Retailing Derived from the French word ‘retailer’ which means,” to cut up". It consists of the business activities involved in selling goods and services to consumers for their personal, family, or household use.
Definition of Retailing “It is the last commercial link in the marketing channel and the point where products finally reach their users.” “Retailing includes all activities directly related to the sale of goods or services to the ultimate customer for personal non-business use.” “Dictionary Definition: The selling of goods to general public.”
Retail IndustryThe share of retail trade in the countrys gross domestic product (GDP) was between 8–10 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010. 35 % Growth 6 % Growth
Indian Retail Industry Commercial real estate services company, CB Richard Ellis findings state that Indias retail market is currently valued at US$ 511 billion. The Organized retail accounted for Rs 55,000 crore (about $12.4 billion) in the year 2006 and still its just about only 4.6% of the total Indian Retail Value that was about Rs 12,00,000 crore.
Prospects of Retail In India new jobs in organized sector alone in 1 million next 10 years. Indias overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. Also, organised retail, which accounts for almost 5 per cent of the market, is expected to grow at a CAGR of 40 per cent from US$ 20 billion in 2007 to US$ 107 billion by 2013.
Subhiksha-The Introduction Largest retail value chain in India with 1600 outlets started in 1997 . 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. The company’s investors include Wipro’s Azim Premji and ICICI Prudential Mutual fund apart from the ESOP Trust.
Business Vision & Mission 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, 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.
Product Portfolio Supermarket: The supermarket includes quality groceries, packaged foods, cosmetics and toiletries, household provisions, etc. Fruits and Vegetables: Includes fresh fruits and vegetables sourced directly from farms on city outskirts by Subhiksha and made available to the consumers at very reasonable prices. Consumers get fresh produce atbest prices.
Contd…… Pharmacy: Subhiksha stores generally have a in storepharmacy which stores mostly basic medicines. Allmedicines are made available to consumers at a flat10% discount. Telecom: Subhiksha is recently forayed into mobileretailer business and offers handsets, recharge cardsand accessories from all leading cell phonemanufacturer’s at lower prices.
Retail StrategySubhiksha focuses on two factors for its model.These are called the two Cs: 1. Criticality of Cost. 2. Convenience of Buying
Internal Analysis Small Store/Cost Saving. EDLP. Lower Infrastructure Cost. Centralized Purchasing. Marketing Communication. Introduction of Subshikham card. Establishment of Home Delivery and Online retail system.
• In 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, ICICI ventures joins Subhiksha.• 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
SWOT AnalysisSTRENGTHS WEAKNESS• Discount model • Lack of expertise in Indian Retail• Strong Top management team environment• High Customer base • Low grade lower management team• High Brand Value • Strategy of debt‐led Rapid expansion• Use of Information Technology on a small equity base • Long time taken in IT ImplementationOPPORTUNITIES THREATS• Worlds most lucrative retail market • Economic uncertainty and Recession• Heavy Investment industry from FII’s • Strong Competitors at National and and Venture Funds Regional Level • Price war and shrinking margins• Huge No. of customers • Risk in Retailing and rapid expansion
Competitive AnalysisSR. BRAND NAME OUTLET TYPE LEVEL OF OWERNSHIPNO OPERATION1 SPENCER’S SUPERMARKET NATIONAL RPG GROUP2 RELIANCE FRESH SUPERMARKET NATIONAL RELIANCE GROUP3 FOOD BAZAR SUPERMARKET NATIONAL FUTURE GROUP4 MORE SUPERMARKET NATIONAL ADITYA BIRLA
Comparison of Subhiksha with other Retail Outlets Product Range Positioning Store Format Strength Price
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.
Contd…… Lack of strong HR policy and Staff. Strong Competition. Over confidence and Aggressiveness.