Why did Subhiksha failed ?

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 Industry
The share of retail trade in the country's 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 Organized Retail
Industry
 Indian Retail Industry
 Commercial real estate services
company, CB Richard Ellis' findings
state that India's retail market is
currently valued at US$ 511 billion.

 The Organized retail accounted for Rs

55,000 crore (about $12.4 billion) in the
year 2006 and still its just about only
4.6% of the total Indian Retail Value
that was about Rs 12,00,000 crore.
 Prospects of Retail In
India
 1 million new jobs in organized sector alone in
next 10 years.
 India's overall retail sector is expected to rise to
US$ 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.
The Case Study on
Subhiksha
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 store
pharmacy which stores mostly basic medicines. All
medicines are made available to consumers at a flat
10% discount.

Telecom:
Subhiksha is recently forayed into mobile retailer
business and offers handsets, recharge cards and
accessories from all leading cell phone manufacturer’s
at lower prices.
 Retail Strategy

Subhiksha focuses on two factors for

its model.
These are called the two C's:

 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 Analysis
STRENGTHS
• Discount model
• Strong Top management team
• High Customer base
• High Brand Value
• Use of Information Technology
OPPORTUNITIES
• World's most lucrative retail •
market
• Heavy Investment industry from •
FII’s and Venture Funds
• Price war and shrinking margins
• Huge No. of customers
WEAKNESS
• Lack of expertise in Indian Retail
environment
• Low grade lower management
team
• Strategy of debt‐led Rapid
expansion on a small equity
base
• Long time taken in IT
Implementation
THREATS
Economic uncertainty and
Recession
Strong Competitors at National
and Regional Level
 Competitive Analysis

SR. BRAND NAME OUTLET TYPE LEVEL OF OWERNSHIP

NO OPERATION

1 SPENCER’S SUPERMARKET NATIONAL RPG GROUP

2 RELIANCE FRESH SUPERMARKET NATIONAL RELIANCE

GROUP

3 FOOD BAZAR SUPERMARKET NATIONAL FUTURE GROUP

4 MORE SUPERMARKET NATIONAL ADITYA BIRLA

 Comparison of Subhiksha
with other Retail
 Product Range Outlets

 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.

 OU
Y
N K
HA
T