Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
   Retail Stores     Types of Retail Formats in India     Complexities in Retailing   About Subhiksha     Retailing s...
   Mom & Pop Stores (Kirana Stores)   Departmental Stores (Westside, Lifestyle)   Category Killers (Best Buy, E-Zone) ...
   1997 – Retail Market was non-existant   Organized retail accounted for Rs 55000    crores in 2006($12.4 billion)   I...
1000                                                               No. Of Outlets900                                      ...
Vision“To emerge as the largest retailer in the  food, grocery, pharmacy segment in all the  geographical regions we opera...
 Subhiksha was started by R. Subramaniam, an  IIM A & IIT Chennai alumnus in 1997 Subhiksha in Sanskrit means (prosperit...
   Fruits   Vegetables   Grocery   Medicines   Mobiles
   Discount Store   Multiple Products   Small Store format   Service Oriented   Residential Locations   Availing Bra...
1.   Criticality of cost2.   Convenience of Buying    No Frills Store    EDLP Strategy    Off the main roads to take ad...
   Establish itself as a neighborhood store   Everyday low price system   Wanted to attain greater penetration in all  ...
   Subhiksham Card   Marketing Communication   Supply Chain and Inventory    turnover efficiency   Home Delivery Syste...
   1997 - 1st grocery Store in Chennai   2000 - 50 stores in Chennai   2000 June - ICICI Venture 10% stake for 15 Cr  ...
   2007 - 350 Crore IPO   2008 April - Enter into Wholesale Market   2008 April - Un-mindful Expansion   2008 July - M...
   In 2000 ICICI Venture invested in Subhiksha with    10% stake at Rs15 Cr & raised stake to 23 % by    2004   Subhiksh...
   Segmentation was done    on the basis of geography    initially     Opened stores in South India      initially , lat...
   Expanding middle & upper classes has played a    big role in the expansion of existing modern    format stores & entry...
   Low prices   Consumer Savings   Consumer Trust   One Stop Shop     Multiple products under one store   Store desi...
   TV Advertisements   Price Challenge    Campaign   Hoardings   Celebrities for    promotion   EDLP approach   “Sub...
   EDLP – Everyday Low     Pricing Approach    Prices below the MRPProduct        Subhiksha MRPRice 5 kg      Rs.102    ...
 Distribution Channels helps in the ‘place’  aspect of the marketing mix It provides place, time & possession  utility t...
Brand Name       Outlet Type    Level of OperationSpencer’s        Supermarkets   NationalReliance Fresh   Supermarkets   ...
“We are a golden egg laying duck, we are introuble. We need their (bankers and lenders)support and upon getting it we will...
   Un-mindful expansion spree across the country   Subhiksha was thinking of going for an IPO in    2007 but shelved it ...
   Spending the debt raised money   Lack of Transparency   Liquidity crisis   Poor Management   Government Interventi...
 March 2009- Undergone a corporate debt  restructuring exercise, with lenders reviewing its  books Subiksha’s subsidiary...
   Madras high Court and creditors against the    reopening   Petition filed by Kotak Mahindra & ICICI   Debt burden  ...
   Specializations in products   Improved stores     Better Store Design & Interiors   Better management with supplier...
   New Store Format   Open stores in malls or shopping complexes    to increase footfall   Diversify in products which ...
Failure of subhiksha
Failure of subhiksha
Failure of subhiksha
Failure of subhiksha
Failure of subhiksha
Upcoming SlideShare
Loading in …5
×

