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Presentation2.1

  1. 1. OUTSOURCING TRENDS IN INDIAN RETAIL INDUSTRY Vivek Parekh 2010281 Sankha Dip Dutta 2010207 Debashish Bagg 2010298 Shantanu Pandey 2010212 Sakshi Agarwal 2010206 Shashank shekhar Tripathi 2010213 Benjamin Weber 2010FE01
  2. 2. Agenda• Indian Retail Industry • Pantaloon Retail Ltd. • Spencer Retail Ltd.• Summary of Results • From database and Annual Reports • Outsourcing Ratio • Survey • Telephonic Interaction• Conclusion and Limitations
  3. 3. Indian Retail Industry• 4th Most attractive among emerging markets• Contributes to 12% to GDP of India• Employees 25 Million people• Organized retail 5% of total Market• Lead players • Pantaloon Retail India Ltd. • Spencer’s Retail Ltd. • Etc.
  4. 4. Pantaloon Retail India Ltd. • Incorporated on 12th Oct, 1987 • Malls in 51 cities • 78 Hyper markets, 113 Food bazaar etc. • Leaders in Indian retail IndustrySpencer’s Retail Ltd.• approx 200 stores• Started with multi format food retail• A growing player
  5. 5. Figure 1: Outsourcing ratio 1.00Outsourcing Ratio 0.90 0.80 0.70 0.60 0.50 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Year Retail Industrial Pantaloons Spencer Average Retail Ltd. Retail Ltd.
  6. 6. Raw MaterialSpencer’s Retail Ltd Big Bazaar• Buy Semi-finished goods • Procures raw material for home grown brands• Minimal processing • Processing outsourced
  7. 7. Pantaloons Retail Ltd. Spencer Retail Ltd. 0.80 0.95Outsourcing Ratio y = -1E-05x + 0.762 Outsourcing Ratio y = -0.000x + 0.913 R² = 0.189 R² = 0.338 0.70 0.85 0.60 0.75 100 5100 10100 100 600 1100 1600 Sales turnover Pantaloons… Linear (Pantaloons… Spencer…SalesLinear (Spencer… turnover Outsourcing Ratio Retail Industrial Average 1.00 y = -1E-05x + 1.103 R² = 0.826 0.50 14000 24000 34000 44000 Sales turnover Retail Industrial… Linear (Retail Industrial…
  8. 8. 1600 1400 1200 1000 800EBIT 600 400 200 0 -2000.50 0.60 0.70 0.80 0.90 -400 Outsourcing Ratio Spencer Pantaloons Retail Industrial Retail Ltd. Retail Ltd. Average
  9. 9. Cashflow / Net Sales 0.30 0.20 0.10 0.00 0.50 0.60 0.70 0.80 0.90 -0.10 -0.20 Outsourcing Ratio Spencer… Pantaloons… Retail Industrial…
  10. 10. Survey Results Big bazaar Ltd. Spencer’s Retail Ltd. Single/ Multiple source Multiple source Multiple source Main parameters 1. Low cost 1. Capacity aggregation 2. High quality 2. Inventory aggregation 3. Transport Aggregation 3. Transport aggregation Negotiations Reverse auctions One-on- One negotiation Responsive/ effective Effective Tradeoff Buy back contracts Revenue sharing 1. Quantity flexibility 2. Responsiveness Logistics outsourcing 3PL 3PL
  11. 11. Survey Results cont. Big bazaar Ltd. Spencer’s Retail Ltd. Outlets Company owned 1. Company owned 2. Leased 3. Franchise Staff outsourcing Permanent staffing 1. Contract 2. Permanent staffing Depth of monitoring Tier 2 Tier 2 vendors Negotiations Reverse auctions One-on- One negotiation Trends in Outsourcing Increasing Increasing
  12. 12. Big bazaar logistics• Logistics by Li &Fung Group• Information systems • Warehouse Management Systems • Put-to-light systems • Auto replenishment system by help of ERP• 12 transportation hub and 40 branches in the nation• 1600 transportation vehicle
  13. 13. Supply chain
  14. 14. Checks and Balances• At times big bazaar has ‘Excess Stock ’• Proper place to pile Excess Inventory if compulsory
  15. 15. Insights for Manager’s Interview (Spencers Retail Ltd.)• Outsourcing for perishables• Handy Boys • Tackling of price hikes• Japanese 5S for inventory management• Personal forecasting
  16. 16. Conclusions and Limitatations• Conclusion • Big bazaar moving away from outsourced good to internal production • Big bazaar looking at long term efficiency rather than responsiveness • Spencers looking at responsiveness and looking at getting its forecasts right• Limitations • Lack of more data restricted for looking at the seasonal variation • Results cannot be generalized to the complete industry due to 95% of it being un organized.
  17. 17. Probable effects of FDI Norms• Spur of competition• Increased outsourcing of goods from India• Employment of farmers and other small producers?• Overall efficiency increase?
  18. 18. Thank you Happy shopping

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