Subhiksha was founded in 1997 as a discount grocery store chain in India. It expanded rapidly through the 2000s, reaching over 500 stores by 2006. However, this rapid expansion was uncontrolled and without proper consolidation or attention to retail management principles. Stores were poorly managed and lacked consistent inventory. By 2009, Subhiksha faced a debt crisis and underwent restructuring. Attempts to revive the brand through new store formats and debt refinancing failed due to ongoing debt burdens and liquidity issues. The company ultimately failed due to its uncontrolled growth strategy without focus on profitability, supply chain management, or quality retail operations.

3. 1. About Subhiksha
 Subhiksha was started by R. Subramaniam, an IIM A & IIT Chennai
alumnus in 1997
 Subhiksha in Sanskrit means (prosperity)“the giver of all good things in
life”
 Theme - Why pay more when you can get it for less at Subhiksha?
 Discount store at prices lower than other retail outlets
 500 outlets in early 2007
 Set up 1,000 sq ft shops all across the city

4. 2. Retail Methodologies
 Discount Store
 Multiple Products
 Small Store format
 Service Oriented
 Residential Locations
 Availing Branded Products

5. 3. Retail Strategy
 Establish itself as a neighborhood store
 Everyday low price system
 Wanted to attain greater penetration in all markets
 Lease rental system for stores
 Centralized purchasing
 Subhiksham Card
 Marketing Communication
 Supply Chain and Inventory
turnover efficiency
 Home Delivery System
 Use of IT
 Online Retail System

6. SUCCESS OF SUBHIKSHA

7. 1. Success Timeline of Subhiksha
 1997 - 1st grocery Store in Chennai
 2000 - 50 stores in Chennai
 2000 June - ICICI Venture 10% stake for 15 Cr
 2001 - Increased Stake to 23%
 2002 - 120 Stores across Tamil Nadu
 2003 - Azim Premji 10% stake for 230 Cr
 2006 - 500 Stores across the country
 2007 - 1000 Stores Across the country

9. Reason 1. UNMINDFUL EXPANSION
 Across states from South to
West- rapid store expansion.
 Rapid increase of personnel.
 From groceries and medicines
to mobiles and Electronics- too
fast
 Huge investments and cash
flows

10. Reason 2. GROWTH…WITHOUT CONSOLIDATION
 2004 marked a departure in
Subhiksha philosophy from
consolidation and growth to
uncontrolled growth.
 Very few stores would have
been profitable in terms of cash
flows.

11. Reason 3. WHITHER RETAIL MANAGEMENT
 The focus was towards
multiplying turnovers.
 Expansions happened without
an eye to principles in retail
and customer management.
 Staff service was shoddy and
stores lacked a healthy appeal
to customers.
 A Subhiksha store often looked
like a government uniform
pricing store.

12. Reason 4. PROFIT AND LOSS? BALANCE
SHEETS?
 Uncontrolled increase in store
and personnel was bleeding the
treasury.
 Turnover being the mantra,
Subhiksha worked on slim and
zero margins, often evoking the
wrath of other players in the
market.
 Thus cash outflows were high
where as inflows in terms of
margins were non existent.

13. Reason5. MASTERING THE SUPPLY CHAIN
 Downstream supply chain was
not integrated.
 Bulk buying is not a source of
advantage.
 In effect, Subhiksha was being
a reseller buying products from
vendors and selling them at
zero margins.

14. Reason6. MANAGING VENDORS
 Subhiksha tried to build scale
on bulk quantity purchases
from vendors and a liberal
credit term extended to them.
 Your vendors only have a
limited leash….expecting huge
credit cycles to make up for
your turnover is hardly “good”
vendor management.

15. Reason7. INVENTORY MANAGEMENT
 Credit defaults caused supply
breakages.
 Hence it led to situations where
either there were huge store
inventories going bad.
 Inconsistency resulted in
customer dissatisfaction with
store franchise
 Unrestrained practices like
reselling to other retailers,
made company squeeze
supplies

16. Reason8. DISCOUNTS AS USP
 The only USP was
discounts…..hardly a
sustainable competitive edge.
 Footfalls, turnaround and
turnover being the guru
mantra: Subhiksha never
understood its customers.
 In a rush to build turnovers and
meet targets , lower level
managers resorted to reselling
it to retailers and emptying the
inventories.

17. Reason9. QUALITY OF GROUND LEVEL
MANAGEMENT
 Personnel recruited to run
operations were locals.
 Tendency towards dishonest
practices in face of turnover
pressure.
 Scored “own goals” by playing
into the turnover traps.
 Quality of store service was
bad, adherence to rules of retail
were minimal.

18. Reason10. DIFFUSED FOCUS
 Subhiksha sold fresh
vegetables, groceries,
medicines, mobile phones,
accessories and more…where
was the focus?
 How robust was the business
model and the manpower to
handle such diversity?
 Did they ever stop to catch a
breadth and consolidate?

20. 1. Subhiksha’s revival strategies
 March 2009- Undergone a corporate debt restructuring exercise, with
lenders reviewing its books
 Subiksha’s subsidiary Cash and Carry Proposed scheme
 50% waiver and amalgamation with Blue Green Construction &
Investments
 Post merger promised to pump in 150cr
 Reopened as Subhiksha Rice Wholesaler
 3 stores opened in Chennai

21. 2. Failure of these strategies
 Madras high Court and creditors against the reopening
 Petition filed by Kotak Mahindra & ICICI
 Debt burden
 Tried to re open to fast to soon without clearing dues
 Chose debt over equity for funding
 Liquidity crunch
 Inadequate I.T support

22. 3. Recommended Retail Strategies
 Specializations in products
 Improved stores
 Better Store Design & Interiors
 Better management with suppliers
 Raise funds in a systematic manner
 Shut stores with low sales
 Focus on quality instead of quantity
 Invest more in R&D
 Study target market well
 Carry sales check on regular intervals
 Improve quality & after Sales service
 Choosing Equity over Debt to be risk free

23. Continued…
 New Store Format
 Open stores in malls or shopping complexes to increase footfall
 Diversify in products which are profitable
 Products for which overall industry performance is good
 Products which are related to the current product basket
 Customer Relationship Management
 Better working conditions for employees

24. THANKYOU
BY: DANISH
ABHISHEK
SURBHI
KRITI
MUKESH
NAMITA