiksha to deliver savings to all consumers on each and every item that they need in their daily lives, 365 days a year, without any compromise on quality of goods purchased.

Shortcoming of Mission Statement

1. Timeline 2. Not aligned to Vision statement. 3.Value in terms of what, is not specified.

Porters Five Forces Analysis

Potential Entrants: A strong possibility of potential

entrants is there but understanding of Indian consumer is really difficult which restricts the multinationals in expanding at local level and local retailers at National level.
Bargaining Power of Suppliers: The Power of suppliers

is not very dominant in India.

Bargaining Power of Customers : A strong Bargaining

power of customers, unless they are very loyal.

Potential Substitutes : Exist but lack a strong value

proposition

Retail Strategy
Subhiksha focuses on two factors for its model. These are called the two C's:
1. Criticality of Cost. 2. Convenience of Buying

Corporate Strategy
Growth and Expansion Differentiated Experience. No frills model. Discounts as their USP.

Competitive Analysis
S.N BRAND NAME OUTLET TYPE LEVEL OF OPERATION NATIONAL OWERNSHIP 1 SPENCERS SUPERMARKET RPG GROUP

RELIANCE FRESH

SUPERMARKET

NATIONAL

RELIANCE GROUP

FOOD BAZAR

SUPERMARKET

NATIONAL

FUTURE GROUP

MORE

SUPERMARKET

NATIONAL

ADITYA BIRLA

KEY CHALLENGES
Risk in retailing and expansion.
Need for an I.T. solution. Inefficient inventory control.

Absence of departmentalization.
Absence of performance evaluation. Absence of MIS system.

Inadequate logistics.
Lack of decentralized planning

SWOT Analysis
Strength

Weakness
Lack of expertise in Indian Retail environment Low grade lower management team Strategy of debtled Rapid expansion on a small equity base Long time taken in IT Implementation

Discount model Strong Top management team High Customer base High Brand Value

Opportunity

Threat

World's most lucrative retail market Economic uncertainty and Recession Strong Competitors at National and Heavy Investment industry from Regional Level FIIs and Venture Funds
Price war and shrinking margins

Huge No. of customers

Risk in Retailing and rapid expansion

REASONS FOR FAILURE

Over expenditure on advertisement. Over expenditure on wages and rent. Expansion of stores without adequate system control & IT

support. Govt. Interventions. Suppliers bargaining power. Lack of strong HR policies & staff. Huge rent & lease bills. The wrong assumption that telecom segment is a sound, & profit making segment. Strong competition Over confidence & aggressiveness

Recommendations
Build a franchise model to control the rent and

employees costs which are biggest operating costs of organized retail business.
Build retail operation with appropriate debt levels

because interest cost is another big margin eating expense