The document summarizes trends in outsourcing in the Indian retail industry. It analyzes data from Pantaloon Retail Ltd and Spencer Retail Ltd, finding that both companies outsource a large portion of their operations, with Spencer outsourcing more at around 95%. A survey found that both companies use multiple vendors and outsource logistics and transportation. While Big Bazaar is moving towards more internal production, Spencer focuses on responsiveness through outsourcing and forecasting improvements. Limitations include a lack of seasonal data and the results only representing 5% of the overall industry.

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. 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. 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. Pantaloon Retail India Ltd.
• Incorporated on 12th Oct, 1987
• Malls in 51 cities
• 78 Hyper markets, 113 Food bazaar etc.
• Leaders' in Indian retail Industry
Spencer’s Retail Ltd.
• approx 200 stores
• Started with multi format food retail
• A growing player

5. Figure 1: Outsourcing ratio
1.00
Outsourcing 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. Raw Material
Spencer’s Retail Ltd Big Bazaar
• Buy Semi-finished goods • Procures raw material for home
grown brands
• Minimal processing
• Processing outsourced

7. Pantaloons Retail Ltd. Spencer Retail Ltd.
0.80 0.95
Outsourcing 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. 1600
1400
1200
1000
800
EBIT
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. 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. 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. 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. 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. Supply chain

14. Checks and Balances
• At times big bazaar has ‘Excess Stock ’
• Proper place to pile Excess Inventory if compulsory

15. Insights for Manager’s Interview (Spencer's Retail Ltd.)
• Outsourcing for perishables
• Handy Boys
• Tackling of price hikes
• Japanese 5S for inventory management
• Personal forecasting

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
• Spencer's looking at responsiveness and looking at getting its forecast's 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. 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. Thank you
Happy shopping