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By: Dheeraj Tripathi

Roll no: 1301-065


Section A
PGDM 2013-15
Case Analysis: Big Bazaar
Indian Retail Market
Worlds eighth largest at $250 billion
12 million retail outlets
Retail sales represented 33.3% of Indian GDP
In 2005, modern Organized retail market had
3.5% share of Indian retail market


RETAIL FORMATS
Value Retailing
Big Bazaar
(Discount
Hypermarket)
Food Bazaar
(Food & Grocery)
Lifestyle
Retailing
Pantaloons
(Departmental
Store)
Central
(Lifestyle Mall)
Introduced in 1997 as High Fashion family department store
Departmental store
16 stores across India
Positioned as Preferred fashion destination for 15-35 age segment
Various private label brands like John Miller, UMM, RIG
Launched in 2004, operated as A mall without internal walls
Seamless mall
3 stores by 2005
Apparels, Toys, Music, Books, Accessories
Featured entertainment zones, food courts and restaurants
Introduced in 2001 as a Hyper Market, designed to blend typical Indian Bazaar
Discount hyper market
Wide range of products including clothing, kitchenware, sporting goods, Luggage
and jewelry

Launched in 2002 within Big Bazaar Store
Six months within the launch, 42 outlets- 18 standalone
33 standalone food bazaar stores by 2005
Average of 7000 products , sold fresh produce, consumer packaged goods, staples,
ready-to cook products alongside private label teas, salts and spices
Sold to Aditya Birla Nuvo
13 stores
166 stores

43 stores
Store
Year of
commencement
Stores(as
on date)
Big Bazaar 2001 162
Food Bazaar 2002 31
Central 2004 22
Brand Factory 2006 26
Home Town +Ezone 2007 51
FBB 2008 27
Food Hall 2011 4+2
Planet Sports +aLL 2011 68
I am in 2013 3
Store Details
Big Bazaar: 4 PS
Product
Apparels
Home & Living
Kitchenware
Electronics &
Appliances
Beauty
Footwear
Toys & Games
Price
Value Pricing
Time based Pricing
Psychological Pricing
Bundling
Promotion
Wednesday Bazaar
Maha Bachat
Joona do, naya lo
Big Day
Saal Ke Sabse Saste 3
Din
Brand Endorsement-
M.S. Dhoni
Place
Design to look
crowded
High traffic areas
Potential
Development areas
Customer Perception
POSITIVES

Large stores
Variety
Value for money
Promotional Offers
Quality
High Volume, Low price

NEGATIVES


Costlier than neighbourhood store
Long Queues
No Credit
Snob Effect
FOOD BAZAAR
Concepts borrowed from Western markets:

Convenience
Cleanliness
Hygiene
Pre packaged commodities


Indian-ness added:

Touch-feel-do
Select bag weight
Bazaar like atmosphere
2001 2002 2003 2004 2005
Shareholders funds 8.3 12.43 15.57 21.43 50.97
1 1.50 1.88 2.58 6.14
Total loans 16.02 25.27 33.49 54.33 65.86
1 1.58 2.09 3.39 4.11
D/E Ratio 1.93 2.03 2.15 2.54 1.29

Net Block 8.29 15.71 24.69 36.91 49.18
1 1.90 2.98 4.45 5.93
Work in progress 1.81 1.45 0.76 3.32 3.63
Investment 1.17 1.17 1.21 1.21 7.34


Assets
Inventories 12.96 20.11 26.32 36.36 63.49
Total Current 19.05 30.38 38.24 52.92 92.93
1 1.59 2.01 2.78 4.88

Total Current Liabilities 6.16 10.84 15.29 16.9 33.32
1 1.76 2.48 2.74 5.41
Current Ratio 3.09 2.80 2.50 3.13 2.79
Figures In $ million
2001 2002 2003 2004 2005
Total Sales 41.65 65.65 102.36 151.48 249.43
1 1.58 2.46 3.64 5.99
Total Expenses 38.26 60.51 93.75 138.64 229.51
1 1.58 2.45 3.62 6.00
After Tax Earning 1.47 1.62 2.63 4.55 8.87
1 1.10 1.79 3.10 6.03
NET Profit margin (PAT/Sales) 0.035 0.025 0.026 0.030 0.036
ROCE (PAT/Equity+Loan) 0.060 0.043 0.054 0.060 0.076
Figures In $ million
Findings:
PAT rose from $1.47 mn in 2001 to $8.87 mn in 2005
Increase of roughly 6 times
But Profit margin remained almost constant (3.5% to 3.6%)


Pantaloons marginally contributed to growth
Sales increase of 6 times during 2001-2005
D/E ratio high in 2003 and 2004 signifying expansion

7 BB from 2001-03 while 12 from 2004-05
9 FB from 2002-03 while 24 from 2004 to 2005

SCM improved. Central warehouse in Nagpur
Implementation of SAP