Pantaloon Retail Strategic Analysis

1. Pantaloon Retail India Limited
Group 6
GMP:10-11
Amit Kumar
Chinmay
Malik
Pradeep
Sanjeev
Tarun

2. Indian Retail space is expected to witness tremendous growth
in next few years
Indian retail space growth: 2006-2008 Indian retail sector overview
500
Shopping malls
450 • The retail market in India is estimated at about
400 Square Ft. (Mn) US$ 410 billion and constitutes about 60% of
private consumption
300 • Sector has witnessed a lot of interest from both
domestic and global players, who have
200 committed investments worth $30 billion
137 120 • By 2011, India will have an additional 280
100 hypermarkets, 3,200 supermarkets, 400
28
department stores and approximately 1200
0 mega specialty 48 stores and 20,000 exclusive
2006 2008
brand outlets
Retail technology solutions growth ($ Mn): 2010-2015 Key success factors for a retailer in India
1400 1,260 • Sales growth from existing and new stores
1200 • Customer footfall, conversion and transaction
1000 size
• Inventory management
800
• Real estate prices
600 503 • Shrinkage
400 • Other macro economic factors like domestic
200
consumption, inflation , competition, and other
local policies etc.
0
2010 2015

3. Value Chain Analysis
Firm Infrastructure
Human resources Training Quality training Marketing Sales assistant, Customer service
research training customer service training
training
Technology/ Handling and sorting, Feedback/ Marketing Feedback / control Customer service
computerized information systems support systems
systems control
warehousing generation &
distribution
Procurement Supply chain Buying systems, buying Supporting Budget control
management cycle management marketing
objectives
Property Warehouse location Store design, store Store location
management atmospherics
Central warehousing Product range Retail branding Presentation stock Complaints
management, check- management, returns
Logistics Advertising, sales
out service, Financial handling,
management promotions
Product mix services repairs/service
Returns policy agreement
guarantees management
Logistics / Merchandising Marketing Store operations After sales service
Distribution

4. Pantaloon’s competitive strength lies in better understanding
of Indian market, ubiquitous presence and efficiency
 Started retail business in 1997 in Kolkata
Early mover  Developed a wide network of stores across India in
advantage various formats
 Establish brand equity for the Company
 Cater to the consumer requirements across various
Deep understanding consumer segments through various formats
of the retail sector
Pan India presence  Presence in 72 cities across India, through approximately
29 type of formats in various lines of businesses
and economies of
 Understand and implement processes to make front end
scale and back end functions efficient and cost effective
Competitve
strengths  Efficient business processes and expertise that enable us
to optimize resources to execute projects in multiple
Operations capability
locations at competitive costs and in minimal time
 Own logistics services company
Robust internal retail  55 distribution centres warehouses in 29 cities across
support systems India, covering an aggregate area of 30,67,538 Sq. ft and
handling over 33,11,392 SKUs
 Led by Kishore Biyani, one of the leading entrepreneurs in
the retail sector in India
Management team

5. Pantaloon should focus on improving its revenue growth
through better alignment with the customers
1 Year Revenue growth: 2009-2010
14.0% Analysis:
12.0%
12.0%
11.6% • Pantaloon is the only player
10.0% with negative revenue growth
8.0%
in the group
6.0%
• Even our benchmark, which
happens to be world’s largest
4.0%
company, recorded positive
2.0% 0.9%
growth in a crisis-ridden
0.0%
market like USA
-2.0% Shoppers Stop Trent Pantaloon Wal-Mart
• Competitors witnessed a
-4.0% healthy growth of more than
-6.0% -5.2% 10%
-8.0%
Recommendation:
A company which claims that it understands the recorded the decline in revenue. Need
to focus on better image, effective marketing communication, and customer oriented
loyalty initiatives

6. Pantaloon’s Cash Conversion Cycle (CCC) is highest amongst
the peers
Cash Conversion Cycle (CCC): 2009-2010
100.0 Analysis:
82
80.0
• Pantaloon recorded a
whooping cash conversion
60.0 cycle of 82 days. This high CCC
40.0 is influenced due to inventory
stock up of around 4 months
20.0
7 • Benchmark Wal-Mart
0.0 recorded a CCC of merely 7
Shoppers Stop Trent Pantaloon Wal-Mart days
-20.0 -4 • Other Indian players recorded
-40.0 negative CCC
-38
-60.0
Recommendation:
A closer look at the CCC indicates that company has prohibitively high inventory levels.
Therefore, Company should focus on improving product forecasts, JIT delivery model, and
better relationships with its suppliers/ distributors

7. Pantaloon’s Should focus on reducing the COGS through
improving supplier relationship and better sourcing
COGS to revenue (%): 2009-2010
80.0% 74.6% Analysis:
70.0% 65.4% 67.5% • In Indian companies ,
Pantaloon had the highest
60.0%
cost of goods sold to revenue
50.0% 47.1% ratio
• Trent had a significantly low
40.0%
COGS to revenue ratio
30.0%
20.0%
10.0%
0.0%
Trent Shoppers Stop Pantaloon Wal-Mart
Recommendation:
Company needs to look at improving its COGS by either reducing the material cost or
labour cost. However, company already has significantly low labour costs. Therefore, it
should focus on reducing material cost through better supplier management

8. Pantaloon has huge investments in its balance sheet which
may require further analysis
Investment to Fixed Assets ratio: 2009-2010
2.00 Analysis:
1.77 1.78
1.80 • Pantaloon has kept huge
1.60 amount of money in
1.40 investments. Trent is following
1.20
the suit
• Does this high investment in
1.00
non-business activity suggest
0.80
lack of faith in retail business
0.60 or siphoning off of money???
0.40
0.40 • In Wal-Mart, not even a single
0.20 cent has been kept in the
0.00
0.00 investments and all the
Shoppers Stop Trent Pantaloon Wal-Mart money is invested in the
business only