Failure of subhiksha

20,253 views

Published on

Published in: Business
  • Be the first to comment

Failure of subhiksha

  1. 1.  Retail Stores  Types of Retail Formats in India  Complexities in Retailing About Subhiksha  Retailing scenario in India  Retail format of Subhiksha  About Subhiksha (Vision, Mission, Internal Analysis, Fund Raising)  Segmentation, Targeting & Positioning  Promotion, Distribution, Pricing & Competitors  Decline of Subhiksha  Reasons of Decline  Revival Strategies of Subhiksha Recommended Revival Strategies for Subhiksha
  2. 2.  Mom & Pop Stores (Kirana Stores) Departmental Stores (Westside, Lifestyle) Category Killers (Best Buy, E-Zone) Malls (Inorbit, Ansal Plaza) Discount Stores (Primus Retail) Supermarkets (Haiko) Street Vendors (Hawkers) Hypermarkets (Reliance Fresh, Big Bazar) Kiosks (CCD Express)
  3. 3.  1997 – Retail Market was non-existant Organized retail accounted for Rs 55000 crores in 2006($12.4 billion) It is only 4.6% of total Indian retail value($270 billion) Retail in India is expected to grow at a rapid rate of 37% in 2012 and 45% in 2015 In 2010, 60% of the retail value ($270 billion) was dominated by food & grocery
  4. 4. 1000 No. Of Outlets900 Country Wide800 2004 700600 2005500 2006400 0, 0, 22, 325 300 0 , 0, 140, 250 2007200 22, 35, 60, 105 94, 46, 55, 70 100 0 142, 150, 450, 1000 Subhiksha Reliance Food Bazaar Food World Spencers Fresh Daily
  5. 5. 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 , as guided Subhiksha to deliver savings to all consumers on each & every item that they need in their daily lives, 365 days a year without any compromise on the quality of goods purchased”
  6. 6.  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
  7. 7.  Fruits Vegetables Grocery Medicines Mobiles
  8. 8.  Discount Store Multiple Products Small Store format Service Oriented Residential Locations Availing Branded Products
  9. 9. 1. Criticality of cost2. Convenience of Buying No Frills Store EDLP Strategy Off the main roads to take advantage of low cost Catchment area of approx 2 kms Local low overhead front-end of Kirana stores with efficient supply chain of a large retailer
  10. 10.  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
  11. 11.  Subhiksham Card Marketing Communication Supply Chain and Inventory turnover efficiency Home Delivery System Use of IT Online Retail System
  12. 12.  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
  13. 13.  2007 - 350 Crore IPO 2008 April - Enter into Wholesale Market 2008 April - Un-mindful Expansion 2008 July - Market Falls 2008 Oct - Operating Difficulties 2009 - Major Financial Crisis 2009 March - Shut Down Operations
  14. 14.  In 2000 ICICI Venture invested in Subhiksha with 10% stake at Rs15 Cr & raised stake to 23 % by 2004 Subhiksha also raised a 15 Cr debt from the market 2003 - Azim Premji took 10% stake from ICICI for Rs230 Cr 2004 – 2007 equity of Rs160 Cr, debt of Rs. 345 Cr & bridge loan of Rs.125 cr 2008- raised debt capital of Rs.600 Cr from Enam Securities Ltd, ICICI Ltd & Kotak Mahindra Bank
  15. 15.  Segmentation was done on the basis of geography initially  Opened stores in South India initially , later expanded elsewhere Later on, was done on the basis of age groups  Different product portfolios were targeted for different market segments
  16. 16.  Expanding middle & upper classes has played a big role in the expansion of existing modern format stores & entry of new ones Attract not the top end customer but the aam aadmi Target Market for different products:  Grocery & Vegetables – Common man & specifically Housewives  Mobile –Youth  Medicines – Old Age People
  17. 17.  Low prices Consumer Savings Consumer Trust One Stop Shop  Multiple products under one store Store designed with Indian touch Location Convenience Privilege to loyal customers Indian Management
  18. 18.  TV Advertisements Price Challenge Campaign Hoardings Celebrities for promotion EDLP approach “Subhiksham” Card
  19. 19.  EDLP – Everyday Low Pricing Approach  Prices below the MRPProduct Subhiksha MRPRice 5 kg Rs.102 Rs.119Britannia Rs.21 Rs.24Marigold 400gmSugar 1 kg Rs.15 Rs.17
  20. 20.  Distribution Channels helps in the ‘place’ aspect of the marketing mix It provides place, time & possession utility to the consumers Carpet Bombing Model  Cluster of stores in close proximity 10 stores in 1998 to 1000 stores in 2008 Stores with one intermediary – Retailers
  21. 21. Brand Name Outlet Type Level of OperationSpencer’s Supermarkets NationalReliance Fresh Supermarkets NationalFood Bazar Supermarkets NationalMore Supermarkets NationalFood World Supermarkets South IndiaNiligiri’s Supermarkets South IndiaFabmall Supermarkets South IndiaSpar Supermarkets South India
  22. 22. “We are a golden egg laying duck, we are introuble. We need their (bankers and lenders)support and upon getting it we will restartoperations and repay all debt. It is not easy,but we have to make it happen.”
  23. 23.  Un-mindful expansion spree across the country Subhiksha was thinking of going for an IPO in 2007 but shelved it in view of “uncertain market conditions” No consolidation- Tried to be first in every town Poor inventory management Private Labels Operations came to a standstill due to non- payment of salaries, huge debt burden & arrears to suppliers Major competition by stores like Big Bazar, Spencer’s etc
  24. 24.  Spending the debt raised money Lack of Transparency Liquidity crisis Poor Management Government Intervention Lack of strong HR policies & Staff Wrong Assumption that telecom sector is sound to invest Over Confidence & Aggressiveness
  25. 25.  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
  26. 26.  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
  27. 27.  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
  28. 28.  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

×